Happiness is defined as "experiencing pleasure, satisfaction, or joy."
Happiness is very important. At the societal level, happy populations seldom engage in crime, terrorist activities, or political revolts. At the organizational level, research consistently shows happy employees to be more productive, even though happiness is just one of many factors involved. At the individual level, a person's happiness plays an enormous role in determining how successful he or she will be and it determines how satisfying the experience of that success will feel to the individual.
If happiness is so important, we obviously need to discover what really determines happiness. With that in mind, new research is finally revealing the answers.
Studies of genetics have found that a predisposition toward happiness is inherited. A gene that helps in switching on the neurotransmitter serotonin is linked to positive moods, and people who have inherited longer variations of that gene reported feeling happier.
However, it appears that only one-third of happiness is actually genetically determined. Studies on identical and fraternal twins in 2012 found that even when people have the same genetic makeup, some people are happier than others.
What this means is that happiness is largely within the control of the individual.
Yet, many activities we often associate with increased happiness—including accumulating greater wealth, purchasing products, going on vacations, or even moving to places where we can experience greater affluence—have recently been shown to make little or no impact on happiness.
However, there are important exceptions, and understanding those exceptions is essential to individuals, marketers, managers, investors, and government leaders.
Consider the influence of wealth.
At a national level, there is a difference in happiness between people who live in impoverished countries where they face a daily struggle to meet their basic needs, and those who live in wealthier countries. However, contrary to what many would assume, happiness does not continue to climb with higher incomes.
This is known as the Easterlin Paradox. Its namesake, USC economics professor Richard Easterlin, explains: "Simply stated, the happiness-income paradox is this: At a point in time both among and within countries, happiness and income are positively correlated. But, over time, happiness does not increase when a country's income increases."
In fact, we would expect that happiness would have increased markedly in countries like Chile, China, and South Korea, where per capita income has doubled in less than two decades. Yet, as Easterlin recently reported in the journal Proceedings of the National Academy of Sciences, in all three cases, surveys showed that people's satisfaction with their lives slightly decreased as their wealth increased.1
More specifically, a new analysis led by economists Eugenio Proto in the Centre for Competitive Advantage in the Global Economy at the University of Warwick and Aldo Rustichini from the University of Minnesota found that once income reaches a certain level—around $36,000, adjusted for Purchasing Power Parity—life satisfaction levels peaks, after which it drops slightly in developed countries.
Why doesn't happiness continue to rise, and why does it fall? In the journal PLoS ONE, the economists suggest that more money creates higher aspirations. Inevitably this leads to disappointment and a drop in life satisfaction if those aspirations are not met.2
According to Proto, "There is a sense of ‘keeping up with the Joneses' as people see wealth and opportunity all around them and aspire to having more. But this aspiration gap—the difference between actual income and the income we would like—eats away at life satisfaction levels. In other words, what we aspire to becomes a moving target and one which moves away faster in the richest countries, causing the dip in happiness we see in our analysis."
In another study that reached a similar conclusion, University of Illinois psychology professor Edward Diener, found that a country's gross domestic product per capita does not have much of an impact on the average person's happiness. Diener's findings, based on responses of more than 800,000 people in 135 countries from 2005 to 2011 were recently published in the Journal of Personality and Social Psychology.3
Diener's team gathered data from a Gallup World Poll, which conducted surveys by telephone and door-to-door visits. Respondents rated their lives on a scale from zero to 10, and answered questions about positive or negative emotions experienced the previous day. The researchers looked at each country's gross domestic product per capita, obtained from the International Monetary Fund, and each respondent's household income.
Diener explains, "According to the ‘Easterlin Paradox,' rich individuals are happier than poor ones, but rising incomes do not seem to be associated with an increase in happiness. Our research contradicts this concept by finding that rising income will only have an effect if aspirations or desires do not rise even more quickly. If people make more money, they can be happier. But if they are constantly disappointed because they expected to make even more money, then rising income might not help."
Therefore, happiness is a matter of managing expectations, within yourself and the people you lead, so that aspirations remain realistic and attainable.
If a person isn't happy in the country where he or she currently lives, would moving to a different country lead to more happiness?
University of Leicester sociologist David Bartram analyzed data from the European Social Survey of more than 42,000 people in an attempt to determine whether happiness can be gained by switching nationalities.
Bartram focused on migrants from Eastern European countries to see if they became happier once they have settled in Western Europe, compared to the happiness of people remaining in the country.
