Can money have a negative effect on happiness?

About a year ago I was part of a liberty fund colloquium at PERC. At one point the discussion turned to the issue of how important money was in achieving happiness. I don’t recall the exact context, but I believe we had been discussing limitations of using the market system to solve environmental problems. The concern was that the market system failed to capture the full value of certain goods.

The consensus among the discussants was that happiness was one such example of when the market failed.

I had to bite my tongue when this was said. Never mind the empirical research showing the relationship between income and happiness.  I was biting my tongue because most of the discussants were wealthy individuals. The marginal dollar might have mattered little to my fellow discussants, but that was because they had not lived through poverty. Getting ten dollars can change your mood immensely when it is the difference between paying the rent or having to sleep on skid row.

I had forgotten about the incident until I read Grigorev’s story and I started to ask myself if I was happy. On second thought, happy might not be the best term. Satisfied? Comfortable? Content? Safe?

It isn’t a question I’ve had the chance to ponder on much. As a rule of thumb I spend most of my day worrying about money. When I was young I worried about whether my parents had enough money to pay the bills till the next paycheck came in. I often damned myself for not being able to work – the United States’ child labor laws are plain stupid. Even when I grew up, and my family’s finances improved slightly, thinking about money became my obsession as I took more and more economics classes. In my mind money and happiness are so strongly linked that if asked how my day is going I think about how much money I’ve made (or lost) since waking up.

After thinking about it for a week I’ve come to the conclusion that I was wrong about money’s effect on happiness. My summer job pays well enough and my bank account has never been so full. I am not happier for it though. To the contrary, I have fallen into a bout of depression. It is hard to explain, but it is what it is. After paying for the essentials (rent and food), a few luxuries, and stashing away some rainy day savings I just don’t know what to do with extra money and it makes me uncomfortable. I think I could live a comfortable life on a budget of $12,000~15,000 annually, a bit above world average income.

I knew that the effect of money on happiness was diminishing, hence my fellow discussants waving away the importance of money on happiness. I however never thought that money might have a negative effect on happiness.

For the time being I have quit my summer job and given away my extra cash to family members whose returns are still positive. Hopefully once the school year starts, and I return to being near the poverty line, my depression will be replaced by happiness.

Has anyone else had a similar experience? Or am I an outlier? Alternatively, what are you all spending your money on?

From the Comments: Foucault’s purported nationalism, and neoliberalism

Dr Stocker‘s response to my recent musings on Foucault’s Biopolitics is worth highlighting:

Good to see you’re studying Foucault Brandon.

I agree that nationalism is an issue in Foucault and that his work is very Gallocentric. However, it is Gallocentric in ways that tend to be critical of various forms of nationalist and pre-nationalist thought, for example he takes a very critical line of the origins of the French left in ethnic-racial-national thought. Foucault does suggest in his work on Neoliberalism that Neoliberalism is German and American in origin (which rather undermines claims that Thatcherism should be seen as the major wave). He also refers to the way that Giscard d’Estaing (a centre-right President) incorporated something like the version of neoliberalism pursued by the German Federal Chancellor, Helmut Schmidt, from the right of the social democratic party.

Thoughts about the relations between France and Germany going back to the early Middle Ages are often present in Foucault, if never put forward explicitly as a major theme. I don’t see this as a version of French nationalism, but as interest in the interplay and overlaps between the state system in two key European countries.

His work on the evolution of centralised state judicial-penal power in the Middle Ages and the early modern period, concentrates on France, but takes some elements back to Charlemagne, the Frankish king of the 8th century (that is chief of the German Franks who conquered Roman Gaul), whose state policies and institutional changes are at the origin of the French, German and broader European developments in this are, stemming from Charlemagne’s power in both France and Germany, as well as other areas, leading to the title of Emperor of the Romans.

Getting back to his attitude to neoliberalism, this is of course immensely contentious, but as far as I can see he takes the claims of German ordoliberals to be constructing an alternative to National Socialism very seriously and sympathetically and also regards the criticisms of state power and moralised forms of power with American neoliberalism in that spirit. I think he would prefer an approach more thoroughly committed to eroding state power and associated hierarchies, but I don’t think there is a total rejection at all and I don’t think the discussion of ordoliberalism is negative about the phenomenon of Germany’s role in putting that approach into practice in the formative years of the Federal Republic.

