9 - Wealth, consumption and happiness  pp. 199-226

Wealth, consumption and happiness

By Aaron Ahuvia

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The question of the relationship between wealth and happiness is an ancient one, addressed in the early writings of major religions and in Greek philosophy. Many religious and philosophical thinkers have argued that money does not buy happiness; whereas the general public have seen things quite differently. Recent empirical work has allowed us to bring data to bear on this question, with fascinating results.

Most of this research on happiness (i.e. subjective well-being) assumes that people can assess their own thoughts and feelings with reasonable accuracy. In this sense, it is no different from the overwhelming majority of psychological research, which relies on self-report measures. These self-report measures fall into several categories. Some assess global life satisfaction, for example by asking questions such as: looking at your life as a whole these days, how satisfied with your life would you say you are? Others assess satisfaction with various domains of life, such as financial situation, health, family life, etc. Judgements of life satisfaction are cognitive, that is to say, they are thoughts about how well one is doing. Other measures focus on affect, one's emotional life. Recently, researchers have started using the experience sampling methodology (Kahneman and Sugden 2005), in which respondents are contacted through a beeper at various points in the day, and write down what they are doing and how they feel at that moment. Although highly promising, the expense of the experience sampling approach has limited its popularity.

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