Based on his research, which was published in the journal Migration Studies, it appears that most migrants were no happier after migration—and migrants from Poland were significantly less happy.4
Migration offers people the opportunity to make significant gains in their incomes by moving to a wealthier country. However, Bartram's research found that migrants often end up in a lower relative status in their new country, and relative position usually matters more for happiness than one's spending power or absolute income.
According to Bartram, "If average happiness is quite low in the origin country such as Russia and Turkey, then an increase in happiness would likely occur. However, for a country such as Poland, where people are generally happier (at least in comparison to Russia, for example), there appears to be a decrease in happiness for those who go to Western Europe."
Furthermore, the comparison to people who stayed behind, or "stayers," did not show a significant correlation between migration and happiness.
Bartram explains, "Migrants from Eastern Europe do not appear to have gained happiness via migration to Western Europe. Migrants are happier than stayers—but the analysis suggests that migrants were already happier than stayers, even prior to migration. So, the happiness advantage of migrants doesn't emerge as a consequence of migration; that advantage was already present before migration."
Although Bartram did not make the connection between happiness and optimism, other studies have suggested that optimistic people are happier. Therefore, it seems likely that optimistic people are both happier to begin with, and more likely to believe things will get even better if they go somewhere else.
As a result, migrants score higher on measures of happiness than stayers, but they also would have scored higher had they never left their home country.
However, the fact that Polish emigrants felt less happy in their new surroundings reinforces the idea that high expectations can cause disappointment that lowers happiness. Since their fortunes did not improve as much as they hoped, these migrants felt less happy than they did in their country of birth.
Migration also poses a threat to the sense of happiness that comes from a strong sense of identity with one's home country. A study by three University of Illinois researchers published in Psychological Science shows that the more satisfied people are with their country, the better they feel about their lives—especially people who have low incomes or live in relatively poor countries.5
The researchers concluded that people who were financially insecure, because they had low incomes or lived in poor countries, attempted to console themselves by feeling good about their country.
This leads to the conclusion that when people are going through difficult circumstances on a personal level, they turn outward for sources of satisfaction. This may explain why people who are impoverished or struggling financially embrace nationalism, religion, and devotion to sports teams.
Ironically, although the research we've discussed indicates that having more money doesn't lead to happiness, the opposite appears to be true. Young people who are happy are more likely to become wealthy adults.
That's the conclusion of a study that analyzed data from 15,000 U.S. adolescents and young adults. As reported in the Proceedings of the National Academy of Sciences, young people who describe themselves as happier or more satisfied with their lives go on to earn significantly higher levels of income during the careers.6
The researchers found that the greater wealth is largely due to the greater tendency of happy people to earn a college degree, find a satisfying job, and win promotions than people who are less happy.
In fact, the researchers were able to quantify the economic impact of happiness: On a scale of one to five, a one-point increase in life satisfaction at the age of 22 is correlated with annual incomes that are $2,000 higher at the age of 29.
The study controlled for other factors, such as IQ, education, and health. And it demonstrated that, even among children from the same households, happier siblings earn higher incomes.
Based on this trend, please consider the following forecasts:
First, the so-called "happiness gap" in the U.S. will become increasingly narrow in the decades ahead.
"Happiness inequality" is the gap between happy people and less-happy people that correlates with demographic characteristics; in recent years, the gap has become smaller and this trend is likely to continue. Research published in the Journal of Legal Studies by University of Pennsylvania economists Betsey Stevenson and Justin Wolfers found that, even as gaps in income, leisure time, and spending are growing, Americans are becoming more similar in their level of happiness7 Specifically, since the 1970s, whites have become less happy on average, while non-whites have become happier; and women are less happy, while men are happier. In both cases, these changes narrowed the happiness gap. But, there is an exception: People with college degrees are even happier than they were, and those without degrees are even less happy than they used to be.
Second, while higher incomes won't automatically lead to greater happiness once a person's basic needs are met, differences in "spending habits" will lead to different levels of happiness.
According to several studies, buying products generally doesn't make people feel happier, but buying experiences often does. For example, San Francisco State University researchers found that experiential purchases, such as theater tickets or dinner at a restaurant, lead to increased well-being because they satisfy the need for social connectedness since they are typically shared with other people. However, another study by the same researchers found that spending money on experiences such as concert tickets or exotic vacations won't make you happier if you're doing it to gain recognition from others. According to assistant professor of psychology Ryan Howell, "Why you buy is just as important as what you buy. When people buy life experiences to impress others, it wipes out the well-being they receive from the purchase."8
Third, marketers will refine their campaigns based on insights from research studies on consumers.
