Can Money Buy Happiness?

Ah, one of the oldest philosophical problems and many fine movies have made this topic so alive (The Little Poor Rich Girl by Shirley Temple come immediately)

If money buys happiness then it worth to go through all the hard work to get money. If not, then why so many people continue to spend most of their time to get money which has little effect on happiness.

There has been numerous studies (click here for wide array of it) on happiness and income. Easterlin is one of the earliest economist to go through happiness data (from self declare dataset) and found paradox of happiness. People with same amount of money tend to be happier in poor country, but happiness don’t increase over time with economic growth. Is it possible that it is relative income having more impact to happiness instead of absolute income?

A global study of Sexual Attitudes and Behaviours by Pfizer in 2002 seems to be an odd way to study the relation but please bear with me for a while. It has more than 27 000 respondents from 28 countries with fascinating questions. (yup, sometime I have too much available time)

Three of them will be used in this mini study (How happy have you been with your life in the past year? How physically pleasurable did you find your relationship with your partner to be in the past year? How would you rate your overall health?) The numbers are in percentage of population stating they in moderate/good/very good (answer 3-5 in a scale of 5). Quite interesting to know that Indonesian has the highest number (98%) for question number two with Japan as the lowest (57 %).

I pair the data set with average income per capita of each country for that year, adjusted for cost of living or as purchasing power parity (PPP) in economic jargon so it is comparable across countries. Then I set up a log liner regression model with happiness as dependant variable and income, health and physical relationship as independent variable.

Before going to the result, some caveats need to be address (especially for economists and econometricians out there). There are some issue on subjective data, not that subjects intentionally being untruthful but they may have recalled problem. Some studies found that when asked about the past subjects tend to put emphasis on the extreme than average. Furthermore, I only got the average percentage of each question not the complete panel so the result is not as robust as when I can get the income of all participants. But as Donald Rumsfeld would say, you do regression with the data you have and not the data you want (hey, this is not my PhD dissertation).

I found that income has no effect what so ever on happiness (P value = 0.4472). On the other hand, health is has significant effect. (P value = 0.0140) and one percent increase of population that satisfied with their health correspond to 21,4 % increase in happiness. What about the last variable? The significant level jump to the roof (P value = 0.0001) and one percent increase in population satisfied with their physical relationship correspond to 39.58 % in happiness.

Hmm.. More study certainly is needed. If government want to increase people’s welfare, should it put more emphasis on *ahem* quality of life aspects than the usual investment/productivity/industrialization? So if you have been feeling unhappy lately despite all the material achievement, relax a bit and listen to the old tune by Rolling Stones:

I can't get no satisfaction

I can't get no satisfaction

'Cause I try and I try and I try and I try

I can't get no, I can't get no

The Economics of Sexual Behaviour

by Berly

I was just thinking to write a piece about economics of happiness since my department going to organize summer school about it.

That is until I stumbled upon two interesting articles. The first article was published on Lancet, the Econometrica of medical journal, with Professor Kaye Wellings from London School of Hygiene and Tropical Medicine as principal author. The second one was presented by Todd Kendal at Stanford Law School’s Law and Economics seminar. You may wonder what those two articles got to do with Economics.

The first paper is aptly titled “Sexual behaviour in context: a global perspective.” (Now that’s a topic people can think global and act local). Welling et al found that the richer a country, then the later people married and the higher incidence for premarital sex with men enjoying (no pun intended) higher increase than women.

The rich country’s citizen experience larger age differences between men and women when they loose their virginity (in case you are wondering, it is 16,5 year and 17,5 year for UK and 24,5 year and 18,5 year for Indonesia). Lastly, the high income country saw more sexual partners for women than in low income countries (in Cameroon, Haiti, and Kenya, men on average have multiple partners while women tend only to have one).

The second paper studies relationship between pornography, rape and internet. Kendal used state level panel data in US from 1998-2003 to found a 10 percentage point increase in internet access is associated with a decline of 7.3%in reported rape victimization. Cross checking the data with arrest list, he found the decline is largest on young male but having no significant correlation with other crime types. One of the main arguments against porn is its addictive properties (like smoking) that push users for more and more stimulation that could lead to rape if continuously feed upon. The study refutes it.

So increasing education and investment for higher income are only a façade for glorified pervert world? When Todaro talked of development as increasing choice and Sen spoke of development of freedom, they may not realized that they are also advocating rich women to be able to choose between multiple sex partner and teenager boys using their freedom to substitute rape with internet porn.

But I can’t help but wondering how my undergrad development economics class would be much more interesting if these topics were covered. Development is indeed an elusive concept.