"I'll get you anything my friend if it makes you feel alright."
"Cos I don't care too much for money; money can't buy me love."
"I'll give you all I got to give if you say you'll love me too."
"I may not have a lot to give but what I got I'll give to you."
"I don't care too much for money, money can't buy me love."
"Can't buy me love, everybody tells me so; can't buy me love, no no no, no"
It turns out, they were right (although I'm not sure they really believed it). Money can't buy us love. It can't buy us happiness, either. A study conducted by the economist, Richard Easterlin, compared income (adjusted for inflation) with subjective well being (SWB) from 1946 to 1989 and found that although income rose fairly constantly over that period of time, subjective well being did not. In fact SWB actually declined slightly (see the Figure below, which reproduces Figure 10.1 in, "Social: Why Our Brains Are Wired to Connect"). A similar correlation (or lack thereof, actually) has been found in several countries, perhaps the most dramatic in Japan where over roughly the same period of time, income rose over 500 percent but SWB remained unchanged.
Why? I'm going to return to this question in a future post, but the short answer is this: social ties. Economists have identified a number of factors that contribute to subjective well being, but the one that appears to matters the most is social ties. The more we have, at least up to a point, the happier we are. People who are married are, in general, happier than those who are not. People who regularly see close friends, whether it's walking around a track or sipping beers at a pub, are generally happier than those who do not. People who volunteer, who as a consequence regularly interact with others, are happier than those who do not. And so on. Unfortunately, there's increasing evidence that we are becoming increasingly isolated, which would explain why SWB has been declining. Why that is so, however, is a topic for another day.