Wealth And Well-Being

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By Mark Lundegren

I have written before about our civilized preoccupation with wealth, including its natural origins, even amidst the relative absence of material wealth in our original human state, the underlying social forces promoting the pursuit of wealth before in and our time, and wealth’s potential deleterious effects on our health and well-being – and thus the need for wealth’s thoughtful regulation.

From time to time, I receive notes from visitors to HumanaNatura and others questioning these ideas, or accepting them but asking for more information and especially proof of the inverse relationship between wealth and well-being.  The many undesirable effects of unequal wealth and unchecked materialism on our individual and community well-being have of course been understood intuitively for generations, but this intuition had not been confirmed and informed by hard science, and thereby exposed to rigorous examination and made the material for informed and consensus-based action, until recently.  Also, since extreme wealth and the control of government were often synonymous before the rise of modern industrial democracies, hard science before our time might have been ill-timed, and unable to promote individual health and social advancement in a way that it can now (even if this process may take time and upset many entrenched interests and ideas about the proper bounds of government).

Fortunately, we need no longer live in uncertainty or rely on our intuition on questions of wealth and well-being any longer.  Extensive scientific research has been done on wealth effects over the last three decades or more, by a diverse group of psychologists and social scientists, and many follow-on studies continue to probe this topic at an increasing pace.  Wealth and well-being may seem a perennial issue, in the senses of being both historical and resistant to our understanding, but in truth much greater clarity on their connection and dynamics is now at hand – perhaps to the chagrin of the long wealthy and their conservative defenders.  This development in our understanding of wealth and its optimal uses is especially timely now, as the opportunities for extreme wealth – enabled by the same scientific progress that is bringing new clarity about the nature of wealth – seem ever accelerating in our global post-industrial society.

The research I refer to is now widely published and available to anyone interested in studies of income, consumption, and economic inequality effects on well-being, but this body of work can be overwhelming to sift through and evaluate, since it is quite large and still growing.  Fortunately, an excellent summary of some of the most important findings in wealth and well-being research has been assembled in a monograph, entitled Beyond Money: Toward An Economy of Well-Being, by Edward Diener and Martin Seligman.

If you are interested in, or unconvinced about, scientific research investigating the generally negative relationship between wealth and well-being, I would encourage you to review Diener and Seligman’s very accessible and well-documented monograph, which is available free online via a search of their monograph’s title.  For now, I will simply summarize some of the key wealth and well-being research findings they have compiled (with some comments of my own in parenthesis):

1.     Money has been used in the past, by both societies and researchers, as a surrogate for well-being, since it was easy to measure, believed to be a positive correlate to well-being, and only limited tools for measuring well-being more directly were available.  Modern psychologists and social scientists have called this assumed correlation of wealth and well-being into question, primarily by developing reliable tools for measuring and indexing individual and community well-being and measuring wealth’s correlations with them.

2.      Research into human well-being includes measures of pleasant emotions, life satisfaction, unpleasant emotions, and optimism.  Increasingly, this research has moved from simple cross-sectional questionnaires to longitudinal studies that frequently use experience-sampling techniques (via portable devices that survey the participant’s life experiences in real time, rather than relying on memory)

3.      Individual well-being is defined by researchers to include pleasure, engagement, meaning, and life satisfaction.  Pleasure is measured by degree of reported positive emotions, engagement by the intensity of life involvement and absence of boredom, meaning by feelings of connectedness, and life satisfaction by a general assessment of self-satisfaction. Other specific aspects of well-being are also frequently assessed in this research, including work engagement, stress, depression, and trust in neighbors.

4.      Economic indicators initially track with well-being as people arise from poverty, but then have only limited correlation as wealth increases.  Across nations, increasing annual income up to about $10,000 (2002 US dollars) correlates strongly with increased well-being.  After this amount, there is limited correlation, and no correlation at all when the data is controlled for health, quality of government, and human rights.  Huge income increases in wealthy nations, in other words, have produced virtually no increases in well-being.

