This piece first appeared on ClearerThinking.org on February 28, 2024, was edited on February 29, 2024, and appeared here with minor edits on March 27, 2024.

Does money buy happiness? Intuitively, the answer is yes: common sense tells us that poverty and hardship make people unhappy. We can use money to buy a lot of things that might make us happier – things like a nicer home, fancier vacations, education for our children, or just the opportunity to have more free time. On the other hand, it’s a cliche that “money can’t buy happiness.” Many admire and aspire to the lifestyles of multi-millionaire celebrities, yet rich and famous people often seem desperately unhappy. 

But what does science say about this question? The answer is relevant for all of us as individuals: how important is it for our happiness to strive to make a high salary? It’s also relevant for states: if policy-makers want citizens to be happy, should they prioritize increasing their wealth, or other things?

So, what’s right? Does money make you happier, or is happiness something money can’t buy? In this article, we tell the tale of scholars’ attempts to find out whether money makes people happier, and why they ended up disagreeing on such an apparently simple question. We think you’ll find the results surprising — particularly the recent saga of how some scientists set out to understand the link between income and happiness.

As usual, we’ll discuss the studies’ methodologies and results in detail throughout this piece. However, if you’re short of time and/or just want to know what are the key takeaways, you jump to the “key takeaways” section, at the end of this article. 

Does money increase life satisfaction?

There’s a clear, cross-cultural relationship between income and ‘life satisfaction’ (or ‘life evaluation’). This is broadly how well someone thinks their life is going, relative to what’s realistic for them. For example, in the Gallup World Poll (a large survey, run in over 160 countries), surveyors measure life satisfaction by asking participants in their native language:

“Please imagine a ladder, with steps numbered from 0 at the bottom to 10 at the top. The top of the ladder represents the best possible life for you and the bottom of the ladder represents the worst possible life for you. On which step of the ladder would you say you personally feel you stand at this time?”

This is known as the ‘Cantril ladder’. Participants with higher incomes tend to place themselves higher on the ladder than those with lower incomes. This is true both across countries and within countries. In poorer countries, people rate their life satisfaction as lower than in richer countries:

Source: Our World in Data

Citizens of poorer countries, where the GDP per capita is less than $5000, have low average life satisfaction (3-5 out of 10), whereas in richer countries like Switzerland, Singapore or the US, the average life satisfaction rating is higher (6 or 7 out of 10). Results are typically similar for other measures of life satisfaction, such as answers to the question “In general, how satisfied are you with your life?”

To complicate things somewhat, the relationship between income and life satisfaction is logarithmic. This means that every time you double someone’s income, their life satisfaction doesn’t double, but increases by a fixed amount (in this case, roughly 1 point on the life satisfaction scale that ranges from 1 to 10). 

Note that the chart above is a “log plot” – you’ll see that on the x-axis, income roughly doubles at every division, going from $1000 to $2000 to $5000 to $10,000. So a straight line on this plot means that every doubling of income is associated with an increase in happiness of a fixed number of points. On a regular (not logarithmic) scale, the graph instead looks like this:

Source: Our World in Data

This means that though an increased income is associated with greater life satisfaction, this is proportionate to how much a person is already making. Let’s say you start making an extra $1000 a year in income: this will impact your happiness a lot if you were originally making $2000 a year, but it won’t make a big difference if you were already making $100,000 a year. To put it another way, for those who are poor, life satisfaction will typically increase quite a bit as they make an additional $10,000, but for those who are rich, this amount of money has far less impact. .

The charts above show the relationship between income and life satisfaction across countries, but higher-income countries and lower-income countries differ in many ways other than wealth. For instance, lower income countries tend to have worse healthcare systems, so it’s hard to tell if they have lower average life satisfaction due to lower incomes or due to worse healthcare systems (or due to a myriad of other differences between wealthy countries and poorer countries). So it’s hard to be confident from this data alone that higher incomes cause greater life satisfaction, rather than some other factors increasing both income and life satisfaction.

