How Much Do You Earn? The Easterlin Paradox

Are you happy? How much do you earn? Look, I can’t force you to give me a break here, but it would benefit us both if you did.

Are you happy? How much do you earn? Look, I can’t force you to give me a break here, but it would benefit us both if you did.

The quality of mercy is not strained*

Faced with the following choice, would you rather…

a. Receive £5,000 and a friend gets £3,000, or

b. Receive £10,000 and a friend gets £15,000?

The answer (or an attempt at an explanation) a bit later. Sometimes you need to distance yourself to see things clearly. Most of us have had feelings of jealousy or envy in our lives, but nowhere may it be more difficult to deal with than in the workplace. How much do you earn? The so-called salary taboo does seem to be much less of a problem in stereotypically forthright America than in stereotypically stiff-upper-lip restrained Britain. According to the research, 67% of UK workers are uncomfortable talking about what they get paid in contrast to 17% of Americans. Even that American % is much higher than it was a few years ago, suggesting that widespread unemployment, resulting from the state of the economy, may provoke survivor guilt among those still comfortably off. No one really likes to admit they’re jealous or envious of a co-worker. The problem is the difficult economy has made our stress and insecurity more pronounced, which can often exacerbate the jealousy we feel on the job. We become more emotionally sensitive, and find ourselves battling the green-eyed monster in the office. See also Mudita.

Here is what happens (probably) when you ask someone to tell you how much they earn:

They hesitate.
They try to change the subject.
They go red.
They won’t tell you.
They make something up.

It appears we fear being judged about our salaries, either undeserving or boastful about large ones, or morally inferior for earning less, and friendships thrive on equality, or at least the illusion of it. Yet this whole moral dimension to wages collapses when we consider the paradox given at the beginning: option a or option b?

The answer is complex and lies within the Easterlin Paradox. It is named after the economist and USC Professor Richard Easterlin, who discussed the factors contributing to happiness in a 1974 paper [Does Economic Growth Improve the Human Lot? Some Empirical Evidence. In Paul A. David and Melvin W. Reder, eds., Nations and Households in Economic Growth, New York: Academic Press, Inc.pdf]. The paradox refers to the fact that while, in any given country, richer people tend to report more happiness than poorer ones, very rich countries don’t have happier populations, on average, than only modestly well-off ones. Recent research (2014) has utilised several measures of happiness, including biological measures showing similar patterns of results.

One possible implication for government policy is said to be that, once basic needs are met, policy should focus not on economic growth or GDP, but rather on increasing life satisfaction or Gross National Happiness (GNH). It was originally designed in an attempt to define an indicator and concept that measures quality of life or social progress in more holistic and psychological terms than only the economic indicator of gross domestic product (GDP).

At present, we are stealing the future, selling it in the present, and calling it GDP. —Paul Hawken

GNH has only been officially used in one country (Bhutan), where a Gross National Happiness Commission is charged with reviewing policy decisions and allocation of resources. Sounds a cool job.GNH value is proposed to be an index function of the total average per capita of the following measures,

Economic Wellness. Metrics via direct survey and statistical measurement of the economic situation, such as consumer debt, average income to consumer price index ratio and income distribution.
Environmental Wellness. Seen via direct survey and statistical measurement of environmental metrics such as pollution, noise and traffic.
Physical Wellness. Indicators include statistical measurement of physical health metrics such as severe illnesses.
Mental Wellness. Indicated via direct survey and statistical measurement of mental health metrics such as usage of antidepressants and rise or decline of therapy / depression numbers.
Workplace Wellness. Seen through direct survey and statistical measurement of HR metrics, e.g. jobless claims, job change, workplace complaints, grievances and lawsuits.
Social Wellness. Taken from direct survey and statistical measurement of social metrics such as discrimination, safety, divorce rates, complaints of domestic conflicts and family lawsuits, public lawsuits and crime rates.
Political Wellness. Trickier to measure, can be via direct survey and statistical measurement of political metrics such as the quality of local democracy, individual freedom (rights) and foreign conflicts.

There is a big debate about whether we can actually get accurate and reasonably objective measures of our own well-being. Clearly income (if we are honest and answer the question of course) is just one of many factors that influences how satisfied we are with our lives. Psychologists do say we often feel jealous when we sense someone has taken something away from us that we were attached to emotionally. That might include the fear that other people earn more than you (whether rational or not). Maybe the other measures of well being (listed above for GNH) might help give you a better perspective.

So how much do you earn? It depends…and option b please.

Don’t think of cost. Think of value. Be Amazing Every Day

*Merchant of Venice, Act IV, Scene I , William Shakespeare, 1564 – 1616. The quality of mercy is not strained. Portia is importuning Shylock to show mercy, but recognising that she cannot demand it. [Very roughly meaning, Look, I can’t force you to give me a break here, but it would benefit us both if you did]. Shylock declines, of course, and this proves his undoing…now Portia uses his ‘letter of the law’ attitude against him.

Categories: : blog