But over the long-term, you can’t really have zero income—you need some basic level of resources just to survive at subsistence levels. Subsistence income is probably around $400 per year, although of course it doesn’t have to be formal taxable income—it could be foraged food or whatever. This is true today—few people even in India or Africa have incomes less than a few hundred dollars, because basically if you make less than a dollar per day, you die: https://80000hours.org/wp-content/uploads/2017/04/1200x-1.png . Something like this is also true for the distant past, although obviously the idea of translating the labor of medieval people into US Dollars is a difficult academic project: https://voxeu.org/article/ancient-income-inequality .
With a floor around $400/year, you get:
five doublings to $12K/year, the poverty line for individuals in the USA and the level of Andrew Yang’s “universal basic income” proposal (although in practice government welfare raises income above this level making people better off than the raw number looks, while a slew of comparison and selection effects make people worse off than the number looks).
eight doublings to $100K/year, very well-off above-median family income in the USA, equivalent to some of the highest-income countries in the world like Switzerland.
about sixteen doublings to an income of $250 million per year, which would make you a billionaire after a forty-year career.
A sixteen-point difference still breaks a ten-point scale, but in fairness the people who made the scale were probably never trying to interview the full spectrum of people from Malthusian poverty all the way up to the global 0.000001%. (More discussion of how plausible it is that billionaire lives are really great at this applied divinity studies post: https://applieddivinitystudies.com/billionaire/)
Thanks for this! I don’t see anything here that disagrees with my claim. I said it can’t literally be true, which is how lots of people treat it. Going from no income to $400/year also involves an infinity of doublings.
A better claim might be “given you have enough income to subsist, doubling your income causes a fixed increase in happiness.” Fine, but note that’s not literally the claim “doubling your income causes a fixed increase in happiness.” My hope is that by showing the logarithmic model isn’t true, that pushes us to come up with a more realistic model of the relationship between happiness and income.
Fair! There are certainly a lot of problems with a pure logarithmic model.
I would certainly expect there to be threshold effects around subsistence. I also wonder if there are other kinds of threshold effects having to do with the median income of your local society (distinct from social-comparison effects). In America today, large parts of the economy are arguably captured by regulatory schemes that suppress market competition and promote rent-seeking. https://capturedeconomy.com/ In a world where housing was cheap and plentiful, education and other credentialing costs were low, etc, perhaps it would be easier to afford the “basics” of a physically comfortable developed-world life, and we’d see a weaker correlation between income and happiness. In real life, with high amounts of rent-seeking, I wonder if that artificially pumps up the correlation between happiness and income, by creating more zero-sum social-comparison status games where people have to fight to outbid each other for an artificially scarce resource.
It’s also hard to take seriously the idea that the scale just keeps going and going as you get richer… With my personal income of around 100K, the logarithmic model would imply that I’m equidistant from the billionaire level vs the subsistence level. But I don’t feel like becoming a billionaire would make me happy to anywhere near the extent that falling into absolute poverty would make me miserable. Although maybe I just lack imagination when it comes to how great my life could be. (I would still take the gamble, but for altruistic reasons: if I got lucky, I could use my wealth to influence the world in good ways.) Maybe it’s hard for the scale to keep going to extreme levels in part because there just aren’t enough people who are that rich; nobody makes products or services for people with a net worth over $100B (like vacations to the moon, perhaps) because so few potential customers exist.
Finally, of course it’s pretty weird to just ask people to rank their overall “happiness” on a 1-10 scale. I liked the point, made by Applied Divinity Studies, that increased income raises “life satisfaction” moreso than it boosts “experienced wellbeing”. I wonder if we couldn’t split those categories even further… Experienced wellbeing might be split into a physical vs social component. (Physical = benefits from the comforts of air conditioning, tasty food, no chronic health problems, etc. Social = how much you go about your day feel liked and respected. Maybe some kind of “mindset” or “hedonic setpoint” component that’s like “to what extent do you feel stressed/anxious/pessimistic in the manner of a depressed person”.) Life satisfaction might be split into components like freedom (I feel like I have control over my life and can do what I want) vs accomplishments (I feel like I’ve distinguished myself with success) vs influence (I’m happy that I can exercise power and influence the world to my liking). Asking about specific categories and then combining them into an overall score afterwards might be a more precise way to measure what contributes to different components of happiness, and to make sure that the questions still work well cross-culturally.
