Fed's Bernanke: Money ‘By Itself’ Doesn’t Buy Happiness

Fed Chairman Ben BernankeIt was not your typical speech by the Federal Reserve chairman; then again, this was a commencement address at the University of South Carolina in Columbia, about a two-hour drive from Dillon, where Ben Bernanke spent much of his childhood.
The Fed chief’s address focused on happiness, and reaffirmed some age-old parental advice: money isn’t everything.
Bernanke didn’t entirely abandon economics, however, as he referenced studies measuring contentment and income.
“Although today most Americans surveyed will tell you they are happy with their lives, the fraction of those who say that they are happy is not any higher than it was 40 years ago, when average incomes in the United States were considerably lower and few could even imagine developments like mobile phones or the Internet,” Bernanke said, referring to a study years ago by economist Richard Easterlin.
The economist, Bernanke told graduates, found that once you “get above a basic sustenance level–on average, people in rich countries don’t report being all that much happier than people in lower-income countries.”
For example, he said, Americans have reported similar levels of happiness as do Costa Ricans, who have about one-quarter the per capita income.
Other studies have contradicted that notion and contend that richer countries heighten happiness through higher levels of technology, infrastructure and healthcare.
So Bernanke took a stand somewhere in the middle ground.
“So I am going to continue under the assumption that, although wealth and income do contribute to happiness and life satisfaction, other factors must also be very important,” he said. “Or, as your parents always said, money doesn’t buy happiness. Well, an economist might reply, at least not by itself.”
He also said that happiness is often measured by the degree of human interaction, more so than the amount of material wealth. And that both psychologists and economists agree.
“Happy people tend to spend time with friends and family and put emphasis on social and community relationships,” Bernanke said. “We are social creatures. Research has demonstrated that happiness and life satisfaction are perhaps more closely related to participating meaningfully in a network of friends, family, and community than any other factor.”

One thought on “Fed's Bernanke: Money ‘By Itself’ Doesn’t Buy Happiness

  • May 9, 2010 at 5:48 am

    Bernanke gave an important speech. As an economist, not a psychologist (which is my field) or a motivational guru, he stated what we know and tend to ignore. Money by itself truly has questionable value. It does seem high time that those in the financial realm begin to speak out. King Midas found out too late the limited benefits of having it all. Remember the children’s story? He was granted the wish to be the richest man in the world and everything he touched turned to gold, including his daughter who just wanted a hug.
    Time we stop showing celebrities with hundreds of shoes and start to talk values with those getting ready to enter the work force before they become addicted to the false premise that more is better. At some point more, even oxygen, becomes toxic.

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