Rich but Sad

is there a strong correlation between wealth and sadness?

The issue of finding happiness is not trash talk but serious science that is baffling many psychologists.  What does it take to make someone happy?  I think contentment is the key.  And that includes the acceptance of who we are.  Not all can be tall, not all can be pretty, not all can be white, not all can be rich.  The research of course shows that wealth is not correlated to happiness.  However, not having enough can make life miserable.

We all know that not having enough money can cause lots of hardship.  For some it is a hardship to forego a snack before a workout while for others hardship means walking endless miles to reach a handful of millet and collect a bucket of clean water, not having a roof over the head and complete lack of medical attention.  For some a Salisbury steak is a delight and for others even a dead bird can be an appetizing meal.

Daniel Goleman writing in his book on Social Intelligence tells of a story when he was living in rural India. He was intrigued to learn that hospitals in the area typically provided no food for their patients.  More surprising was the reason: whenever a patient admitted their family came along, camping out in their room, cooking their meals and otherwise helping care for them.  How wonderful he thought was for a patient to have people who cared to be their day in and day out to ward off the toll of physical suffering.

What really happens is that as communities get richer they acquire more things to occupy themselves in life so that they are gadget busy or equipment busy and thus have less time for interpersonal relationships. Long hours at work is another factor.  I knew of a busy professional couple who made it a point to get home early on Wednesday.  On Monday and Tuesday they worked busy long hours. Wednesday was a good mid week day to catch up on the relationship. Then Thursday and Friday was busy and then the weekend arrived for family life together again.

In most of the developing world most of the people do not even have their basic needs, and all that organizations like UNICEF do is try to fill the gap for those basic needs with an effort to make it self-sustainable.  On the other hand, with most of the rich every where consumption over the basic needs is linked to conspicuous wealth and status.  People are not happy until they can draw status not from the self but from their possessions.  Thus there is a never ending sadness as the person next-door or the brother-in-law has something better. In 1899, a Norwegian-American Thorstein Veblen published a sociological tract called "Theory of the Leisure Class."  That book introduced "conspicuous consumption," as the author defined as "specialized consumption of goods in evidence of pecuniary strength."  Veblen believed that people spent ostentatiously to show where people ranked. Quite rightly, I remember in the early 1970s, both UNDP/UNICEF requested its international professional staff to keep a low public profile and not to drive flashy cars and show off ostentation in Bangladesh as the majority of people were so very poor that they either starved or had one meager meal a day. 

If you read Richest Country, Saddest People - Any coincidence?, you'll note that what is lacking in the industrialized world is the sense of community and strong family ties.

Other references: Conspicuous Virtue and the Sustainable Sofa by Joseph Rago, WSJ 3/23/2007.

Comments

[Frances Truscott]

Hi Merrill
One of the things that seems to make many people sad is comparing themselves with others, instead of appreciating what they are or have.
I read a letter you wrote to CIMA's Financial Management magazine where you talked about social savings to society, and management accountants talking about consideration of costs that do not show up in units of currency. Do you think there is any point in producing proxy financial valuations of both costs and potentially benefits (which perhaps will be expressed in terms of costs saved, or opportunity costs) for social programs that, for instance support women so there is less domestic violence, more supportive childcare so fewer children needing care from the state etc?
The recently published report in the UK by Sir Nicholas Stern on the economic impact of climate change provides very broad brush, but financially quantified cost estimates for likely damage over the coming years. That provides an approximate baseline for costs justification of current investment on carbon emmission reduction, which otherwise seems to be seen as simply too expensive. I wonder if his report would have had so much impact if he had not made some very broad approximation of costs that are not currently captured in conventional financial statements.
Best wishes
Frances Truscott, a fellow CIMA member

[Merrill]

With more and more women employed either full-time or part-time, the need for childcare services feels throughout the countries of the world. The existence of public benefits and externalities from childcare offers a reason for governments to intervene in the private sector’s allocation of resources for childcare. The first question to answer is whether the conditions of production are such that the private sector is unable to supply the efficient amount of childcare services even if there is a public expression of demand. Public provision may be justified if childcare services produce under conditions of decreasing cost, so that market demand is large enough to support only one producer. However, there is no conclusive evidence that the average (per child) cost of childcare services falls as the size of childcare center rises. A particular childcare center may exhibit decreasing costs temporarily because its physical plant fix in supply in the short run, but childcare facilities are usually not overbuilt to take advantage of decreasing costs. On economic grounds, public supply of childcare services does not appear to be preferable to private supply. Nonetheless, the existence of social objectives for childcare services may over-ride any proposal to separate public supply from public demand for childcare. This may constitute a restriction on the private supply of childcare services.
Could it be that governments are now ready to remove the guilt from the shoulders of the working mother? Mothers are now going to work in large numbers and the world has changed to the notion that the woman’s place is the home, not the office. The real problem though is the lack of government support for childcare.
Economic efficiency and equity requires that people be able to express individual demands for child care services, and that no child/parent be denied access to child care because of his/her family’s or his/her neighborhoods’ income. By lowering the price of childcare service through public sector finance, parents who for monetary reasons deny themselves the services would now have access to it. This added advantage, of a second parent would increase family income and in turn will enhance the entire well-being of the children in the family. This is a personal choice and should not be directed by public policy.
The public provision of childcare services must not only be in infrastructure but also in the education and training of parents. While stigmatism still exists that childcare is the woman’s business, there should be a culture change that childcare is a partnership between man and woman. For example, state run programs to change the culture of society that childcare is a parent’s responsibility and not a woman only duty can be very good for society.
For the sake of equity, it would be good for the public sector to ensure that all members of society receive the minimum levels of childcare and to impose upon the private suppliers of childcare services whatever non-economic objectives society may specify.

