GDP and Happiness

Does happiness have anything to do with wealth (photo source: Gerard Boragay)

There is a fascinating discussion going on about the relationship between GDP and Happiness on the New York Times Freakonomics blog. I highly encourage everyone to follow it, particularly if you are interested in whether material wealth really increases happiness. So here's the basic gist:

Arguably the most important finding from the emerging economics of happiness has been the Easterlin Paradox.

What is this paradox? It is the juxtaposition of three observations:

1) Within a society, rich people tend to be much happier than poor people.
2) But, rich societies tend not to be happier than poor societies (or not by much).
3) As countries get richer, they do not get happier.

But then the author presents his own research and what his outcomes suggest. Apparently...

There is no Easterlin Paradox.

The facts about income and happiness turn out to be much simpler than first realized:

1) Rich people are happier than poor people.
2) Richer countries are happier than poorer countries.
3) As countries get richer, they tend to get happier.

Moreover, each of these facts seems to suggest a roughly similar relationship between income and happiness.

What explains these new findings? [read the rest...]

Of course he goes on to explain that most of it has to do with the flawed data set and resulting analysis.

Personally, I believe in some way that rich people are happier than poor people, but not for reasons that have anything to do with wealth. A significant number of the richest people in the world today (eg. Gates, Mittal, Buffett, Oprah, the google guys, etc) made their own wealth. Most of them came from average, if not lower than average circumstances and went on to make millions. The key to their wealth has been that they all LOVE their jobs. They all LOVE what they do. Their jobs got them wealth and they worked more (though I am pretty sure that if you took their wealth away or paid them nothing, they'd still do their jobs...the google guys are perfect examples). This has created a reinforcing loop of happiness and wealth. But more importantly, because they love what they do, they live more fulfilled lives and are happier. I can't say the same of the poor, who often take the jobs for the financial incentives or provide the best security. It doesn't matter how hard they work, but life continues to be an endlessly unfufilling struggle.

My point in this opinion piece is (and this goes with all the stuff about finding a job), do what you love (make enough to survive, but try to do what you love). Even in the worst case scenario, you might be poor...but a side of you will feel fulfilled, rich, and happy. This I say from multiple years of experience.

Take a lesson from the babe!

mobile phones and their future

The cellphone has revolutionized business by improving connectivity between some of the world's poorest people. In his bestselling book "Fortune at the Bottom of the Pyramid" C.K Prahalad talks about "connectivity" as being an important aspect of improving a person's socio-economic standing. Most third world countries suffer from a desperate lack of infrastructure, that keeps its people grossly deprived of any interaction with the outside. This lack of interaction results in a lack of information, which keeps them ignorant of means to make their lives better.

It is easy for people to say that what keeps the poor in a state of poverty is their laziness. That is true of maybe a handful of them. The vast majority, I've seen work hard and desperately want ing to extricate themselves from their poverty. What keeps them poor is pure ignorance, lack of information, and without libraries, good schools, role models, or the internet, they have no way of changing that. They don't even know where to go for information.

That brings forth the One Laptop Per Child program, the wikimedia foundation, or others that are trying to bridge this gap. I'll talk about the computers in a later post. But what I think is the future, and what is already revolutionizing socio-economic growth in the BOP (Bottom of the Pyramid) is the cell phone.

Take this market I came across in northern India, where flowerwomen were SMSing across villages to find which of the nearby markets was "happening." Once they knew which one had higher demand, they would clamber into the corresponding bus and sell their flowers in the right spot, generating a higher profit. John Adams would be proud...this is market efficiency at its best.

Yesterday, I had a conversation with George, an old colleague from Kisumu, Kenya, about life there. I've been to Kisumu, and there isn't much infrastructure to boast about. Although the third largest city in Kenya (Nairobi and Mombasa are first and second), all the main shops fit on a single street. Its like an overgrown village. There are few internet cafes and they are expensive. George is not rich. But he is ambitious, intelligent, and interested in making something of himself. So he uses his mobile phone to log onto the internet and check and send emails (which is cheaper than calling the US). So in a matter of half an hour, I could help George with solving some technical issues about his water system at home. Having no library or computer wasn't a problem. He could atleast contact me and I could get him the information. So now George's water system is working and he's drinking clean water again. That's the power of connectivity.

Africa today is the world's largest growing mobile phone market. Our second hand phones often end up there to be quickly grabbed by someone. Who would have thought that a Swede's broken down tossed-out phone would be fixed and grabbed up by a poor Malinese woman in Timbuktu. Globalization has done some amazing things. Cell phones are a market I would also keep investing in.