The Missing 85%

I used to be Corporate Man. You know what that meant. A fancy job title. A high income. Occasionally I was even allowed home.

Ungrateful wretch that I am, I decided 12 years ago to step off the gravy train. Since then, my income has been about 15% of what it would have been.

Imagine it! What could I have done with the other 85%? The overseas holidays! The new cars! The launch! The pool! The home cinema! Oh dear, all of that happiness foregone!

Don't cry for me, Argentina. I've missed out on the goodies, but I haven't missed out on the happiness.

Why so? Last week I came across a convincing explanation by, of all people, an economist. Not any old economist. Richard Easterlin of the University of Southern California is about as eminent as they come.

Easterlin's basic point is that we are driven by a myth. We spend our lives chasing the dollars because we believe that the dollars will make us happier. But numerous research studies show that an increase in income doesn't in fact bring about a lasting increase in happiness (unless we are extremely poor). That is because we keep shifting the goalposts. As our income grows, so do our material aspirations. We doom ourselves to always fall short.

By contrast, our lives have other (non-material) domains where our aspirations remain fairly constant. Achieving goals in these areas is more enduringly satisfying. Easterlin puts it this way in an article called "Explaining Happiness": 

Most individuals spend a disproportionate amount of their lives working in order to make money, and sacrifice family life and health, domains in which aspirations remain fairly constant as actual circumstances change, and where the attainment of one’s goals has a more lasting impact on happiness. Hence, a reallocation of time in favor of family life and health would, on average, increase individual happiness.

My own experience backs up Easterlin's thesis. That 85% of income - I may have foregone it, but I haven't missed it.

Of course, you're not me. Maybe happiness doesn't matter to you. In that case - just keep chasing the bucks.