The Economics of Happiness: Crash Course Econ #35

The Economics of Happiness: Crash Course Econ #35


Hi, I’m Adriene Hill, and this is Crash
Course Economics. So, you want to be happy? Here’s your checklist:
Get a job where you make about $82,000 a year. Do not get fired from that job. Make sure
your commute is no more than 22 minutes. And, please, please: you’ve got to stop
looking at your friends’ Facebook profiles. [Theme Music] In the U.S., the pursuit of happiness is one
of our inalienable rights; written into the Declaration of Independence
right along with the biggies — life and liberty. The self-help industry is worth billions of
dollars. I mean, some of us hire life coaches. And for all that, happiness can seem pretty
elusive. Economic thought over the last couple of centuries
is built on a model that says we all have unlimited, inexhaustable desires.
More equals better. And economists believed they could tell what
makes us better-off by looking at how we spend our money and time. But in recent years, those assumptions are
being called into question. Economists and psychologists have discovered a disconnect between how we buy and spend and do, and what actually makes us FEEL better off. They’ve realized that sometimes, getting
paid nothing for doing something can make us feel happier than getting paid. Like say I cooked a friend a dinner for his
birthday, and after we finished up the last bite of
birthday cake, he offered to pay me for it. All of the sudden my gesture of kindness my
warm fuzzy feelings, they disappear. Economists have discovered a correlation between greater income and greater happiness across cultures. But in some places the effect is greater than
others. But, they’ve also found that more money has diminishing returns when it comes to our day to day happiness. Let’s go to the Thought Bubble.
Say Stan and I are both successful bakers. Thanks to a combination of my impressive baking
skills and some luck, I’ve become a star baker. I make $500,000 a year in cupcake sales and
baking pan endorsements. Stan, on the other hand, is a masterful, but
not-famous baker. He makes $50,000 a year selling cupcakes out
of his modest bakery. Stan and I enter a cupcake contest.
I win $10,000 in the cake category. Stan wins $10,000 for his icing and decoration. But that money is going to have very different
effects on our lives and our feelings of happiness. For Stan, $10,000 represents a significant
portion of his income. That $10,000 may make him feel a whole lot
more relaxed and better off. For me, an extra $10,000 is nice and all. But it’s not going to change much about
how I live my life or what I do with my time. $10,000. Cool. Whatevs. Beyond some level of income, the value of
each additional dollar has diminishing returns in terms of our day
to day well-being. A 2010 study found in the U.S. it was about $75,000 a year— or about $82,000 when you adjust for inflation. After that, the researchers discovered, a person’s day to day happiness levels just didn’t change that much. But, the same researchers also looked at another
form of happiness; asking people how satisfied people were with
their place in the world. And there, money mattered. The study found that there was a difference between the wealthy and super-duper-insanely wealthy when it came to overall satisfaction with
their lives. Thanks Thought Bubble! So, we know that some people have a natural predisposition to be unhappy. And some people seem more inclined to constant
joy. Those people are annoying. For a long time, psychologists believed that
people have a “set point” for happiness. And that most big changes — positive or negative — had only a temporary effect on happiness. But, more recent studies show that economic choices and circumstances can have lasting effects on just how happy we are. For one, there is a pretty clear relationship
between unemployment and happiness. Basically, being out of work can make people
out-and-out-miserable. By some estimates, unemployed people have 5%-15% lower life satisfaction scores than people with jobs. Studies have found that the negative effects of unemployment are greater in high-income countries. There’s also research showing that the happiness
of middle-age people is more negatively affected by unemployment than
older people. You might be thinking, duh, people without a job aren’t making any money, so of course they’d be less happy. But economists have found that the loss of
well-being due to unemployment is greater than can be explained by the immediate
loss of a paycheck. One explanation is that unemployment makes people worried not just about paying the bills today, but also about the future. Economists have also found that moving from a part time job to a full time job makes people happier. But, the correlation between hours worked and happiness doesn’t continue up and up and up. At some point,when you’re working ALL THE
TIME, happiness levels start declining. Imagine it like an upside down U shape. Kind of like an I’m-working-all-the-time-and-never-get-to-see-my-friends sad face. Long work commutes make people less happy.
Credit card debt makes people less happy. And inflation, it turns out, especially unpredictable
inflation, can make people less happy. We like stability.
