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A dollar figure for happiness

Misty Harris, CanWest News Service

June 17, 2007

Money really can buy happiness, but good health and social interaction provide an even more dramatic boost, concludes a University of London study that creates financial equivalents for life's pains and pleasures.

According to Nattavudh Powdthavee, whose findings are published in the Journal of Socio-Economics, an improvement in health from "very poor" to "excellent" provides as much happiness as an extra $631,000 a year. By contrast, a decline in health from "excellent" to "poor" has a psychic cost of $480,000 in financial losses.

Increasing face time with friends and relatives from "once or twice a month" to "on most days" feels like getting a $179,000 raise, while talking to neighbours more often is worth the equivalent of about $79,000 extra per year.

"Money buys happiness, but not a lot of it," says Powdthavee, a social economist at the U.K. university's Institute of Education.

"If you purchase a Ferrari, how often are you actually thinking about the fact you're driving this expensive car? The joy of materialistic things doesn't last as long as the feelings you get from spending quality time with your family or loved ones."

The study draws from a survey of 10,000 Britons who were asked questions about their health, wealth and social relationships. Members of the sample were then placed on a "life satisfaction scale," with one being totally miserable and seven being euphoric.

Using an economic regression analysis known as shadow pricing, Powdthavee determined exactly how much extra money per year a person would need to earn to move from one point to another on the scale.

For instance, an individual who sees friends or relatives less than once a month to never would require an additional $133,000 annually to be just as satisfied as someone who sees friends or relatives on most days.

Widowhood packs a psychic punch of $421,000 a year in losses, while getting married provides the equivalent happiness of $105,000.

The problem, of course, is that most people don't know what's good for them.

"That's the flaw of human nature, really," says Powdthavee. "Almost all of us have what professor Daniel Gilbert from Harvard University calls affective forecasting: the sense that we mispredict what would make us happier in the future."

Given the choice between more face time with friends and the six-figure psychic equivalent, for instance, Powdthavee says most folks would take the money and run.

Ryann Bradley, a radio DJ from Alberta, is among that majority.

"I already have awesome friends that I do see on a regular basis," reasons Bradley. "Plus, making an extra $179,000 a year, I could buy more friends -- and their time."

Scott Paterson, however, says there's nothing that compares to the joys his pals bring.

"Over the last couple of months, I have reconnected with quite a few friends that I had lost contact with -- some for more than 20 years. Since then, we've been talking about our past, things we did, the fun that we had, the trouble we got into ... to me, that's real happiness," says Paterson, who works for an Ontario software company.

"Material things break, get lost. Friends and the good memories that you create with them don't."
 

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