But over the long-term, you can’t really have zero income—you need some basic level of resources just to survive at subsistence levels. Subsistence income is probably around $400 per year, although of course it doesn’t have to be formal taxable income—it could be foraged food or whatever. This is true today—few people even in India or Africa have incomes less than a few hundred dollars, because basically if you make less than a dollar per day, you die: https://80000hours.org/wp-content/uploads/2017/04/1200x-1.png . Something like this is also true for the distant past, although obviously the idea of translating the labor of medieval people into US Dollars is a difficult academic project: https://voxeu.org/article/ancient-income-inequality .
With a floor around $400/year, you get:
five doublings to $12K/year, the poverty line for individuals in the USA and the level of Andrew Yang’s “universal basic income” proposal (although in practice government welfare raises income above this level making people better off than the raw number looks, while a slew of comparison and selection effects make people worse off than the number looks).
eight doublings to $100K/year, very well-off above-median family income in the USA, equivalent to some of the highest-income countries in the world like Switzerland.
about sixteen doublings to an income of $250 million per year, which would make you a billionaire after a forty-year career.
A sixteen-point difference still breaks a ten-point scale, but in fairness the people who made the scale were probably never trying to interview the full spectrum of people from Malthusian poverty all the way up to the global 0.000001%. (More discussion of how plausible it is that billionaire lives are really great at this applied divinity studies post: https://applieddivinitystudies.com/billionaire/)
Thanks for this! I don’t see anything here that disagrees with my claim. I said it can’t literally be true, which is how lots of people treat it. Going from no income to $400/year also involves an infinity of doublings.
A better claim might be “given you have enough income to subsist, doubling your income causes a fixed increase in happiness.” Fine, but note that’s not literally the claim “doubling your income causes a fixed increase in happiness.” My hope is that by showing the logarithmic model isn’t true, that pushes us to come up with a more realistic model of the relationship between happiness and income.
Fair! There are certainly a lot of problems with a pure logarithmic model.
I would certainly expect there to be threshold effects around subsistence. I also wonder if there are other kinds of threshold effects having to do with the median income of your local society (distinct from social-comparison effects). In America today, large parts of the economy are arguably captured by regulatory schemes that suppress market competition and promote rent-seeking. https://capturedeconomy.com/ In a world where housing was cheap and plentiful, education and other credentialing costs were low, etc, perhaps it would be easier to afford the “basics” of a physically comfortable developed-world life, and we’d see a weaker correlation between income and happiness. In real life, with high amounts of rent-seeking, I wonder if that artificially pumps up the correlation between happiness and income, by creating more zero-sum social-comparison status games where people have to fight to outbid each other for an artificially scarce resource.
It’s also hard to take seriously the idea that the scale just keeps going and going as you get richer… With my personal income of around 100K, the logarithmic model would imply that I’m equidistant from the billionaire level vs the subsistence level. But I don’t feel like becoming a billionaire would make me happy to anywhere near the extent that falling into absolute poverty would make me miserable. Although maybe I just lack imagination when it comes to how great my life could be. (I would still take the gamble, but for altruistic reasons: if I got lucky, I could use my wealth to influence the world in good ways.) Maybe it’s hard for the scale to keep going to extreme levels in part because there just aren’t enough people who are that rich; nobody makes products or services for people with a net worth over $100B (like vacations to the moon, perhaps) because so few potential customers exist.
Finally, of course it’s pretty weird to just ask people to rank their overall “happiness” on a 1-10 scale. I liked the point, made by Applied Divinity Studies, that increased income raises “life satisfaction” moreso than it boosts “experienced wellbeing”. I wonder if we couldn’t split those categories even further… Experienced wellbeing might be split into a physical vs social component. (Physical = benefits from the comforts of air conditioning, tasty food, no chronic health problems, etc. Social = how much you go about your day feel liked and respected. Maybe some kind of “mindset” or “hedonic setpoint” component that’s like “to what extent do you feel stressed/anxious/pessimistic in the manner of a depressed person”.) Life satisfaction might be split into components like freedom (I feel like I have control over my life and can do what I want) vs accomplishments (I feel like I’ve distinguished myself with success) vs influence (I’m happy that I can exercise power and influence the world to my liking). Asking about specific categories and then combining them into an overall score afterwards might be a more precise way to measure what contributes to different components of happiness, and to make sure that the questions still work well cross-culturally.