And for our savings to hold their value. It’s not just the ups and downs of what
you can afford that affects your happiness. It’s also what the neighbors can afford. There’s something called the reference-income
hypothesis or ranked-income hypothesis. It says that the satisfaction I get from my
income and consumption level depends on how I’m doing compared to everyone
else around me. So, if the wealthy-star baker version of myself
lives around millionaires, I might be less happy than if I lived in a
middle class neighborhood. Even if I’m making the same income.
A 2009 study found this is true, to an extent. Researchers found out Americans were happier when they lived in rich neighborhoods in poor counties. The authors wrote: “it appears that individuals in fact are happier when they live among the poor, as long as the poor do not live too close.” This idea that status matters, maybe more
than absolute income, brings us around to something known as the
“Easterlin Paradox.” It’s named after an economist named Richard Easterlin, who, back in the ’70s, found that that as the income level in a country rises, the average level of happiness in those countries doesn’t always follow. This happens even though we also know there
is, at some level, a positive relationship between income and
happiness. So, what’s going on? One explanation is that we derive happiness from status, rather than absolute income. So when an entire country gets richer, even
if our income goes up, our status and relative income stays about
the same. And we don’t get any happier. Another explanation gets back to the “set
point” of happiness we talked about before. Some economists talk about the “hedonic
treadmill” or “hedonic adaptation”. Here’s Rousseau — describing the phenomenon: “Since these conveniences by becoming habitual
had almost entirely ceased to be enjoyable, and at the same time degenerated into true
needs, it became much more cruel to be deprived of
them than to possess them was sweet, and men were unhappy to lose them without
being happy to possess them.” I can remember the joy I felt when I got my
first smart phone. Now I’ve adapted to the point that my phone is kind of annoying, but if somebody took it away, I might cry. There’s a third explanation out there regarding
the Easterlin Paradox and that’s that it’s not actually a paradox
at all. Basically that it doesn’t hold. There has been some research that shows the paradox is only true for relatively wealthy countries, where the basic needs of citizens are already
being met. In lower GDP countries, the studies find, there ARE overall increases in happiness when income rises. More recently, economists Betsey Stevenson
and Justin Wolfers argued that average levels of happiness rise in countries where income rises, regardless of how wealthy that country is. The data, they say, points to a clear relationship between GDP per capita and average levels of well-being. All of this happiness research matters when
you think about how governments measure progress and decide
what the right path is for a country. For a long time economic growth has been at
the center of economic policy. It explains some of our global fixation on
GDP numbers. But, if you believe that an increase in income and stuff isn’t going to make people happier and better off, income growth may not be the best way to mark
or judge the progress of a society. A focus on GDP and growth might hide and even
exacerbate issues like income inequality and environmental damage related to increased
consumption. In the 1970s, the king of the tiny country
of Bhutan proclaimed that “‘Gross National Happiness is more important
than Gross National Product.’” Instead of measuring economic progress using
GNP or GDP, the government tracks GNH — Gross National
Happiness, which considers the social, physical, spiritual
and environmental health of its citizens. And it’s not just Bhutan. In 2011, the United Nations adopted a resolution that calls for member states to give greater
weight to happiness and well-being when figuring out how to pursue social and
economic development. But this focus on happiness in addition to
economic growth isn’t a truly new idea. All the way back In 1968, U.S. presidential candidate Robert Kennedy got up in front of an audience at the University of Kansas and criticized
the focus on economic output alone. “Our Gross National Product, now, is over
$800 billion dollars a year, but that Gross National Product — if we
judge the United States of America by that — that Gross National Product counts air pollution
and cigarette advertising, and ambulances to clear our highways of carnage.” He goes on: “It measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to
our country, it measures everything in short, except that
which makes life worthwhile.” Well, I don’t think we can write a better ending to the show, or to the series, than that. Thanks for watching.
It’s been such a pleasure. Thanks for watching Crash Course Economics, which is made with the help of all these nice people, who work on the show because it makes them
happy. You can help keep Crash Course free for everyone
forever by supporting the show at Patreon. Patreon is a voluntary subscription service where you can support the show with a monthly contribution. Thanks for watching.

