Mega wealth sometimes equals mega misery 
Posted By Mirko Bagaric on December 8th, 2006
Generous and well-balanced: now these are two traits that future generations are unfortunately not likely to use in describing much of the population today.
In what has been described as the most comprehensive study of wealth ever undertaken, a study by the Helsinki-based United Nations Development Institute released this week revealed that two percent of adults in the world have more than half of the world’s wealth. The poorest 50 per cent of people in the world have a measly one percent of global wealth.
The director of the institute put the figures in tangible terms by stating that if the world’s population was reduced to 10 people, one person would have $99, while the other nine would get to split the remaining $1 dollar. The income disparity has grown in the past 50 years.
So how much wealth do you need to be in the richest one per cent of people in the world? The answer is $US500,000 (this is based on assets in 2000 – where the survey data was taken from).
But if you haven’t managed to squeeze into this club, don’t despair. Chances are that you are more likely to be part of the club that really matters – that which is founded on human well-being.
Recent empirical studies show this there is in fact an inverse relationship between mega wealth and happiness.
A study titled Why Australians Will Never Be Prosperous released in July 2005 shows that 21 per cent of surveyed individuals in the lowest income group (0-$25,000) indicated that they were totally satisfied with life whereas only 13 per cent of individuals in the highest income group ($100,001+) stated that they were totally satisfied.
A study earlier this year showed that the happiest country in the world is cash-strapped Vanuatu. Rounding off the top five were equally economically stretched Colombia, Dominica, Costa Rica and Panama. Australia rate a lowly rank of 139 – out of 178 surveyed countries (this is surprisingly well down on our position in similar surveys in 2005).
Studies consistently show that once beyond a certain level of wealth, money does not contribute to well-being. So what is the point of diminishing returns beyond which more money no longer meaningfully contributes to our lives? In absolute terms the answer is the level of income that is necessary to buy the essentials for living – food, shelter, health care and education.
But there is also a relative aspect to the equation. This stems from the fact that most of us have an unhealthy tendency to compare ourselves to others, and then compete with them. This explains the reason that happiness increases when a person escapes poverty, but societies do not become happier as they progress from relative poverty to affluence.
Putting both the absolute and relative considerations into the equation, it emerges that money ceases to have a significant effect on our sense of well-being once we derive an average level of income.
It is not surprising that in a US Time magazine poll, money ranked a lowly fourteenth to the question ‘What are your major sources of happiness?’ According to the poll, happiness tended to increase as income rose to $US50,000 a year. But after that, money didn’t have a significant effect on happiness.
So if money doesn’t do the trick what should we be aspiring towards? In a nutshell the things that are conducive to happiness are fit and healthy bodies, realistic goals, self-esteem, optimism, an outgoing personality, a sense of control, close relationships, challenging work and active leisure, punctuated by adequate rest and a faith that entails communal support, purpose and acceptance.
Given this it is often counter productive for people to aspire to join the mega wealthy club and further distort the wealth distribution in the world. It won’t help them to be happier and it further pegs back the needy in the world who are scraping to accumulate enough resources to survive on a day to day basis.
One of the mysteries of human nature that continues to confound sociologists is why people continue to strive to make money when they have got more than enough to spend in many lifetimes. The explanation probably comes from a misplaced desire for status and power – none of which actually make people feel better.
The luckiest group are the mega rich who get rich by doing things that they actually enjoy. That is why so many of us envy sports people, musicians and successful actors. They would be better off still if they donated a considerable portion of their wealth to those that would benefit from it. Empirical studies that people who give are happier than those who do not.
A version of this was published in the Geelong Advertiser on 7 December 2006.