The 10 Things Economics Can Tell Us About Happiness

From The Atlantic:

Last week, I shared the OECD's brand new rankings of happiest countries on earth. This week, let's pull back the lens and consider the most important lessons about well-being from the mountainous piles of economic research distilled by the New Economics Foundation's excellent review. All caveats about the messiness of research bias and the usefulness of self-reported happiness surveys apply.

1) Generally speaking, richer countries are happier countries (see above). But since many of these rich countries share other traits — they're mostly democracies with strong property rights traditions, for example — some studies suggest that it's our institutions that are making us happy, not just the wealth. More on that in a second.

2) Generally speaking, richer people are happier people. But young people and the elderly appear less influenced by having more money.

3) But money has diminishing returns — like just about everything else. Satisfaction rises with income until about $75,000 (or perhaps as high as $120,000). After that, researchers have had trouble proving that more money makes that much of a difference. Other factors — like marriage quality and health — become more relatively important than money. It might be the case that richer people use their money to move to richer areas, where they no longer feel rich. Non-economists might chalk this up to the “keeping up with the Jones'” principle.

More here.