Daniel Yohans

100 thoughts on “The Economics of Happiness: Crash Course Econ #35

  1. Matthijs A says:

    What happened to the ACDC belt dude though

  2. b zz says:

    2 + 2 = 4 we don't seem to doubt it but can I trip over these numbers or spill coffee on them , happiness = abstract
    noun.
    How can I quantify , Alice jump down the rabbit hole.

  3. Rachel Evans says:

    my life is trash but i am so much better off than all of my FB friends

  4. Rachel Evans says:

    take my phone away n bill collectors will stop calling me and making my happiness go down

  5. Travis Harger says:

    Really enjoyed this series. One of my fav series along with Philosophy and Computer Science. Thanks, just wish it didn't end​.

  6. Kasia Zmuda says:

    Thanks so much for the series. I'm a first-year MBA student and this really helped me recall some key points when it comes to Economics! Much appreciated!

  7. Justin Letchford says:

    You're happier when you live around people who are poorer than you, interesting. I wonder if that's evolutionary? Imagine this, someone who has an amount of wealth chooses to live in an area that is not so wealthy. They then obviously have to buy a house in that area, fill their car with fuel there, buy their groceries there, go to the doctor there and send their children to school there putting that wealth into the economy and they're emotionally compelled to do it because just being there makes them happy so they stick around.

  8. Trọng Lĩnh Ngô Đăng says:

    Thank you for all

  9. Md Muzakkir says:

    can you do videos about Islamic finance?

  10. Abbos Shodiyev says:

    Thanks for videos

  11. Menglong Youk says:

    I disliked economics since my high school because the teachers made the subject so boring, and I held that view ever since, but it is no more after I finished Crash Course economics today. Thanks to all the stuffs involved in making this series. You're all awesome.

  12. Arpit Chhabra says:

    Could you please make a series on investing in stock market, it will make me happy.😀

  13. Arpit Chhabra says:

    BTW loved this series, that's y liked all the vids. Great work guys. Thank you so much for your EDUCATION AID.

  14. Debbey Lukas says:

    Thank you so much for this series. I’ve learned a lot

  15. Tenwan says:

    I'm from Bhutan!(not that anyone cares.)

  16. Robinson Marquez says:

    Amazing series but it would be better if you add some chapters about savings which is also an important part of economics.

  17. Austin Gharib says:

    Happiness = gratification / gratitude

  18. Anonymous says:

    In 6 hours I learnt what it took my school 2 years to teach!

  19. Jurij Fedorov says:

    It was a good intro to economics. But it's very left leaning at times. Not that that's a hidden factor on this channel but it does make some of these videos very one-sided and the counter arguments are very often forgotten and ignored. There are some bad psychology mixed into some of these videos and both of these teachers seemed to just adore using psychology to explain economics. While themselves not really understanding psychology or how studies in psychology are done and what they imply. Their points from psychology were mostly wishful thinking and left leaning biased indoctrination. Too often a final point was started by "You should not…", "You should…", "But I feel…".

    Again, it's very much worth a watch for people who don't already study economics but please don't take this as gospel. Economics is not supposed to be left or right leaning. And a lecture series where all slightly right leaning study results are apologized for is not really a fantastic lecture series unless you are super critical while you watch it or watch another series that is more neutral right afterwards. While this one was a series with a left leaning view on economics. Milton Friedman has a series with a libertarian view on economics. The same principles are talked about but the conclusions are not completely the same. I would probably suggest people to watch that series to see what I mean. Both this one and the Milton Friedman series are very much biased but very informative if you start to understand when they stop talking about science and start talking about their personal ideas of the world.

  20. Jessica Bressan says:

    Adore the videos! Will there be one on Neoliberalism? Oh please oh please!

  21. Apple Sewer says:

    Thank you CrashCourse For this series. It's the first time I've ever actually felt like I understand economics!

  22. Alejandro Guerrero Ruiz says:

    I like Crash Course and this Economics course is great. Now, I am saddened by the fact that economists always seem the autistic kid within the Social Sciences. They only read and cite other economists, and keep doing research in areas where good theories and established empirical findings are already in place… not just in psychology (which would be the only thing behavioural economists would cite) but in sociology, political science, anthropology and so on. And hence economists keep asking research questions with a sense of wonder and ingenuity as if no one had ever asked them before. The field of happiness is a painful example of it. I would love a Crash Course in Economics that remains humble in that other social sciences can also help answer this type of social questions.

  23. משה כהן says:

    Thank you for such a valuable series!

  24. Jawad Aria says:

    I will miss the blue of your eyes, Adriene.

  25. Abdullah says:

    IS THIS THE FINAL EPISODE?

  26. ec2ainun says:

    thanks!!!

  27. Imran SG says:

    THANK YOU

  28. Norcal Mike says:

    I really enjoyed the series. Thanks

  29. mohideen says:

    Thank you crash course team,the series is really awesome,the duo were really exiting ,i am indeed grateful to you.