That’s why it’s useful to bring in evidence from within countries, to see if the effect holds within a single country as well.

Source: Our World in Data

Each country in the chart above is represented by a line, connecting the average reported life satisfaction of people in five income quintiles within the country. The chart is messy, but in general, the story is the same: most of the lines trend upwards, with richer citizens reporting a higher life satisfaction than poorer citizens.

Source: “Subjective Well-Being and Income: Is There Any Evidence of Satiation?”, Betsey Stevenson and Justin Wolfers, NBER Working Paper 18992, April 2013. Reformatted in the Economist

The chart above shows a more limited sample of countries. This data is older, from 2013, but it shows a similar trend: if we look at the US line, we can see that average life satisfaction ranges from about 6.6 (out of 10) at the lowest incomes, to around 7.5 at the highest incomes. Compare this to the India line: average life satisfaction is lower in India overall, but just as in the US, poorer Indians on average report lower life satisfaction (about 4.2) than richer Indians (about 5.8).

Other ways of measuring life satisfaction also show within-country differences in life satisfaction depending on income. For example, in the chart below, participants in the US were asked whether they were ‘very satisfied’, ‘somewhat satisfied’, ‘somewhat dissatisfied’ or ‘very dissatisfied’ (rather than being asked to rate their satisfaction on a scale). The proportion of ‘very satisfied’ people is higher in higher income bands, and the proportion of dissatisfied people is lower. Although the number of participants is not high in the lowest and highest bands, on the right hand section of the table (Panel B) we see a fairly steady increase in the percent of people who are very satisfied as income rises. 

Source: “Subjective Well-Being and Income: Is There Any Evidence of Satiation?”, Betsey Stevenson and Justin Wolfers, NBER Working Paper 18992, April 2013. 

Note that even this within-country data doesn’t prove that income causes greater life satisfaction: all these polls show is a strong association between income and life satisfaction. Perhaps even within countries, other factors (such as the quality of infrastructure in richer vs poorer areas of a single country) cause people to feel more satisfied with their lives and to earn more money. However, given that across-country and within-country evidence agree, and it’s reasonable to assume a priori that money can contribute to life satisfaction by enabling people to buy things they want and need as well as to have more control over their time, it stands to reason that there is probably a causal link. But we should keep in mind that the data don’t provide absolute proof that an increase in income causes an increase in life satisfaction. 

An additional complicating factor is that this data measures averages. Even if on average it’s the case that greater income causes greater life satisfaction, for any given person, income and life satisfaction could be more or less closely related than average. This means that two people of the exact same income may be impacted very differently by the same increase in income: perhaps the extra money allows one person to leave a career they hate and pursue one they love, whereas the other just puts the additional income into their savings and doesn’t end up using it for anything important. So we have to be careful not to make confident generalizations about individuals, based on the average. 

So, if more money is associated with greater life satisfaction, is it right to say that the wealthier tend to be happier? Not exactly: it depends what you mean by happiness. 

Does more money make you happier day-to-day?

The Gallup polls, and many other studies related to happiness, measure life satisfaction: participants are asked to reflect on their lives holistically and think about how things are going. However, life satisfaction is only one way to measure a person’s happiness. We might also consider how emotionally happy people feel day to day: whether they tend to feel joyous, content and calm, or stressed, depressed and anxious. This is sometimes known as ‘hedonic wellbeing’ or ‘experienced happiness’.

Psychologist Daniel Kahneman and economist Angus Deaton wondered if there was a relationship between this moment-to-moment hedonic wellbeing and money, just as there was with life satisfaction. In a 2010 experiment, they analyzed more Gallup data, this time from 1000 U.S. residents. This survey, rather than asking participants to rank themselves on Cantril’s ladder, instead asked them whether they had experienced specific emotions for a lot of the previous day (for example ‘enjoyment’ ‘sadness’ or ‘worry’).