5.      As evidence of this, researchers measured the steep rise in economic output in the developed world over the last fifty years of the twentieth century and parallel trends in well-being.  The finding: this economic expansion was not associated with increases in life satisfaction, but was strongly correlated with increases in depression, alienation, and distrust.  Since World War II, there has been a dramatic divergence between income and satisfaction in the United States and other developed nations.  In the same period, depression rates have increased ten-fold, adult and childhood anxiety has risen markedly, and social connectedness and trust have declined.

6.      A key idea in this research is that once communities achieve sufficient wealth to ensure their physical security, health, social relationships, enjoyable work, and opportunities for personal growth, additional income does not increase reported well-being.  In fact, increasing wealth may even reduce well-being, by undermining social relationships and work arrangements that prove essential to life satisfaction.

7.      Non-economic factors prove to be much stronger predictors of well-being than wealth and income.  These factors include social cohesion, democratic governance, justice, and work satisfaction.

8.      One noteworthy study measured life satisfaction across groups with widely different income levels.  The study concluded that Forbes magazine’s “richest Americans” had no greater life satisfaction than the Inuit people of northern Greenland or the Massai, a traditional herding people without electricity or running water and living in dung huts.  The hyper-rich Americans were in fact only slightly more satisfied than college students surveyed from 47 nations, the Illinois Amish, and Calcutta slum dwellers (all of whom are poor but likely have strong social connections).  The Forbes listees, however, were much more satisfied with their lives than the California homeless and Calcutta street dwellers surveyed (very poor people lacking social support networks).

9.      Supportive, positive relationships prove absolutely necessary for our well-being.  Well-being, in turn, is necessary to create and foster these positive relationships, suggesting a self-reinforcing and catalyzing cycle of human emotional and social health.  Economic growth, on the other hand, appears to interfere with this natural human cycle of individual and social health, stressing and undermining social relationships and individual well-being. (The result of increasing wealth is thus often a declining and equally catalyzing cycle of lower social cohesion and reduced individual sociability and promotion of social relationships – in other words, a cycle consistent with the atomization of people and dissolution of communities we now see occurring around the globe amidst rising incomes.)

10.  Well-being, regardless of levels of wealth, has significant advantages.  People with high levels of well-being appear to enjoy better social relationships, a high incidence and more stable and rewarding patterns of partnering, and greater health and longevity, all of which in turn foster and reinforce well-being.

11.  Higher well-being, ironically, is associated with increased productivity and engagement at work (setting the stage for a sustainable economy based on intrinsically-rewarding, highly productive work, instead of one based on extrinsic rewards and the lure of greater wealth – and contained within it, the seeds of its own undoing, via reduced well-being and declining engagement and productivity).

12.  Public policy focused on economic growth is now likely to do far more harm than good in the developed world, and even the developing world, once a basic standard of living is made possible through industrialization.  Well-intentioned politicians and public policy advocates would be wise to shift attention to other, more direct drivers of well-being: promoting social cohesion, reducing stress, increasing life satisfaction and meaning, enhancing marital and leisure satisfaction, and increasing work engagement.

13.  In microeconomics, the standard assumption is that more freedom of choice means a higher quality of life.  Because increasing income correlates to greater number of choices, it is (incorrectly) assumed to be a surrogate for increasing life quality.  (Newer research suggests that increased choice is not necessarily associated with increased life quality and that excessive choice may even undermine human well-being.  Since the conditions that foster human well-being are now better known and quite actionable in many cases, well-being can and should be promoted directly, instead of being pursed through the often ineffectual promotion of expanding wealth and choice.)

14.  The industrial revolution led to an explosion of goods and services in the developed world, but also led to increasing material aspirations, setting up a self-defeating and negating pattern of life, with greater aspirations largely canceling any well-being effects from economic growth (and promoting an overall pattern of declining well-being from economic growth’s undermining of social cohesion).

