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