The researchers then grouped these emotions together into ‘positive affect’ – happiness, laughter and enjoyment – and ‘blue affect’ – sadness and worry. They also measured stress. People with higher incomes were more likely to report experiencing positive emotions the previous day, and less likely to report sadness, worry or stress.

Source: “High income improves evaluation of life but not emotional well-being”, Daniel Kahneman and Angus Deaton, PNAS 107, September 2010

As with life satisfaction, the relationship between hedonic wellbeing and income was logarithmic in Kahneman and Deaton’s data for lower incomes, meaning that doubling a person’s income was associated with a fixed increase in their hedonic wellbeing. However, unlike with life satisfaction, this experiment seemed to show that increases in emotional wellbeing taper off at around $75,000 per year (in the U.S.); after that, extra money didn’t seem to increase wellbeing anymore.

On the graph above, ‘ladder’ refers to Cantril’s ladder, the life satisfaction question asked in other studies. You can see that this line continues to go up while the hedonic wellbeing lines flatten out. Again, note that this x-axis is on a log scale, with income doubling every division.

This provides an interesting contrast to the life satisfaction studies: it seems that if you already make $75,000 a year in the U.S., you might become more satisfied with your life if you made more money, but you’d be unlikely to have more positive emotional experiences day-to-day. This makes some intuitive sense: money helps us meet our basic needs and can solve a lot of problems, but there are other problems that it’s much harder to solve with money and that even billionaires have to face — for example relationship conflict, bereavement, or mental and physical illness. Maybe once you’re making $75,000 a year, you can solve all the problems that are soluble with money, leaving only those trickier problems.

But it turns out that story is wrong! 

Questioning the taper 

It makes intuitive sense that day-to-day, hedonic wellbeing would taper off at higher incomes. However, Kahneman’s and Deaton’s result did not hold up to scrutiny. A decade later in 2021, economist Matthew Killingsworth tried to replicate their conclusion on new data. He found something different: in his analysis, hedonic wellbeing did continue to increase with income, even above $75,000 a year. It didn’t taper off or plateau. The slope of the graph was also the same below $75,000 a year and above $75,000, meaning that on average, a doubling of income from $15,000 to $30,000 a year and a doubling from $75,000 to $150,000 a year are associated with the same increase in emotional wellbeing.

What was going on here? Kahneman (the author of the first paper), Killingsworth (the author of the second paper) and psychologist Barbara Mellers, keen to get to the bottom of this, acted like ideal scientists: they embarked on an adversarial collaboration, all working together to try to work out why Kahneman’s and Killingsworth’s experiments had got such different results.

They discovered a few important differences between the 2010 and 2021 studies. First, the 2021 study used more accurate data collection methods. In Kahneman’s 2010 study, surveyors had asked participants to recall whether they’d felt certain emotions the previous day. But in Killingsworth’s experiment, participants instead received smartphone notifications several times per day that asked them to rate how they were feeling at that moment, on a scale of ‘very bad’ to ‘very good’. Since they asked participants multiple times and asked them to describe their feelings in the moment, rather than relying on memory, they got a more accurate measurement of each participant’s general hedonic well-being. There were also many more data points in the 2021 study: over a million data points from 33,000 people (vs 1000 people in the 2010 study, which when separated into different income buckets makes it a bit thin). Killingsworth’s experiment also surveyed more high-income people and had more different income bands, rather than lumping together all participants who made over $120,000 a year.

However, despite this, Kahneman and Killingsworth (when working together) did find some evidence for a plateau in hedonic wellbeing above $75,000 a year in income. So why didn’t it appear in Killingsworth’s study? Why did Killingsworth find that emotional wellbeing didn’t seem to plateau even at high incomes, up to $500,000 a year and beyond?