15.  Because goods and services are widely available and our basic human needs are essentially fully met for most in modern societies, people and social policy advocates can and should refocus their attention on non-economic elements of the good life, seeking enjoyment, engagement, and fulfillment in their work and social relationships.

16.  People rank happiness and life satisfaction as more important than money (but because of our evolved social context and its inherent incentives at the individual level, we often spend an inordinate amount of time pursuing income, at the expense of happiness and satisfaction, influencing others and reinforcing this dynamic in our society, and creating barriers to more compelling and wellness-focused life).

17.  Studies in the United States show that people living in wealthier areas are less happy than those living in lower income areas.  This effect is believed to be caused by the higher materialism, amount of privacy and social isolation, and competitiveness in wealthier areas.

18.  In one study, the same amount of income, adjusted for inflation, produced more happiness in 1973 than in 1995 (perhaps either due to rising aspirations or suggesting habituation effects, where ever-increasing material inputs are required to produce the same amount of happiness over time).

19.  While income gains do not help well-being above a threshold level, income losses and unemployment have been shown to reduce well-being, even in countries with strong social safety nets and welfare programs.  This fact, combined with strong correlations of unemployment and reduced well-being in wealthier nations, suggests the negative well-being effect is not from lower income levels, but from reduced self-respect and greater unmet expectations.

20.  While excessive choice can undermine well-being, democracy is very strongly correlated with well-being, as are equality of human rights and political stability.

21.  High social capital – social trust and rich interpersonal networks – is an excellent predictor of well-being, but is declining in many wealthy nations

22.  Differences in income, especially in poorer nations, are correlated with differences in well-being, as are differences in pay with job satisfaction (however, the differences are a net negative across people and not mutually offsetting, suggesting more even distributions of income will maximize overall social well-being).

23.  Longitudinal research of people over time has demonstrated that wealth is not only marginally correlated with well-being, but that there is also no causal relationship of wealth to well-being.  These empirical studies show that increased wealth does not lead to increased well-being, and may even undermine it.  Studies suggest that people with stable incomes have higher levels of well-being than those with rising incomes.

24.  These same longitudinal studies show clear causation of well-being to higher income, not the reverse.  Because of this, a majority if not the totality of income-wellness correlations are accounted for by well-being impacts on income, rather than income impacts on well-being, further casting doubt on the case for increasing income as a means of promoting well-being.

25.  Research demonstrates that materialism reduces well-being, principally by undermining social relationships and increasing the gap between income and material want.  Unhappiness, in turn, has been shown to drive people to focus on extrinsic goals like wealth (once again suggesting circular relationships between social cohesion and well-being, and wealth and unhappiness).

26.  Importantly, as developed nations have become wealthier, mental health levels have either remained flat or dropped sharply, while indicators of depression and demoralization have increased, especially among adolescents (suggesting that wealth has at best no impact on mental health and perhaps a large negative effect).

27.  Perhaps the most important finding overall, cutting across this wide body of research, is that the quality of our social relationships is crucial to well-being.  Multiple studies underscore that we need supportive, positive relationships and social belonging to remain well, while finding that economic prosperity, beyond a base amount, has a generally negative effect on our social environment and thus our well-being.  The research suggests that social relationships work to increase well-being not only by providing nurturing and support, but also by creating opportunities for us to nurture and support others in turn.  A consistent and related finding is that social isolation correlates strongly with low levels of well-being.

Diener and Seligman conclude their monograph by encapsulating this wealth and well-being research into a six-point model for promoting individual and community well-being: 1) advance conditions of stable democracy where basic material needs can be met, 2) ensure supportive friends and family, 3) create rewarding work that provides an adequate income, 4) promote healthy lifestyles and treat mental illness proactively, 5) maintain clear and important life goals based in one’s values, and 6) encourage a life philosophy or spirituality that provides guidance, purpose, and meaning to one’s life.

