The Hedonic Treadmill

You have two options A or B? A) You get $50k others get $25k B) You get $100k others get $250k.

How happy are you right now? Can one country be said to be happier than another? How do you measure happiness? These are the questions it seems of a new era in developed economies such as the UK. David Cameron recently commissioned a £2 million yearly survey to try to get to the crux of what makes Britons happy. It turned out, unsurprisingly, to be ‘health, family and relationships’. Yet given recent social unrest, protests and the August riots in the UK, it would seem there are a lot more variables to consider. Could one argue that people in the developing world such as India are happier than UK residents?

It is easy to run into various measurement issues when considering this question. I feel that some statistics fail to capture the broader picture. GDP ultimately measures the total value of output that a country generates, other measure such as the Human Development Index encompasses a wider range of components, including education and health. However does this or can this really measure what actually matters; the happiness of citizens.
It would seem that some UK residents have fallen victim to the country’s own success story. As we grow richer as a society the tendency to compare ourselves to other people acts as a plateau or even a depression, to our happiness. This is backed up by studies including Clark and Oswald’s finding in 1996 of UK finding that a rise in the wage of a co-worker reduces one’s job satisfaction by as much as a rise in one’s own wage raises it. Such a discovery suggests the bulk of people would choose option A, where they are relatively better off, despite perhaps being wealthier in option B and with a wealthier society overall.
Not only does this ‘relativism’ prevent us from being happier, it also works with the effect of habituation. The habituation effect occurs where we become used to a certain level of living; a world in which we move from a Nokia 1100 to Blackberrys (or in my case a Sony Ericsson W595) and Ponchos to Ugg boots. This certainly raises the question of whether a self-sufficient farmer in rural India, oblivious to these mod cons would necessarily be unhappier than a UK resident, despite having little or no income and certainly no Ugg boots.

That said, this farmer may fall victim to Clark and Oswald’s finding also. Essentially he may be unhappy that the farmer next to him has slightly more land than him or has a greater variety of crops. It would seem that at any level of development ‘relativism’ would always be a barrier to how happy we perceive ourselves to be. Could it be that development and progress merely pushes us up to a new boundary of happiness?

From recent interviews of the youth rioters, it seems that anger has built from this disparity of riches. So what can we do to avoid unrest? It would be impossible to forcibly equalise everyone’s incomes, and besides, people will still become unhappy comparing their income, which is now the same, to people who they consider to be lazy. It is an innate characteristic to be envious as human beings and this how we evolved as species to try and survive and be better or, in this case, better off than those around us. Thus it would be impossible to alter how everyone perceives their own level of happiness. All this seems to suggest we’d be happier if we lived in an ignorant bliss, away from knowing what others have and thereby eliminating the problem of ‘relativism’. In such a world everyone would pick option B, but in an interconnected and interdependent world, without these motivations to compare ourselves against each other, innovation and technological progress would suffer.

So which option would you choose A or B?


2 thoughts on “The Hedonic Treadmill”

  1. A thought-provoking article. As you suggest, man is an innately envious species, yet one thing we share with our fellow colleagues of the animal kingdom is our instinctive drive to compete with our peers. Though there may be a case for discouraging the emphasis people put on relative positions, it is on the other hand one of the strongest incentives to better one’s one position in life. Entrepreneurial spirit is a function of perceived gains whether for one’s own self-interest or common good. Eliminating these social dynamics in any case may as a result do more harm than good. What we should focus on is equalising opportunities for all in society and not outcomes, letting the free market and individual’s freedom of choice to dictate one’s ultimate position.

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