Do people mistakenly prioritise money-making in their lives?

Happiness researchers are convinced that people in Western societies place too much emphasis on material goods and economic growth. There is the (ill-founded) claim, repeated in Schwartz’s Foreign Policy piece, that we believe GDP to be a proxy for broader well-being. The micro version of this claim, also made by Schwartz, is that we personally place too much emphasis on material goods:

But, consistent with a substantial body of research showing that we generally don’t know what’s good for us, when the money was flowing we substituted risk for security. We sacrificed time with friends and family to spend more time at work accumulating wealth and more time after work figuring out how to spend it. (emphasis added)

Richard Eckersley makes similar arguments in the local context:

The evidence shows material progress does not straightforwardly make us richer by giving us the freedom to live as we wish. Rather, it comes with an array of cultural and moral prerequisites and consequences, such as prioritising money and the things it buys. This affects how we think of the world and ourselves, and the choices we make. These choices are not optimising human health, wellbeing and potential

Of course, people make mistakes in their lives. But do most people really think that money is the route to happiness?

When Australians have been asked about their life priorities they never reply as if most believe that more money should come first. In 1978 an Age/Saulwick poll asked its respondents about their most important goal in life. The most popular response, on just under a half, was ‘a family life’. Only 9% met the expectations of the money equals happiness debunkers. They wanted, as the survey put it, a ‘prosperous life—having a good income and being able to afford the good things in life’.

In 1999 the Australia Institute released a study on quality of life which let its respondents rate more than one goal as ‘very important’. 38% said that ‘more money to buy things’ was very important to improving their quality of life. But two-thirds nominated ‘less stress and pressure’, and three-quarters ‘more time with family and friends’. Most people concur with the researchers in regarding family and friends as ‘very important’, but this survey doesn’t explore the trade-offs between them and other goals.

Another poll, the 2005 Australian Survey of Social Attitudes, helps us see which choices people would make if given the chance. It included a question about ‘personal aims’ over the next five years. 56% said ’spend more time with my family and friends’ was their top aim. Just over a fifth of respondents nominated ‘achieve a higher income’. A separate question on job alternatives found that most people— nearly two-thirds — preferred the same hours and money, while 10% wanted to work fewer hours and earn less money, and 22% of people wanted to work longer hours and earn more money.

The 2007 Australian Survey of Social attitudes asked respondents to agree or disagree with the proposition ‘other things in my life are more important to me than my financial future’. 20% disagreed, or in other words 20% were suggesting that their financial future was their most important priority. Of that 20%, 60% agreed with the proposition that ‘I worry a lot about my financial future’. This is consistent with previous research finding that materialist attitudes correlate not with wealth, but with poverty.

On happiness, I think the folk wisdom is about right. A good standard of living is one attribute of high well-being, but so too are intimate relationships, friends, work, and leisure activities. The right balance isn’t the same for everyone, and it isn’t necessarily the same for any one individual at all stages of his or her life. But balance is a central concept. People who place priority on financial matters typically do not believe that money alone will make them happy, but do believe that this is the biggest source of well-being imbalance in their lives. I’d trust their judgments of their own lives rather than the collective judgments handed down by the happiness paternalists.

10 thoughts on “Do people mistakenly prioritise money-making in their lives?

  1. Thanks Andrew – another calm and careful post, and on the money, as usual. BTW, the best line I know about the place of money in economics was in the Productivity Commission’s 1999 Gambling report (p. 4.21):

    A night of hot passion is not necesssarily of any less value to an economist than a roll of banknotes.

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  2. Andrew, one way to view the prioritisation of money is not an attempt to increase happiness but to try to avoid the unhappiness associated with poverty (what constitutes poverty being a very individual metric).

    Fear of being poor and going without drives people to take a very strong attitude to money. This should result in saving, but all the figures suggest that most people don’t save much (maybe my theory is rubbish).

    Also I think that making money is something people feel like they can control. In a lot of ways its a fairly prescriptive routine, work harder than the next guy, get promoted, get more money. Relationships, etc… are much less formulaic.

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  3. Andrew – do people always say what they mean? If people say in a referendum that they don’t want extending trading hours, then flock to the shops at any occasion of extended hours; if they say they’re prepared to pay more tax for better services, but vote for tax cuts etc why believe them when they say they don’t focus too much on money?
    .
    I imagine that not many people would say they overvalue money, when asked. But they love shopping, they LOVE it. Browsing, choosing, acquiring – it’s very satisfying. And it needs money. So even if they don’t picture themselves as Scrooge McDuck money mad, they create lives that allow themselves to routinely spend quite a lot of money. And then those lives make them unhappy – hence the anti-depressants, the alcohol, the self-help books…..

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  4. Russell, this is sort of like the Bradley effect. Black candidate has big lead in all polls (for Governor of California in 1983?), however actual votes were different. Hypothesis is that people don’t want to say to the interviewer/pollster they won’t vote for him.

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  5. Russell, I believe I can square that circle for you.

    I love what money enables me to do. I never want to be without money and I always want more, even in the ‘just in the case’ savings account.

    But, and here is what counts, I very often, nearly daily, prioritise other things over making money. I prioritise my family, obviously. I prioritise friends. Unlike, say,Warren Buffett, I prioritise my enjoyment of lunch.