When the authors re-examined the data from the 2021 study, they discovered that the plateau did exist — for the 20% of the population with the lowest emotional wellbeing. That is, if you experience lots of negative emotion to begin with, additional income is not associated with increased hedonic wellbeing once you make over $75,000 a year, but if you have average or high hedonic wellbeing, additional income is associated with an increase in day-to-day positive emotions, even if you are already wealthy.

As they investigated, they realized that they had missed this because their methods of measuring wellbeing worked better as measures of unhappiness, or negative wellbeing: they couldn’t easily differentiate between people who were pretty happy, moderately happy, and very happy (in terms of their day-to-day emotions). This made it more difficult to spot that the plateau only existed for the 20% of the population with the lowest day-to-day wellbeing. 

So does that mean day-to-day wellbeing does increase the richer you get?

Well, yes…and no. Media discussions of this story focussed simply on whether happiness increases with income, since that was the main focus of the research. 

But another relevant question — probably more relevant for most people — is how much happier does more money make you? Let’s look at the data (on a regular, non-log scale):

Source: our reanalysis of data from Kahneman, Killingsworth and Mellers’ 2022 adversarial collaboration.

Does it look like average wellbeing increases in the higher income categories? It basically looks like it doesn’t! If you squint, you can just about notice that the bar in the $625,000-a-year band is a tiny bit higher than the bar in the $15,000-a-year band. 

You can only see that logarithmic upwards line if you zoom way in:

Source: our reanalysis of data from Kahneman, Killingsworth and Mellers’ 2022 adversarial collaboration.

Look at the y-axis. In this zoomed-in version, you can see that the lowest point of the curve — the average wellbeing of people making $15,000 a year — is at about 60.9, on a 100-point scale. The highest point — people making $400,000 a year — is 65.8. That is, the difference between the poorest and the wealthiest is only about 5 points, on a 100-point scale!

The takeaway from these hedonic wellbeing studies is often ‘more money makes you happier’. While this isn’t wrong, a more relevant lesson from this research might be that people with vastly different levels of wealth have surprisingly similar levels of emotional wellbeing. 

To put this another way, even if we assume this entire effect is causal (that is, that income is causing all of this increase in emotional well-being), then if you made 25 times more money, taking you from the bottom 10% to well within the top 10% of US incomes, you should only expect to get half a point happier on a 10-point scale (from 6 to 6.5). 

We suspect that many will find the small size of this effect surprising. 

To be fair, the authors of the adversarial collaboration did mention this, but it wasn’t the focus of the paper, and we suspect that many people who looked at the paper briefly would have missed it:

‘[Kahneman and Deaton] reported that the effect of an approximately fourfold difference in income is about equal to the effect of being a caregiver, twice as large as the effect of being married, and less than a third as large as the effect of a headache.’

What is the more interesting finding — that emotional wellbeing goes up logarithmically with income, or that emotional well-being goes up very little with income? We think that the second finding is likely to be the more important one for most people.

Now, of course this result doesn’t mean that you yourself wouldn’t have much higher emotional wellbeing if you were to increase your income substantially — but the link seems weak enough that we should be wary about assuming we’ll feel much happier moment to moment if we make more money. 

Life satisfaction varies much more than hedonic wellbeing 

If hedonic wellbeing varies so little, what about life satisfaction, the variable we discussed at the beginning of this article? The data show that people with greater incomes have higher life satisfaction, on average, but is this difference equally tiny? 

No: if we look again at the within-country data on life satisfaction, we can see that the US line spans more than 1 point on the 10-point scale. What’s more, the difference is even greater if we compare countries: the poorest in India are about 3.5 points less satisfied, on average, than the richest in the US.

Source: “Subjective Well-Being and Income: Is There Any Evidence of Satiation?”, Betsey Stevenson and Justin Wolfers, NBER Working Paper 18992, April 2013. Reformatted in the Economist

So, life satisfaction, in general, seems to vary much more with income than hedonic wellbeing. 