Here is more Foucault at NOL, including many new insights from Barry.

From the Comments: Pushback in favor of Brexit

Dr Stocker‘s recent post arguing against Brexit elicited the following response from Chhay Lin in the ‘comments’ threads, and I think it’s worth highlighting in a post of its own:

Very well explained, Barry Stocker. Although it can be good for Britain to leave the EU, it entirely depends on how they go on from there. I am worried that Britain will move unto the path of less free trade which would be an erosion of the 4 freedoms – free movement of goods, capital, services, and people. On the other hand, it seems to me that the EU was steadily moving toward greater centralization and harmonization of regulations that would decrease the competition between its member states and thereby becoming quite harmful. I think that the EU should have never had greater ambitions than the 4 freedoms with a European Court of Justice that would protect these freedoms. Now they can impose EU-wide tariffs and quotas against products from countries outside of the EU or they can impose EU-wide sanctions. Some harmful examples of the EU: the quotas on cheap Chinese solar panels and EU-wide sanctions against Russia. A wise independent Britain would have free trade agreements with countries within and outside the EU, but I’m afraid that too large a portion of the Leave supporters are hostile to immigration and open markets.

Chhay Lin has written more about Brexit, in Dutch, on his homepage and I do recommend you check it out.

From the Comments: Why care about Syrians?

Dr Gibson notes:

I’d say the “big question” makes no sense. Surely some Syrians would be better off under ISIS and some under Assad.

And there’s a bigger question: who the hell cares? Few if any of us Americans have enough information to judge this issue nor should we. We have our own fish to fry. The Washington politicians have done incalculable damage with their ceaseless meddling in the affairs of the Middle East and elsewhere. Let the Syrians and their immediate neighbors sort this out.

I wanted to draw this excellent comment out for two reasons. Reason number one has to do with Dr Gibson’s first paragraph. Questions rarely make sense (which is why you ask people for help), but suppose you asked whether Syrians would be better off under capitalism or socialism. Some Syrians would be better off under socialism than capitalism, but that doesn’t mean it’s just as good as capitalism. Right? One of those systems is better for far more people than the other, and as an individual don’t you have a moral duty to support the more just system in some form or other? These are questions that libertarians, especially libertarians in the United States, should be asking themselves more often than not. There is a disturbing tendency among this faction of libertarians to lean in the direction of nationalist parochialism when it comes to matters outside of our borders. This brings me to reason number two for highlighting Dr Gibson’s (quite excellent) comment: Reminding libertarians and classical liberals that our creed is an international (and a humble) one.

War refugees represent the humblest of our species. The UN estimates that the war has affected nearly 12 million Syrians so far and, of course, that doesn’t include all of the people outside of Syria’s borders who have been affected. Russians, Europeans, North Americans, Syria’s immediate neighbors, and East Africans have all been affected by the ongoing war. How could you not be interested, especially from an individualist point of view?

I think the problem of the American libertarian’s parochialist nationalism stems from Murray Rothbard’s Cold War-era writings. Unlike F.A. Hayek and Ludwig von Mises, who were both big supporters of more international cooperation (but who both saw the glaring flaws in organizations like the UN and what is now the EU), Rothbard’s writings on foreign affairs were heavily influenced by the fact that the world was dominated by two superpowers and that the government he lived under used lies and deceit to counter Moscow’s power plays. Rothbard’s world of bi-polar geopolitics is long gone. It doesn’t exist. It will not exist again in my lifetime. Ours is a world of multipolarity. Yet somehow Rothbard’s writings on foreign affairs (which descended into outright incoherence near the end of his life) still have a profound impact on the American libertarian movement.

