The writer Malcolm Gladwell has another theory. They don’t realise that - after buying a nicer house and a nicer car, paying off their debts and setting up an ample pension - they would discover that they could really use another couple of million dollars. Another is that people are as naive as my friend. Why? One possibility is that nobody really has a clue how to answer the survey question, and $10mn was the central answer, a thousand times more than the minimum and a thousand times less than the maximum. A $10mn lottery prize was a popular choice. Most people, however, did not favour the top prize. Those lottery prizes ranged from $10,000 (for those whose absolutely ideal life involves replacing the curtains and upholstery) to $100bn (for those whose absolutely ideal life involves a great deal of drama about buying Twitter). Then they asked how much money would be required to achieve that life, if it came in the form of a lottery win. More recently, psychologists Paul Bain and Renata Bongiorno changed the focus: instead of asking how much money was enough, they invited survey participants to envisage their absolutely ideal life. However, there is another measure of happiness: do people evaluate their lives as satisfactory? By this definition, Deaton and Kahneman found no limit to the uses of money: extra income, at any level, was correlated with higher levels of life satisfaction. More money than that did nothing to reduce the amount of time people felt anxious, stressed or sad. Just over a decade ago, Daniel Kahneman and Angus Deaton, each winners of the Nobel memorial prize in economics, found that $75,000 a year (more than $100,000 today - roughly my friend’s dream income) was enough to optimise day-to-day experiences. That may be because, as Keynes also noted, there is an insatiable desire for needs which make us “feel superior to . . . our fellows”. Incomes have increased much as he anticipated, and yet no solution is in sight. In his famous essay Economic Possibilities for Our Grandchildren, John Maynard Keynes argued that, if incomes increased eightfold from 1930s levels, “the economic problem may be solved, or be at least within sight of solution”. How much does anyone truly need?Įconomists have offered various answers over the years. His dream income is about twice the average UK salary, several times the global average, and about a hundred times more than the global poverty line. My friend, who lived with his parents, was simultaneously naive and wise. This was almost 30 years ago - the equivalent fantasy today would be more than £200 a day. It felt like an incomprehensibly large sum of money he simply could not conceive of spending enough to exhaust such riches. When I was a student, a friend of mine fantasised about earning £100 a day.
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