Before you answer the question, I would like you to
conduct a couple of thought experiments.
The first step is to answer the following question:
All things considered, how satisfied are you with your life
these days? Please give your answer as a number between 1 and 10, with a rating
of 1 is you are dissatisfied and 10 if you are satisfied.
That is a standard question that has been asked by happiness
researchers. Now we come to the thought experiments.
Thought experiment 1:
Imagine that your circumstances suddenly change so that it
becomes possible for you to increase your peronal life satisfaction rating by
25% if you are prepared to sacrifice some wealth. What is the maximum amount of
wealth that you would be prepared to sacrifice in order to achieve an improvement
of 25% in your life satisfaction rating?
Don’t worry if the 25% improvement would take you beyond the
top of the rating scale. For the purpose of this exercise it is deemed to be
possible to increase your life satisfaction beyond the end of the scale e.g.
from 10 to 12.5. That makes sense because people who are completely satisfied
with their lives sometimes find that their lives get even better.
Thought experiment 2:
Now imagine a different scenario. Your circumstances change
so that it becomes possible for you to increase you wealth by 25% if you are
prepared to sacrifice some personal life satisfaction. How much life
satisfaction would you be prepared to sacrifice in order to achieve a 25%
increase in wealth?
My guess is that in answering the first question there are
not many people who would be prepared to sacrifice all their wealth to obtain a
25% increase in life satisfaction. In relation to the second question I don’t
think there would be many people who would be unwilling to sacrifice any life
satisfaction (if only for a limited period) in order to obtain a 25% increase
in wealth. Those are just my guesses. If large numbers of people tell me that I
am wrong, I will have to admit that I have made a mistake.
What is the point of this exercise? Some economists have been prepared to assume
that the sole aim of individuals is to maximize life satisfaction as measured
in social surveys. That might seem to be a reasonable assumption until you
think of the implications. If your sole aim is to maximize personal life
satisfaction it would be irrational not to sacrifice all your wealth in order
to obtain greater life satisfaction, if that possibility became available. Similarly,
it would be irrational to sacrifice any life satisfaction under any
circumstances to obtain greater wealth.
If the choices that people make imply that they do not aim
to maximize life satisfaction, that doesn’t mean that they are irrational. It
just means that there are some things more important to them than life
satisfaction, including some things that money can buy.
What could be more important to people than life
satisfaction? Some clues are offered by research, discussed here a couple ofmonths ago, which asks people to choose between hypothetical situations with
different ratings of life satisfaction and other well-being indicators.
The
people surveyed indicated a stronger preference for options offering high
overall well-being to you and your family than for life satisfaction. Other
well-being indicators ranked above life satisfaction included personal health,
being a good, moral person and living according to personal values, the quality
of family relationships, financial security, your mental health and emotional
stability, a sense of security about life and the future, having many options
and possibilities in life and freedom to choose among them and a sense that your
life is meaningful and has value.
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