As we can see from this summary of recent wealth and well-being research, especially as this body of findings grows and proves consistent, the implications for people today is quite significant, and even foundational to a new emerging science of human well-being.  It suggests that many of us may need to reconsider inherited preconceptions and the current thinking of our times – as individuals, family and community members, and advocates of optimal public policies – about our natural human needs and needed social aims, our contemporary technological society and its paramount priorities, and our existing social structures and acceptance of social group entropy. 

This re-evaluation will no doubt touch on many areas, but perhaps most importantly and urgently needs to begin with gaining fresh perspective on our often central and unexamined preoccupation with wealth, our common intuitive assumption that wealth is a reliable general path to human well-being, and our enormous and historically-rooted human infrastructure dedicated to expanding wealth (our devotion to the care and nurturing of the wealthy state, rather than a healthy one, which may be our true intent or underlying need).  While wealth, and especially unequal wealth, are sources of status and esteem for the individuals possessing them today, this transfiguration of natural state – when we were materially equal and achieved status and reproductive advantage through natural fitness – comes with high costs, engendering social structures and expectations that reduce the health and well-being of all people, the wealthy included.

As Diener and Seligman summarize, studies of the lived experience of people today reveal radically different perspectives on wealthy life, depending on whether one or one’s community is wealthy or poor.  Poor people are apt to romanticize about the benefits and advantages of wealth, as are wealthy people about even greater wealth, but the actual experience of each of these levels of wealth is considerably at odds with such expectations.  Beyond benefits achieved by a basic level of income and sufficient wealth to ensure security and law and order, increasing wealth does little to advance our well-being (from the perspective of the possessor of the wealth) and may even reduce wellness and life satisfaction, especially by fostering unnatural competitiveness and undermining important social relationships essential for us to feel and be well.

In our emerging post-modern age, with ever more rapidly evolving industrial technology, we are now approaching a new dilemma in the search for greater well-being and progressive human life: the prospect of near limitless wealth.  This outcome is a realistic scenario, even in the near term of the next few generations of people, barring world war or calamity.  Such an outcome would of course represent a complete reversal of our original natural conditions, when humans lived on the land, possessed little, and relied on kin and clan for security, sustenance, and enlivenment – and were generally happy despite the many hardships of this state.  Given the emerging science of our well-being, and its recasting of wealth as an often negative force in our lives, the implications of the trend toward unlimited wealth are profound and demand our attention now, in the least simply because our own conditions now more than vaguely resemble this potential future.  From the point of view of original human life and natural well-being, we are already fantastically wealthy, and seemingly ever more discontent with our condition, and we live in denial if we fail to attend to this mismatch between old expectations and our new reality. 

Since increasing and unexamined social wealth can be reliably trusted to undermine social bonds, and thereby our individual and collective health and well-being (and our security and lawful life as well), new perspectives on wealth and models for social organization are needed, even now.  In a world where many already have wealth far in excess of the expectations of our ancestors, where many others will soon achieve this level of affluence, and where modern wealth is already undermining modern well-being, it is essential for us to consider both the opportunities and dangers that the trends of technological progress and unmanaged global affluence create for us. 

To continue in our current lopsided way – acting from imprecise intuitions and accepting the material rewards of scientific progress but not its lessons, fulfilling the goals and aspirations of our past and not those that are truly ours and consciously chosen today, and allowing behaviors that may be wise for one but undermining for us all when they are universal conditions – heralds a misshaped and less optimal human future, as our present is already, both of which can be changed and made more optimal by action beginning today.

If secure, cohesive, and democratic communities of moderate and relatively equal affluence – centered on creative work and progressive human development – are possible in advanced technological society and most likely to maximize human health and well-being, and to be both more productive economically and sustainable ecologically, the implications for people today are as clear as they are revolutionary. 

Mark Lundegren is the founder of HumanaNatura.

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