–

To make a more direct comparison, looking at US data, every doubling in income is associated with an increase of 0.6 on 10-point scale in life satisfaction, and an increase of only 0.1 on a 10-point scale in hedonic wellbeing (or equivalently, 6 points on a 100-point scale for life satisfaction, and just 1 point for hedonic wellbeing).

Another way to understand this difference is to measure the variance from the mean of each measurement, which Killingsworth did in his 2020 study. 

Source: ‘Experienced well-being rises with income, even above $75,000 per year’, Matthew Killingsworth

Note that the x-axis here is logarithmic (with incomes doubling at each division), and the y-axis uses not absolute scores but z-scores, which measure how many standard deviations each participant’s score is from the mean. The blue “life satisfaction” line slopes up more sharply than the red hedonic wellbeing line, meaning that as income goes up, life satisfaction rises faster than experienced well-being (it increases by a greater number of standard deviations).   

This is counter-intuitive: if people’s day-to-day feelings are middling (as they seem to be, on average), shouldn’t this lead to a middling level of life satisfaction? Are people bad at remembering their day-to-day emotions, so that when they answer life satisfaction questions, they overestimate or underestimate how good their life is?Perhaps. But more plausibly, life satisfaction and hedonic wellbeing are different elements of happiness, rather than two different ways to measure a single, unitary trait. Most people value positive emotions, but they also value other things, including career, family, status, material goods, achieving their goals, and money itself. And sometimes, striving to achieve something you aspire to — something that would increase your life satisfaction — will cause more negative emotions in the short run — for example, when you overwork yourself and take on lots of stress to hit a work milestone. 

Key takeaways – Are people, on average, happier when they make more money? 

We’ve learned that:

• Making more money is associated with moderately greater life satisfaction 
• Making more money is associated with a very small increase in hedonic wellbeing 
• …unless we’re talking about is the unhappiest 20% of people who already make $75,000 a year or more in the U.S., in which case additional income was not associated with greater hedonic wellbeing
• In both cases (life satisfaction and hedonic wellbeing), extra income has a greater effect when you start off with less money – or, more precisely, each doubling of income is associated with the same effect.  

So, the link between income and happiness  depends on what you mean by happiness, and how much money we’re talking about. Ultimately, you can make some predictions about the way you might feel if you had more or less money, but like so many scientific questions, the answer is messy, and you’re unlikely to know for certain how things will turn out. Perhaps this is why our cultural clichés give us such mixed signals about this question! 

Building Happiness Habits

You’ve learned how income is related to happiness, but if you’re interested in exploring habits that could help you improve your day-to-day hedonic wellbeing, we encourage you to test Clearer Thinking’s “Building Happiness Habits” interactive tool.

It works by pairing certain happiness techniques – namely mindfulness and gratitude – with everyday activity triggers such as walking or checking social media, thereby cultivating happiness-improving mental habits. 

We tested each technique on hundreds of users and found that they made a positive difference for those who practiced them, in just 3 days.

Each technique is:

• Easy to learn – there’s no need for long, difficult training in order to be able to perform them.
• Simple to apply — there’s just one main thing to do, not a bunch of steps.
• Time-efficient — it takes just a few minutes a day to practice them.

Ready to make your days a little brighter?

According to YouGov polling, 41% of people in the United States think that it is the greatest country in the world. Others see the U.S. as a place full of arrogance, violence, and inequality. So, what’s the truth? 

The truth is that there isn’t a single notion of what makes something the “best.” To explore how great (or not) America is, we’ll start by looking at the question from multiple angles. We’ll see how the U.S. stacks up according to a number of important factors before we decide how great it really is:

 1. Technology 

The U.S. is among the best countries in the world for technology and business innovation. It currently ranks 3rd in the United Nations’ Global Innovation Index. It has the most startups worth over $1 billion (the 3rd most startups per capita) and is the originator of many technologies used globally. It is also considered by many to be the best place to create a tech startup. 

