Money can’t buy happiness - the backward sloping supply curve tells me so
Like many teachers, I'm firmly of the belief that money is not the root of happiness. I have to think like that - otherwise how do I argue with my old university friends who went to join the big banks that there’s more to life than big cars and foreign holiday homes ("Come and join us, Jon," they used to say to me, "you can set your own Libor rate and everything" ). It's important that we remind the 'those-who-can't-do' brigade that teaching is a life-style. It's a vocation. A calling.
Well, according to research by US academics Daniel Sacks, Betsey Stevenson and Justin Wolfers, the evidence suggests that wealth is a determining factor in happiness after all. Apparently, the data shows that there are no upper limits to happiness with regards to money – yes, the increase in happiness slows down but still rises.
Quick, somebody tell Victoria Beckham before David gives away all of his cash to the Paris children.
In truth, this isn’t the most shocking news of the week (Chris Huhne proving Mario Balotelli’s summary of English driving had some validity takes that one). A decrease in income tax is usually seen as an incentive to increase our desire to work and the principle has even been applied to the super-rich recently when justifying the reduction in the upper tax-band.
I guess, however, that the view that happiness continues to grow with wealth may create some in-class discussion when it comes to explaining the backward-sloping supply curve for labour. This theory suggests that work and leisure are substitutes - we are inclined to reduce our work commitment as our hourly wage rate increases as we want to spend more time enjoying ourselves and can start to afford to do so. In the end, though, the theory backs up this research – higher incomes give us the ability to afford more leisure time and therefore to improve our level of happiness.
You can read about the research in this link from The Telegraph.
I’m off to buy a lottery ticket.
This exam coaching and revision workshop is designed to support A2 Economics students in the final phase of their preparation for exams in June 2015. The workshop combines exam technique advice with coverage of our selection of core business economics (micro) and macroeconomics topics.