Money and happiness

15 11 2009

Mind of the Market, by Michael Shermer, is by far the most complex and in-depth book I’ve ever read. I talked a little about it in my earlier post – Folk Numeracy. Now that I’ve finished reading it I have more to say.

As I mentioned in my other post, Mind of the Market talks about the evolution of the markets from hunter-gatherer to consumer-trading. All through the book, he tries to explain how human brain has evolved to work in hunter-gatherer system since ages but is required to operate in consumer-trading culture today and how this affects and shapes the markets. He also makes it a point that both markets and minds are moral.

The author talks about, among other things, free markets, libertarian paternalism, trust, happiness, money, science, rules, virtues, evil etc.  At some point, he even explained how a fMRI scanner works, the technical details of which escaped me the first few times I read those passages.

From the myriad of topics discussed in the book, I found the chapter -Why Money Can’t Buy You Happiness the most interesting. In that chapter, Michael Shermer addresses the question and analyzes the emotion of happiness. Though most of us agree, at least intellectually, that Money is not everything, we see people doing crazy stuff for money and the power it brings. We came to  view money and the comforts and thereby status it brings as a sign of ultimate success and most of the times pursue wealth in order to gain more happiness.

But as all wise people realize and say, money can’t buy you happiness and it’s been proven time and again. Studies show that despite the increase in absolute wealth people in America are no more happier than they were half a century ago.

Michael states that happiness is often equated with pleasure and the pursuit of pleasure is what makes people land on a hedonic treadmill. According to Hedonic treadmill theory, as a person makes more money, expectations and desires rise in tandem, which result in no permanent gain in happiness.

Like all other emotions, happiness is also a proxy to deeper instincts and needs and the author defines happiness as:

Happiness is an evolved emotion that guides us to find meaning in the simple social pleasures of interacting with our immediate family and extended family, friends and social circle, and to direct us to find joy in the meaningful purposes of life that most directly involve helping ourselves, our family, our friends, and our community.

An observation I found intriguing is that we all have our own set point for happiness set by our genes and tweaked by the environment and we usually return to our set-point within certain time after a happy or sad event.

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