Case 10.1 Money Doesn't Buy Happiness

Name:
Institution;
Money doesn’t buy happiness. Well, on second thought…
Summary of the case

This case investigates the relationship between happiness and wealth of individuals and the entire nation as a whole. The bottom-line of the investigation is the conclusion that money doesn’t buy happiness. However, different scholars have various approaches to this question. First we meet the Easterlin paradox brought to light by the University of Pennsylvania Economist Richard Easterlin. In his study that he compared data from a relatively wealthy nation with that of a destitute country. He found out that poorer countries are happier than rich nations. He concluded that happiness is determined by an individual’s relative income rather than his absolute income.
Other two professors from Wharton, Betsey Stevenson, and Justin Wolfers come along to criticize Easterlin paradox claiming that it’s not paradoxical at all. They postulate that rich people and rich countries are happier than poor people and their countries. In other words, they concluded that GDP and happiness are directly proportional. The findings by Wolfers and Stevenson in the U.S influenced other economists especially in Britain. British economists started advocating policies that impact directly towards happiness of citizens (social welfare policies).With these developments, Easterlin would later concur with the two Wharton professors. However, this time round he added a new parameter. He believed that money alone does not translate to happiness.

Critically thinking

The role of money in determining personal satisfaction should not be underestimated. It’s only through money rewarded as wages that formulate financial plans that translate directly to personal satisfaction. Human beings are in pursuit of happiness that is only possible with a good personal income. Therefore, employers in companies should question their wage rates because, in the long run, the rates will affect the productivity of the enterprise. High wages keep employees happier (Broscoe, 2011).
The question of financial incentives
Managers in almost all corporations are faced with this common problem. Every manager regardless of the size, age or shape of his company struggles to de...