 Hi, Professor Gerald Friedman, University of Massachusetts at Amherst again, and we're talking about wealth and happiness the orthodox view and the real world. I hate to say that, the real world, but okay Orthodox economists, neoclassical economists, have a very simple model of happiness and model rest like this toys equals happiness more toys equals more happiness the more you have the happier you'll be This comes from the other simple Robinson Crusoe model of people Robinson Crusoe the more stuff he had the happier he was going to be he made the stuff himself if he didn't want it He wouldn't have made it If he had two canoes it must be because he wanted two canoes since he had to make the second canoe So two canoes must be happier than with one canoe Three canoes he'd be happier still At worst if he didn't like something if he made a mistake and made a fourth canoe and found oh I don't really have any place for it. He just leave it burn it throw it away dispose of it More stuff is more happy Now from this you expect Americans should be very happy Picapita income the average amount of stuff that we have Has grown by about two percent a year for 200 years So the amount of stuff we have doubles every 35 years Nowadays we have about thirty thousand dollars worth of stuff per person Compared to about a hundred dollars worth of stuff in 1790 We must be happy, right? Robinson Crusoe would have been happy all this stuff and if you look within countries you do surveys of Happiness within countries rich people are happier than poor people surprise surprise Paris Hilton with her six hundred million dollars is happier than Lindsay Lohan who has I don't know 20 million And she's probably happier than Dan the videographer who has I don't know a hundred fifty dollars You know and you know And a coffee card, you know for people's market, you know People with more money within any country are happier But then there's a problem and this problem was discovered by an economist at the University of Southern, California Richard Easterlin about 40 years ago and Since then it's been called the easterland paradox and it's been checked and tested by lots of people over time There's no increase in happiness in advanced capitalist countries Americans are Almost four times as wealthy as we were right after World War two, but we're no happier the same for the Europeans and most amazingly the same for the Japanese who are Actually a little less happy than they were Right after World War two when they were devastated and starving What's been going on? Why hasn't happiness increased with increasing wealth over time? And this shows up across the world if we can erase this for a second I'll quickly draw you a generalized graph of Survey data for different countries down here is average income So here's $35,000 per person the US he is a hundred dollars For Cameroon And he has happiness This is what it looks like Over here you have an income level of about $10,000 per person Which is about what the United States was after World War two Beyond that point You don't get any more happiness. I mean some countries are less happy Russia Some countries are more happy Finland Here's the US Just about on the line Here's Cameroon and Here's Haiti. I mean these are poor countries for them to get a little more wealth Yes, they get happier. They start getting clean water. They get antibiotics. They get enough to eat They get a change of clothes And going up to about $10,000. Yes, people do get happier beyond that. No Extra wealth beyond $10,000 or so per person in a society does not lead to greater happiness For the society as a whole Why not? I mean we could think about various reasons and you can think about them within your own lives What really makes you happy once you have a warm place to sleep can take a shower Have hot water enough to eat some change of clothes. What makes you happy is your social life Your relations with other people having friends more goods crowds out social relations There's some I'm not sure how this was. I don't remember how this was recorded, but I believe it was Paris Hilton on some video Having sex with somebody on the internet Stopped to answer the telephone That kind of thing can really ruin your social life at least with that person Um Goods crowds out your social life because you have to take your car in to be repaired you have to you know fuss with your Computer you have to update your internet. You have to do this that whatever all instead of spending time with people You care about or might come to care about second What really makes us happy and this sounds bad, but there's a lot of truth to it Why do you like the Lexus you just bought because you drive it into your Driveway and you see the looks on your neighbors. They are impressed You want more so you can show everyone else what a success you are and you can feel like a success because you have more than they do If we all have more None of us are benefiting Make everybody taller and the NBA has taller players, but nobody gets an advantage if Everybody has a BMW Then nobody is impressing anybody else It's just everybody's running harder to get to that BMW instead of Spending their time socializing with other people Why doesn't money make you happier as a society? Third reason because more stuff creates more problems for everybody If everybody has one car Driving around is hard. Everybody has two cars. Every family has three cars Traffic pollution noise we get all the external course of our stuff Yeah, um What we really want Is to have good relationships with other people Money doesn't do anything for that as a society as a whole So more GDP more production more stuff It's hasn't been a good way to increase happiness as a whole On that kind of depressing note, but not necessarily depressing because we can think of it as an Opportunity to change our ways and get something out of it. Um, I leave you have a good day. Thank you