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- OPINION

Yes, money matters - but not that much
Ask Australians if they are happy and you'll discover that being rich isn't everything, writes Richard Eckersley.

Does money buy happiness? The question has probably been posed and probed since the invention of money. And it is worth raising again now - at Christmas, a time of consumer bingeing, and New Year, a time of reflection and resolutions.

In a nutshell, the answer from a new survey is that yes, money can buy happiness, but not a lot, and the poor benefit from it most. This finding is consistent with commonsense and, I suspect, most people's everyday experience.

The results come from the Australian Unity Wellbeing Index, based on surveys of a random sample of about 2000 adult Australians. The index comprises two main values: a personal wellbeing index, which is the average level of satisfaction across seven aspects of personal life; and a national wellbeing index, the average level of satisfaction across six aspects of national life. The surveys also include two general questions about satisfaction with personal life as a whole and life in Australia overall, and two trend questions on whether personal life and national life are getting better or worse.

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Bob Cummins, professor of psychology at Deakin University, and I developed the index, which is sponsored by Australian Unity. Other members of the scientific team are Julie Pallant, a statistician at Swinburne University, and Melanie Davern and RoseAnne Misajon, two PhD students at Deakin University.

We believe the index is a world first and we have recruited about 15 international researchers to seek funding to apply the index in their own countries. They include Ed Diener in the United States, perhaps the world's leading authority in this field, who has urged the development of a national index of subjective wellbeing in the US.

The results of the income analysis show satisfaction with life does increase as income rises. As people earned more, they were more happy with "life as a whole", and particularly five of the seven aspects of personal life: standard of living, health, safety, future security and personal relationships. People were largely equally satisfied, however, with the other aspects - achievements in life and community connectedness - regardless of their income.

Satisfaction rose with income with some aspects of national wellbeing, although the relationships here were generally weaker. Satisfaction was also linked to income with perceptions of trends in personal life - that is, those on higher incomes were more likely to say their lives were getting better - but not with perceptions of trends in life in Australia.

The finding that money helps us be more satisfied needs to be qualified in two respects. First, income does not make a big difference; the difference in satisfaction between the highest and lowest income groups for the personal wellbeing index was six percentage points (from people being 72 per cent happy with life when in households with incomes under $15,000, to 78 per cent for those over $90,000). Also, income explains only a very small proportion of the variance, or total difference, in people's level of satisfaction with life. Other factors such as marriage and religious faith or spirituality are also important, and personality plays a big part.

Second, the effects of income are most pronounced at lower income levels: that is, the main differences were between those with household incomes over $30,000 a year and those on incomes under $30,000, and especially under $15,000. There was still an effect as incomes increased, but it was generally less marked.

These findings are consistent with other research, which shows that people adapt - they adjust expectations and goals and use coping strategies - to maintain a "normal" level of personal life satisfaction, or happiness. People in Western nations are about 75 per cent happy with life. In the two Australian Unity Wellbeing Index surveys conducted so far, the averages were 75 and 77 per cent.

It seems that money can influence life satisfaction within a certain normal range by allowing people to buy positive experiences and pay to avoid negative ones. Beyond a point, however, more money will make little difference. A survey of the Forbes 100 wealthiest Americans found them to be only slightly happier than the average citizen. As Warren Buffett, the billionaire investor, remarked: "If you were a jerk before, you'll be a bigger jerk with a billion dollars."

At the other end of the income scale, however, financial hardships and pressures are more likely to defeat people's capacity to maintain "normal" levels of life satisfaction, and so these can fall. Other adverse personal circumstances, such as chronic, serious ill-health, can also have this effect.

The media, and many others, tend to treat surveys of happiness and life satisfaction as something of "human interest" and curiosity value - in a quite different category from the "serious" news of GDP growth rates, interest rates and the rise and fall of the All Ordinaries Index and ASX 200.

Yet research into life satisfaction and happiness has important social implications. The serious purpose of the Australian Unity

Wellbeing Index is to provide a broad national measure of life that recognises the truth that in rich nations such as Australia the standard of living, measured by per capita GDP, is no longer an adequate measure of quality of life. Quality of life depends on how people feel about their lives as well as the material conditions in which they live. However fuzzy they may be, subjective perceptions can count for more than objective realities.

The need to think beyond materialistic measures is shown by another analysis: differences in satisfaction with personal life between states (the comparison was limited by sample sizes to NSW, Victoria, Queensland, South Australia and Western Australia).

Generally speaking, there were no differences between states in personal life satisfaction (community connectedness being the only aspect to show significant differences). Victorians, however, stood out as more satisfied with national life, scoring highest on the national wellbeing index and with life in Australia, social conditions and the state of the environment. Victorians were also more likely to think life in Australia was getting better.

This finding is consistent with earlier survey results. It does not appear to have an obvious social or economic explanation.

Perhaps Victorians' higher levels of satisfaction with national life reside in some historical or cultural quality. There may be something about the way Victoria has evolved and developed socially and culturally that explains its advantage in subjective measurements.

The Australian Unity Wellbeing Index findings on both income and state differences in life satisfaction illustrate the importance of including measures of subjective wellbeing in assessing the state of Australian society and deciding what sort of society we want to live in - and of not relying wholly on objective measures of materialist living conditions.

Richard Eckersley is a fellow at the National Centre for Epidemiology and Population Health at the Australian National University, and a co-author of the Australian Unity Wellbeing Index.

Michelle Grattan is on holidays.

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Source: geocities.com/sun_day1080110801