    Because I love all those things too, even more than money. Money is merely a means to some of them (money) and a way to do things with others (family).

    But I don’t particularly love shopping, and unless management literature counts (which I read rather little of) I never read self-help books, am rarely drunk, have never been depressed…

    I would humbly suggest that mine is the ordinary case.

    Andrew, what do you mean we don’t equate GDP with well-being? Sure, no-one imagines that it is an exact science, but broadly speaking would anyone doubt that people in the top 50 countries by GDP are on average better off, including in terms of well-being, than those in the next 50, let alone those below? And those of the second tranche better off than the next 50 after them, and so on?

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  6. There’s a group of high income earners who would deny wanting ‘more money to buy things’ but who resist calls to downshift.

    For this group having money isn’t a symbol of success. They’re appalled by mcmansions, large, inefficient cars, big screen tvs and the commericalisation of childhood. They deny being materialistic and say that they aren’t interested in ‘things’. But at the same time, they never seem to have enough money.

    I think Patrick understands why. Money is just a means to an end, and because those ends don’t seem materialistic, wanting more money doesn’t seem materialistic.

    For example, you might want to live near the city so that you can be near your family and friends, cycle to work and walk to the library. You want to tread lightly on the earth and be near the people you care about.

    This probably means living in a run down terrace house or a poky walk up apartment. As a result it doesn’t feel materialistic. But it does require a stupendously large mortgage (much more than a four bedroom, double garage, family home with ensuite in outer-suburbia).

    You worry about your child’s safety. This means that the little 1990s hatchback you’ve been driving has to go. You need something bigger and safer — something with air bags. You and your partner talk about getting a Prius but end up agreeing on a Subaru Outback. It’s not cheap, but it helps manage the anxiety.

    You discover that the child care centre is feeding your child white bread with vegemite. So you wonder if you should stay home more so you can look after them. But your partner would need to earn more money to afford that. In the end you decide you can’t afford it.

    Good food turns out to be expensive. You don’t want to feel like you’re exploiting third world peasants every time you drink a cup of coffee so you always try to buy fair-trade. You don’t like the thought of torturing chickens so you buy free range eggs. You worry that cheap white bread will make your kids fat and diabetic so you always buy exotic multigrain loaves — preferably made without pesticides.

    And then there’s the services. Orthodontics for the kids, pilates and yoga classes for yourself. Perhaps a trip to see relatives abroad (the kids should see their gran before she dies).

    The health and wellbeing stuff really adds up. How come plasma televisions always get cheaper but Pilates just gets more expensive? You definitely need more money.

    This is the world of the post-material consumer — the PoMaCon. And modest inner city lifestyle without dishwashers, clothes dryers, or playstation but one that is nevertheless, incredibly expensive. It’s a life of moral necessities rather than materialism.

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  7. Nicely put, Don.

    Perhaps we should clarify and note that there are at least three strands to the argument that ‘materialism’ is a problem.

    The first is the meaning and importance given to acquiring material goods. There is evidence that those who believe that material signs of success are important priorities in their lives on average experience lower levels of well-being than others. The PoMaCon people consume a lot, but they are not materialists in this attitudinal sense.

    The second is that regardless of why people pursue more money, doing so is typically time consuming and with only so many hours in the day this costs people in terms of relationships, other pursuits, etc. While intuitively plausible, it has been hard to find strong evidence for this being a significant problem.

    The third is the environmental argument; that even if material goods do no harm to people they do harm the environment.

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  8. Don those are some really great points.

    Money is a means to a life-style. That life-style may not be blatantly materialistic (with large versions of everything). However inner-city lifestyle also has a high dollar cost.

    Reminds me of the search for Melbourne’s Whitest suburb. Definitely an expensive place.

    http://www.theage.com.au/news/entertainment/books/its-hip-to-be-white/2009/06/09/1244313134964.html?page=fullpage

    “It has more organic bakeries and vintage shops per square mile than anywhere else. It’s been gentrified — but not completely, which means it still has credibility. And most importantly, everyone seems to be in possession of at least one blonde child. When a suburb is hip enough to contain vintage shops, but safe enough for white people to have kids in, then it’s truly white.”

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  9. I agree with what Patrick and Don have said. It’s way too simplistic to say that caring about money or working more hours makes you less happy. Yes, as Andrew notes, working to earn more money is time-consuming and can mean less time for relationships. But as one can infer from the lack of evidence on this point, who’s to say that spending more time with relatives and friends will make any given person happier? I’m a lot happier with my family relationships now that I live independently and see my folks every week or two than I did when I was a uni student living at home and seeing them every day. The same goes for many friendships and even romantic relationships – more is not necessarily better. If the quality of your communication with your partner, family member or friend is good, then seeing them less often or for less time is not going to cause any problems. And what often makes these relationships fulfilling is what people bring to them – and a lot of that comes from the stimulation and self-esteem derived from outside activities such as challenging (and time-consuming and well-paying) work. Anyone working less than 40 (or more likely, 50) hours a week on their chosen occupation(s) is unlikely to experience these benefits. They will then need sports and other hobbies to fill in the gap, but most of these activities will take time out from family and friends as well.

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  10. Hello Andrew,

    I agree with you that it is important to have the right balance. Although, the balance in life a person seeks is relative. It is based on one’s background, family life, environment…

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