Does Money Buy Happiness?

A tutorial to explore the question

Photo by John McArthur on Unsplash
  1. Clearly define the treatment. In this case, the treatment is some amount of money. Let’s pretend, you want to know the causal effect of getting an extra $1000 on your happiness.
  2. Define the time period. Let’s further pretend, you want to know the causal effect of getting an extra $1000 on your happiness for 30 days.
  3. Imagine yourself in two different worlds. In these two worlds, everything else is exactly the same, i.e., you have the same family, the same friends, the same tinder matches, the same Instagram followers, the same furniture at home, and so forth; except in one world, you have an extra $1000 and in the other, you have an extra $0. In other words, if your baseline income is $X, in one world you have $(X+1000) whereas, in the other world, you have just $X.
  4. Find the difference in happiness between the two worlds. This is perhaps the most difficult step! Just be honest to yourself and ask: what would be the difference in my happiness in these two worlds? You do not necessarily need a scale to measure your happiness; a qualitative difference in happiness in the two worlds will suffice. For example, here is what I find when I ask myself the same question: My happiness for 30 days in a world in which I have $(X+1000) is greater than my happiness for 30 days in a world in which I have $X (keeping everything else the same)💰😊
  5. The effect is equal to the difference in happiness between the two worlds. For me, the effect of getting an extra $1000 on my happiness for 30 days is positive. Colloquially, I claim money buys happiness!

1) how you frame the question and

2) who is in your target population

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Vivekananda Das

Sharing synthesized ideas on Causal Inference, Data Analysis in R, Stat Literacy, and Wellbeing | Ph.D. candidate @UW-Madison | More: https://vivekanandadas.com