  30. potato srh says:

    Please make a crash course finance

  31. Tylon McSwain says:

    “Those people are annoying!”😂

  32. anthony nohra says:

    Is it true that the happier the peaple the more productive they become

  33. Elijah O'Dell says:

    I am Iron Man

  34. Toan Truong says:

    Thank all of you for making this great series.

  35. Murrrk says:

    Hiii, is it possible to do a video on the elasticity of supply and demand?
    especially when its perfectly elastic/inelastic

  36. Toan Vu says:

    People don’t want a good life, they want a better life than others.

  37. Nathan says:

    I live in a poor neighborhood in a rich county.

  38. billy_92 says:

    Thanks for this series.

  39. Dianna Lois Tugas says:

    Thanks. 😊

  40. 鈴木ひろ says:

    Things like these (CrashCourse) surely enhance both GNP and GNH of any place it can reach.
    Thank you for your time and efforts! 🙂

  41. Fabby Marmol says:

    You can watch Frisky Dingo on Youtube Red?

  42. Fabby Marmol says:

    I wonder why that Kennedy lost. His message was so hopeful and happy and not nihilistic at all.

  43. Ranjit K. Nair says:

    You guys did a fantastic job. Keep up the good work. 🙂

  44. alpesh rathod says:

    Jacob and Adriene Thank You for such a powerful course on Economics

  45. Conner Fields says:

    Great ending.

  46. Ishi 123 says:

    Some people seem more inclined to constant joy. Those people are annoying.

    Finally, someone gets it.

  47. Carlo Montoya Castañeda says:

    Thanks for all your videos! It actually made me happier every time I watched one of them 🙂

  48. Dyuti Purohit says:

    Plz upload more videos ,Ur videos help understand economics more easily

  49. min thit says:

    I'm definitely gonna miss the course! A really great journey.:)

  50. Mariia Tkachova says:

    Thanks for the series! I've learned a lot!

  51. Anshuman Tripathi says:

    9:53 when she waved goodbye, I felt worse than what I would feel breaking up with my future girlfriend, who I'm definitely going to find one day.

  52. Mi Basement says:

    Thanks Crash Course, now I understand the world a little bit better.

  53. Leo Ody says:

    Speechless. Thank you from Brazil !

  54. Yasira Osiris says:

    This unrealistic – how many people can make enough money to feed themselves?! Let alone be happy- as if it depends from people! Transnational corporations are between people's well being, happiness and their ability to just survive – corporations pay no tax while the real people are screwed with ever climbing taxes

  55. Soha Flfla says:

    Why disappeared the transaction of Arabic

  56. Daniel Syed-Chaudhry says:

    Thanks to Adriene and Jacob! This series was both educational and entertaining, and I appreciate how you made learning such a pleasure. I am very grateful for all your hard work and effort!

  57. Arief Rakhman says:

    I'm crashed after watching CC economics series in one day.. 😅 thanks,

  58. gladman mundingi says:

    thanks for the course. when do I get my certificate though 😉

  59. Leo Hao says:

    Thank you guys so much. What a boost to my happyness level. Definatly worth the oppertunity cost. (Although i really should ues this time to improve my spelling (-_-“)

  60. Peter H says:

    Thank you to everyone who helped make this series! I've learnt loads 🙂

  61. From Kat says:

    Reference income hypothesis
    Status matters more than absolute income
    Hedonic treadmill
    Easterlin paradox
    Gross national product

  62. kalyango edward says:

    thank you for this series.

  63. Aryan Sthanapati says:

    where is your host

  64. Edwin Oscov says:

    I'm not happy. Thanks Adrienne 🙂

  65. Addepalli Suryaveda says:

    thank you crash course. loved the series and continue your good work.

  66. Elliot Bovill says:

    Absolutely quality. Had to start watching this as I began to take a uni course in intermediate economics, despite having done nothing to make me competent at basic economics XD Watched crash course history (much more my favourite subject) and didn't enjoy/get nearly as much out of it as I did this. Don't usually comment on things (not even world history!) but had to say this has been great and thank you SO MUCH!