For example, a University of Missouri study reported in the Journal of Consumer Research suggests that materialistic consumers gain more pleasure from desiring products than they do from actually owning them.9 As researcher Marsha L. Richins explains, "[T]he positive emotions associated with acquisition are short-lived. Although materialists still experience positive emotions after making a purchase, these emotions are less intense than before they actually acquire a product." Studies yielded the same results for expensive purchases like cars and cheaper items like household electronics, and for cases where the buyer anticipated making the purchase within a few weeks or a year in the future. This research indicates that marketing messages, which reinforce the value of the product after the purchase is made, will become increasingly important.
Fourth, happiness research will have implications for the booming travel and tourism industry.
The industry now accounts for $6.3 trillion of global GDP. But research reported in the journal Applied Research in Quality of Life shows that, once again, anticipation leads to more happiness; following a trip, there was no measureable difference between the happiness of vacationers' and non-vacationers, unless the time off was very relaxing.10 But even then, the happiness effect wore off completely after eight weeks. This suggests that people are likely to derive more happiness from two or more short breaks spread throughout the year, rather than having just a single longer vacation once a year. From a policy perspective, in order for families to be able to stagger their trips throughout the year, the school system will need to become more flexible. Lastly, from a managerial point of view, companies should encourage workers to take vacation time at six-month intervals, rather than using it all on one annual trip.
Resource List:
- Proceedings of the National Academy of Sciences, December 28, 2010, “The Happiness-Income Paradox Revisited,” by Richard Easterlin, et al. © 2013 by the National Academy of Sciences. All rights reserved.
http://www.pnas.org/content/107/52/22463 - PLoS ONE, November 27, 2013, “A Reassessment of the Relationship between GDP and Life Satisfaction,” by Eugenio Proto and Aldo Rustichini. © 2013 by Eugenio Proto and Aldo Rustichini. All rights reserved.
http://www.plosone.org/article/info%3Adoi%2F10.1371%2Fjournal.pone.0079358 - Journal of Personality and Social Psychology, February 2013, “Rising Income and the Subjective Well-Being of Nations,” by Ed Diener, Louis Tay, and Shigehiro Oishi. © 2013 by the American Psychological Association. All rights reserved.
http://psycnet.apa.org/journals/psp/104/2/267/ - Migration Studies, September 30, 2013, “Happiness and ‘Economic Migration’: A Comparison of Eastern European Migrants and Stayers,” by David Bartram. © 2013 by Oxford University Press. All rights reserved.
http://migration.oxfordjournals.org/content/1/2/156 - Psychological Science, February 2011, “Subjective Well-Being and National Satisfaction: Findings from a Worldwide Survey,” by Mike Morrison, Louis Tay, and Ed Diener. © 2011 by the Association for Psychological Science. All rights reserved.
http://pss.sagepub.com/content/22/2/166 - Proceedings of the National Academy of Sciences, December 4, 2012, “Estimating the Influence of Life Satisfaction and Positive Affect on Later Income Using Sibling Fixed Effects,” by Jan-Emmanuel De Neve, and Andrew J. Oswald. © 2012 by the National Academy of Sciences. All rights reserved.
http://www.pnas.org/content/109/49/19953 - To access the study “Happiness Inequality in the United States,” visit the Research Papers in Economics website at:
http://ideas.repec.org/p/iza/izadps/dp3624.html - For more information about how life experiences can boost happiness, visit the San Francisco State University website at:
http://news.sfsu.edu/buying-life-experiences-impress-others-removes-happiness-boost - Journal of Consumer Research, June 2013, “When Wanting is Better than Having: Materialism, Transformation Expectations, and Product-Evoked Emotions in the Purchase Process,” by Marsha L. Richins. © 2013 by ITHAKA. All rights reserved.
http://www.jstor.org/discover/10.1086/669256?uid=2134&uid=2&uid=70&uid=4&sid=21103252027027 - Applied Research in Quality of Life, March 2010, “Vacationers Happier, but Most not Happier After a Holiday,” by Jeroen Nawijn, Miquelle A. Marchand, Ruut Veenhoven, and Ad J. Vingerhoets. © 2010 by Springer Netherlands. All rights reserved.
http://link.springer.com/article/10.1007/s11482-009-9091-9
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