2. Violence

The U.S. is a violent place, given its level of wealth, with the 2nd highest number of gun-related deaths in the world and the 2nd highest rate of firearm-related suicides per capita. Among high-income countries with at least 10 million people, it has the highest number of homicides per capita.

️3. Prisons

The U.S. is a country of many prisoners, with the most people in prison of any country in the world and the 6th highest incarceration rate in the world (and the single highest rate among wealthy countries).

Violent crime charges are the number 1 reason people are locked up in the U.S. (though in some cases, the definitions for “violent” can include actions that don’t cause immediate physical harm, such as purse snatching and drug manufacturing). 

4. Wealth

It’s an extremely wealthy place with the highest nominal GDP in the world, as well as the highest GDP per capita (both nominal and PPP) of any country with over 10 million people. California’s economy alone is large enough that, if California were a country, it would rank 6th in the world by some metrics. And by some metrics, Texas’s economy is larger than Russia’s and would rank 8th.

About 9% of U.S. adults are millionaires, and 39% of ALL millionaires are in or from the U.S. 

5. Inequality

The U.S. is a fairly unequal place in terms of wealth and income, with inequality higher than 63% of countries (the Gini coefficient is 39 vs. a world average of 38). It’s the 5th most unequal among the 37 OECD countries, and the average income of the top 20% of earners is 9.4 times the bottom 20% (though note that inequality figures can be dependent on how taxes and social benefits are handled in the calculations).

The wealth gap in the U.S. is especially pronounced across racial lines, with the median Black household having $24,000 in savings vs. the median white household with $189,000 in savings (almost 8x more). 

6. Science

The U.S. is a very scientifically innovative place, with the most Nobel prizes of any country (the 15th highest per capita). It also has the 2nd highest annual patent applications (which is the 4th highest per capita), many of the world’s top universities, and the most clinical trials worldwide. 

7. Health

The U.S. is an unhealthy place relative to its level of wealth. It has the 10th highest prevalence of obesity (the highest of any wealthy country) and the highest rate of death from illicit drugs of any country where such data is known. Life expectancy in the U.S. is 79 years, which places it 47th highest out of 193 countries (so, it’s roughly in the top 25th percentile). 

8. Entertainment

The U.S. is arguably the most influential country in the world in terms of entertainment production, with the most movies made each year of any country, as well as the largest box office sales and the largest music market size. 

9. Healthcare

Many Americans feel let down by U.S. healthcare despite the U.S. spending the most per capita on healthcare of anywhere in the world. Roughly 48% of Americans rate the healthcare system as excellent or good, 31% as fair, and 21% as poor, which are worse ratings than surveys found in the 2010s.

The U.S. has exceptional top hospitals but bad price transparency (so it’s hard to know what you will end up paying) and inflated prices relative to a lot of the rest of the world. 

10. Desirability

The U.S. is rated the single most desirable place to move to for people worldwide looking to emigrate, though its ratings have declined somewhat. In terms of Americans wanting to leave, during the Bush and Obama eras, about 10% of Americans said they’d like to move to another country, and this jumped to 16% in the Trump era. 

11. Military

The U.S. spends a shocking amount on its military, with about 39% of ALL worldwide defense spending being by the U.S. At times its military power has been a stabilizing force worldwide (e.g., against the Nazis). On the other hand, the U.S. has also initiated a number of disastrous wars. 

12. Happiness

The U.S. is a pretty happy place. When Americans are asked to rate their “general satisfaction with life on a scale from 0 to 10”, the average score is a 7 (compared to an OECD average score of 6.7), which places the U.S. 14th highest among 41 OECD countries.

When asked to imagine a ladder, with steps numbered from 0 to 10 at the top, with the top representing the best possible life for you and the bottom the worst possible one,

Americans place themselves at 6.9 on average, which is 16th highest out of 167 countries (i.e., 10th percentile). According to the World Happiness Index, which attempts to evaluate countries’ happiness by combining factors like GPD per capita, social support, healthy life expectancy, freedom to make life choices, generosity, and perceptions of corruption, the U.S. is 16th out of 142 countries (i.e., 11th percentile). ️

13. Ideals

The U.S. has high ideals, some of which are reflected in the Declaration of Independence: “We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.