  67. The Anonymous says:

    heartful gratitude to jacob and adreine for jettisioning sch a praiseworthy galoring and productive stuff in a pricise n time saving manner, I will be glad to see YOUR team in future wd new stuffs on other subjects like geography , history n other works

  68. muosab altayeb says:

    Thank you for this series .. wish you all the best

  69. Dimnaka Adigwe says:

    Thank for this series it really was a great help, economics used to bother me, it's a large part of how the world is governed but I didn't understand it at all. Now I have better understanding of it and world. 👋 Thanks

  70. s_cafe says:

    This series took quite a ride from “zany ‘cool’ 2 host duo” to toning that down, then dropping a host and stepping up a more pronounced left wing bias and finally ending early (<40 episodes). I’ve watched the 2 history series as well as the computer science series much prefer those two delivery and hosting styles without the cheese and bias.

  71. Erreda says:

    I've been watching you for an entire month, I got attached, Im sad it ended (this feels like a break up hahaha), Thank you so much I learnt so much from this series

  72. Sushil Khatri says:

    No you are crying!

  73. Sushil Khatri says:

    Now time for next series.

  74. Alex Kashie says:

    Thanks a lot Adriene and Jacob, Has been such a privilege to economically learn and growth from you throughout this course… All the best!

  75. Joakim Fridlund says:

    Finished. I want my diploma.

  76. potato psoas says:

    High Happiness = High GDP

  77. Goku Black says:

    LIFE LIBERTY AND THE PURSUIT OF HAPPINESS. WE FOUGHT FOR THESE IDEALS WE SHOULDN'T SETTLE FOR LESS, THESE ARE WISE WORDS ENTERPRISING MEN QUOTE EM DON'T ACT SURPRISED YOU GUYS CUZ I WROTE EM

  78. Miles Scarbrough says:

    Pursuit of Happiness was only written in because they couldn't write property ownership as a right.

  79. Odie Abung says:

    Please create about ideal economy! Thanks~

  80. Kessence Medlin says:

    i have to watch yall videos for class and fill in answers

  81. Ducky Arora says:

    Kinda not happy

  82. Kirubel Million says:

    I loved this series! Thank you guys so much for the efforts in making a complicated subject, so easy and fun

  83. Tom McMorrow says:

    Well this was not the video to watch having been unemployed for a year…good end to this series, though!

  84. Hannah Wang says:

    Thank you for the series!

  85. Ulitarism says:

    Could you guys make a bonus episode how universal basic income and Andrew Yang's policies would effect the economy in the USA?

  86. Müştak Yinanç says:

    Hello Adrien and Jacob, both of you made a great job. I am a new graduated engineer from Turkey, i had an Economy101 lecture on the university and believe it or not you videos are much more funnier and effective than that lecture. Thank you for all of the videos. All of them will help me to earning and paying 🙂

    Unfortunately i am unemployed right now but i am promising i will send some money to CrashCourse Patreon after i found a job. so you must wish luck to Turkish Lira against Us Dollar, if the exchange differences between them decrease then i can send you more money 🙂

  87. Soe Moe says:

    What an amazing series! Thanks so much for creating that. I'll watch it again in the future. You two are amazing teachers. Can you please create more series on finance, accounting, management, marketing, etc?

  88. Mrjacharles says:

    This was my first Crash Course and you guys did not disappoint! So sad to see the end of this series even if it did end 3 years ago!

  89. Cath A. says:

    My favorite series next to Philosophy. I have a question though, is there a way that we can access the resources/researches that was mentioned in this series. Just really need it for my research. Big thanks!

  90. Ferdy Arianto Wiyogo says:

    Thank you Crash Course Economics!!!

  91. Kamila kozioł says:

    Thank you for the series. Despite the serious topics it was compelling and fun.

  92. maha gundadi says:

    Thank you so much for this series

  93. science love says:

    thank you!  Great course.  It was so easy to go through all 35 videos due to your skill and ability to communicate clearly.

  94. Unity says:

    No watching other people Facebook!

  95. Shourya Chakravarti says:

    Thank you for this series, it really helped me. 10/10 utils.

  96. Gaurav Agarwal says:

    This series made me quit my job and pursue higher education in the field of economics.

  97. __________________ says:

    Watching this series has confirmed that I want to major in economics

  98. Yvvon N says:

    It’s such pleasure to learn economics in crash course, amazing experience for me. Thanks a lot.

  99. zazek84 says:

    Brave words from Kennedy. a member of one of the most powerful and a rich family in America

  100. Vijay Salekar says:

    Thanks a lot crash course economics. You helped me a lot to introduce me and to give me brief knowledge on the topics of economics.
    This was one of my best series of crash course.

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