Much of my work here at NOL is dedicated to eviscerating this long-expired mindset from the American libertarian movement. Isolationism is nationalist, plain and simple (just pay attention to the rhetoric of libertarians like Justin Raimondo or Doug Bandow if you need more convincing), but Warren’s point about Washington’s meddling in the affairs of other states remains pertinent. So perhaps a different question to ask (even if it doesn’t make sense) is what a more internationalist-minded, in the vein of Hayek and Mises and Adam Smith, US foreign policy would look like. (I’ve been asking this question for a while now.)

Rick comments on the latest news

While googling a phrase to see if I’m creative (I don’t know if “Hayekian leisure class” is uniquely mine, but the first page of Google’s 78,000 results indicates yes), I found this interesting tidbit: Thorstein Veblen’s house sold (way back in 2004) for $1 million.

The developer is going to (already has? Already started to then went bust?) tear it down and build some sort of luxurious suburban palace. Ironic, but not as ironic as it could have been. Far more Veblenesque would have been leaving it standing as a conspicuously authentic status item.

I can’t find the specific house, but narrowing down to its area on Zillow (based on Internet commentary) leads me to believe that the property has been folded together into a larger lot, but would hypothetically be worth about $2 million today.

Voter Participation: Something Has to Be Done

In California, 70% of eligible voters are registered, and 47% of those turned out in a recent election. Thus about a third of those who could vote do so. These are dismaying numbers.

Dismaying because they are too high.

Why? First, some more dismaying numbers:

When Newsweek recently [2011] asked 1,000 U.S. citizens to take America’s official citizenship test, 29 percent couldn’t name the vice president. Seventy-three percent couldn’t correctly say why we fought the Cold War. Forty-four percent were unable to define the Bill of Rights. And 6 percent couldn’t even circle Independence Day on a calendar.

Too many ignorant fools are casting votes. People who believe that minimum wage laws create wealth, free trade destroys wealth, or clergymen should be forced to marry gay couples, to pick just a few examples. We need to bar these ignoramuses from the voting booth.

How? For starters, ditch the 26th amendment to the Constitution and the raise the voting age to at least 30. Get the 20-somethings out of the way; too many still believe in free lunches.

Second, change the 24th amendment to require poll taxes rather than forbid them. There is no justice in forcing non-voters to pay election costs.

Third, institute stiff qualification exams. Voters need know the vice president’s name, understand the Cold War, identify July 4 as Independence Day, and a whole lot more. Informed voters would be mostly immune from pandering demagoguery.

Disenfranchisement will lead to alienation and rebellion, some will say. Perhaps, and this could be alleviated by a phase-in of the changes. But then voting will become a privilege that young people can aspire to, as they might aspire to a corporate management position.

Another objection: my proposal is elitist. Of course it is! If there’s one thing we desperately need in this country, it’s a reversal of the egalitarian sentiments that have poisoned so much public discourse. We need to encourage and acknowledge the best and the brightest. Ignorant fools should not be allowed to operate dangerous machinery or pull levers in voting booths.

Prediction: Trump-Sanders 2016

You heard it here first. At some point soon the two populist campaigns will join forces and take the White House with Donald Trump as the president. The odd-couple reality show residuals will foist Bernie to the top of Forbes’ “Lamest Billionaires” list before he’s even sworn in.


By 2018 the supreme will be hearing disputed disputes over MLB umpires’ decisions. By 2024 they will be the official referees of Wrestlemania. Incidentally, Wrestlemania 42 is where Bernie Sanders will peacefully shuffle of this mortal coil. Conspiracy theorists will insist that he was killed before the event by a Russian assassin and that his aides carried his dead corpse in so that they could attend the event. After that it will only be another 5 years before the last Facebook (by then a branch of the Social Security Administration) comment using the phrase “Feel the Bern” which by then will understood to be a reference yeast infections.


In fact, lots of good, funny, and interesting things will happen in the future! CSPAN will final get watchable. Even better news: selling the broadcast rights to the State of the Union Address will finally put a dent in the debt. And as budgets shift away from bureaucracies towards more explosive, entertaining, and big-data-y ventures, red tape will whither away. With a good dose of good luck, the world going to hell in a hand basket might be the best thing that’s ever happened to us.