Practical analysis for investment professionals
11 November 2014

Can Money Buy Happiness? Take 15 with Justin Wolfers (Video)

Posted In: Economics

So you think money can’t buy happiness? Well, economist Justin Wolfers has some news for you.

Since 1974, when economist Richard Easterlin published research suggesting there was no link between income and happiness beyond a certain point, many have simply accepted this concept as fact. In fact, the phenomenon came to be known as the Easterlin Paradox. And of course, economists such as Richard Layard seized upon Easterlin’s findings to try to reshape social and economic policy – including proposals to tax all income beyond a certain level.

However, Wolfers and fellow economist Betsey Stevenson reviewed the primary data and concluded that Easterlin’s Paradox was “a non-finding” that “simply describes the failure of some researchers (not us!) to isolate a clear relationship between GDP and life satisfaction.” As Wolfers points out, “you should never confuse absence of evidence with evidence of absence.”

In this interview, I sat down with Wolfers to discuss his work on the economics of happiness. And you will be relieved to know that people the world over find that more money does in fact correlate well with happiness.

As an added bonus, we also discuss Wolfers’ work on prediction markets and the innovative ways companies can improve their market intelligence. Interestingly, he highlights the fact that Wall Street operated prediction markets as far back as the late 1800s — well before we had other more “modern” market intelligence-gathering operations. This demonstrates that prediction markets do well operating as a stand-alone concept with a long and time-tested history. Take a moment to watch the interview and pick up some real gems.

For Blogs and the Enterprise site

This episode of the Take 15 Series was originally released on 2 September 2014.

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All posts are the opinion of the author. As such, they should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute or the author’s employer.

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About the Author(s)
Ron Rimkus, CFA

Ron Rimkus, CFA, was Director of Economics & Alternative Assets at CFA Institute, where he wrote about economics, monetary policy, currencies, global macro, behavioral finance, fixed income and alternative investments, such as gold and bitcoin (among other things). Previously, he served as SVP and Director of Large-cap Equity Products for BB&T Asset Management, where he led a team of research analysts, 300 regional portfolio managers, client service specialists, and marketing staff. He also served as a Senior Vice President and Lead Portfolio Manager of large-cap equity products at Mesirow Financial. Rimkus earned a BA degree in economics from Brown University and his MBA from the Anderson School of Management at UCLA. Topical Expertise: Alternative Investments · Economics

1 thought on “Can Money Buy Happiness? Take 15 with Justin Wolfers (Video)”

  1. James Smith says:

    If a smile is an indicator of happiness, the person being interviewed (a high income economist?) in the video doesn’t smile at all! Is he not serving evidence against his own words?

    Common sense tells us money can’t buy you happiness beyond a certain point. But economists are not famed for possessing common sense. They would like to run a regression on the GDP to figure that out.

    Just focus on being smart, you have a long long way to go….and leave the happiness business to normal folks.

    Reminds me: “Economists are people who are too smart for their own good and not smart enough for anyone else’s.”

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