Cost benefit analysis needs the help of economists well trained to do these calculations. Of course, social programs that support women could translate into less domestic violence but that should also include training men to respect women’s rights and share in the burden of domestic living. For the state to provide less childcare would mean that someone else must pitch in, like the employer or other extended family member or childcare is reimbursed as an employer benefit whether the employee is man or woman. However, there are much more to women’s issues than childcare and UNICEF is working hard to improve the lives of women despite many hurdles to overcome.

As far as women’s rights are concerned there are the bigger issues facing the world, which sadly most people seem to be able to do nothing and women’s rights organizations completely ignore. In some countries, governments cannot educate women or allow them to practice professions and even deny them the right to drive an automobile or vote. When fifty percent of a population disallows the use of the other half’s mental capacity that can roughly translate to potential losses equivalent to the value of its gross domestic product (GDP), so there is one rough indicator I think. One could roughly estimate that such countries may be losing 50% of its GDP value by denying half of its population from work. Then in domestic life women are so badly treated in some countries, even publicly stoned to death or caned in public. Why should women treat differently to men when both are human beings of only different gender? The price of this irrational behavior could be the value of services these women could contribute to society and the value of alternative services that men could contribute to society rather than spending time in stoning and caning women.

On climate change there is much less that the UK and USA can do now because China and India are big consumers of energy and China may soon surpass the USA in its fuel consumption. Assuming that one strong variable causing climate change is the overuse of energy then there is a lot to say about the fundamental problems of energy. There is the issue of energy liquids (petroleum) becoming costly throughout the world because of Middle East problems, strong cartels that control petroleum prices or energy substitutes for petroleum which is gaining ground but not fully developed (ethanol, battery power, etc). Coal is a more inexpensive form of energy and is available in abundance in some places (UK for example) but it pollutes more than petroleum. Scientists are working hard to reduce coal pollutants and the auto industry is experimenting with hybrid models to save on fuel consumption. Well and good, but the journey is long and there are other competing demands, especially dealing with an unstable Middle East, raising the possibility of oil supply disruptions more extreme than experienced to date. What is possible in the near long term is for governments to regulate greenhouse gases that cause global warming and encourage people to use public transport (and provide for it too). Automakers are struggling to get the best low gasoline mileage models out as authorities stiffen the regulatory challenges. On a global scale, the United Nations should do much more by imposing on countries to curtail greenhouse gas emissions. Other good inputs can come from the Vienna based Energy Community Secretariat (www.energy-community.org). Industrialized countries have failed in the sense that they have increased fuel consumption by importing more and more oil rather than increasing the security of its supply. The Energy Community is thus a great intervention that may become a productive voice at least for Europe.

Some of the developing countries shooting for developed status are reaching for the stars no matter the costs of pollution. However, it is still best that the UK, USA and rest of Europe set good examples. The world is getting hotter and the losses of climate change could be devastating in more flooding, hurricanes and other foul weather. I think quantifying all this can be very difficult because one has to work on probabilities of an event taking place, the when and the where being difficult to predict and the variables rather very numerous. For instance, an earthquake in a poor country versus an earthquake in a rich country would have different price consequences as the replacement value of infrastructure and value of lives lost would have different numeric indicators. I think the quantification is priceless but the methodology difficult. If disease links to certain pollutants then that is directly provable. However, when ice fields turn to green pastures in some countries (Greenland for example) that sounds like a benefit from global warming to one country. The universe is massive, so one marvels as to how there were big climatic changes thousands of years ago (warming and cooling) without the pollution, we are having today. This is another hot debate.

I think if each town and each country does their fair share on pollution, the world can be a better place. On the other hand, while there is a cry for alternative energy people are doing less with power they instantly possess in themselves right now. In the USA, more than half of the population is overweight and that is now extending to children as well. One basic reason is that people do now move enough. If sidewalks exist, then bigger kids can walk short distances to school and there would be no need to have buses transporting them. Adults can also do more by walking or bicycling to work or other intermediary places without using an automobile provided there are bicycle lanes. Do not forget that airplanes are also polluting the atmosphere although most pollution problems point to automobiles and other industries.

In conclusion, climate change will be the new threat to international security. As we continue to fight wars and terrorism, the next big war to fight will be the threat of disasters from climate change that is manmade. Perhaps, we are reaching the tipping point and before it tips, some reversal action may not eliminate but at least minimize disasters. However, as we search for energy alternatives we also beginning to challenge the supply and demands of agricultural crops, another new dilemma.

In the quest for alternative fuels crop prices are rising. One of the main causes of food-price increases are new demands for ethanol and bio-diesel, which manufacture from corn, palm oil, sugar cane, and other crops. Raised corn prices also raise the price of milk, eggs and meat as corn uses to make animal food. Some economist’s worry that there can be a food shortage as agricultural crops competes between energy consumption and food consumption.

Lord Kevin one said “when you can measure what you are speaking about and express it in numbers, you know something about it; but when you cannot measure it, when you cannot express it in numbers, your knowledge is of a meager and unsatisfactory kind. It may be the beginning of knowledge, but you have scarcely, in your thoughts, advanced to the stage of science.” If Sir Nicholas Stern had to work out all the cost implications of climate change, perhaps his report may not have come out for the next several more months. On the other hand, it would be good to know the value of additional goods and services foregone in order to enact climate change and the consequences of doing nothing. The same basic questions face society with regard to terrorism and the proliferation of nuclear power, for energy or for warring with others. Global policy responses to the threat of nuclear problems is so acute in this 21st century, that if not properly handled, the world can be destroyed by a manmade nuclear disaster, and that that value is the worth of all nations of the world.