It sometimes lives up to these (e.g., through its strong personal freedoms), and sometimes has dramatically failed to live up to them (e.g., in its use of slavery and treatment of Indigenous Americans). 

Reaching a verdict: How great is the U.S., really?

So, is the U.S. one of the greatest countries? One approach to this question is to simply say that it can’t be answered because different countries differ in too many ways to make such comparisons possible. Another approach is to say that just one of the factors above trumps all the others.

Our preferred view, however, is to think of it in terms of your values: depending on what your values are, you will weigh the factors above differently. By some sets of values, the U.S. may arguably be the best country, whereas, by others, it doesn’t even come close.

At our organization, Clearer Thinking, we conducted research to figure out what it is that people value intrinsically (that is, what people value for its own sake – not as a means to other things). We’ve organized the results of that research into 22 different categories of common values:

Once you have a list of your own intrinsic values (which you can find out with our Intrinsic Values Test), then you can start to answer the question of how great the U.S. is.

For instance, if you have strong values related to protecting those who are less fortunate, you may give the U.S. lower marks due to its relatively high levels of inequality, whereas if you place more value on achievement, the U.S. may get higher marks due to being highly innovative in technology, business, and science.

It can be easy to base your judgments, including those about how good the U.S. is, on group identity rather than based on careful consideration of the facts and what you value. As political scientists Patrick Miller and Pamela Johnston Conover have said:

“The behavior of partisans resembles that of sports team members acting to preserve the status of their teams rather than thoughtful citizens participating in the political process for the broader good.” 

Employing a framework like the one outlined above, where you:

1. first attempt to impartially consider the facts,
2. then consider your values, 
3. and use the facts to inform how good or bad the thing is according to your values, can help you ensure that you’re deriving your conclusions thoughtfully and carefully, rather than simply deriving them from a desire (conscious or not) to conform to the expectations of group identities.

Ultimately, whether you conclude that the U.S. is great or not, we suggest basing your judgment on an evaluation of the facts plus careful consideration of your own values, not based on other people’s expectations.

This piece was first published on the Clearer Thinking blog on January 3, 2024, and first appeared on my website on January 10, 2024.

If someone “wastes” $100, someone else now has $100 extra to spend. Even burning bills deflates the currency, making other bills more valuable.

But people’s time genuinely can be wasted. The tragedy of someone spending hundreds of millions of dollars building a yacht is not the dollars spent but the enormous quantity of people’s time and all of those resources that could have gone towards much more societally valuable pursuits.

If you don’t believe this, just consider what happens after the yacht has been built – those dollars spent are now in the hands of the shipbuilders, ship captain, crew, boat insurance provider, etc., who can spend it themselves. So the money is not lost – not even a single dollar of it disappears; it just goes to other people to use! But all of those people’s time and most of the materials used in building the yacht are lost forever.

What do I mean by “lost” here? Well, time and resources can be spent creating lots of what conscious beings intrinsically value (e.g., happiness, positive relationships, freedom, justice, etc.), or they can be spent producing little to no value. Time and resources are “lost” when they produce little to no value in the process of using them up.

Someone buying an expensive yacht gets some genuine value out of it: some pleasure for them and their friends, social status, etc. But that amount of value is really tiny compared to the hundreds of millions of dollars of labor and resources permanently used up in the process (that could have been used to produce far more value). That vast sum of labor and resources could have produced large amounts of value for many people, but instead produced a small amount of value for one person.

This line of thinking has a surprising consequence: frivolous spending on things that are expensive due to labor and resource usage is much worse societally than frivolous spending on things that are expensive only due to taste preferences. It is much worse for society if someone builds a yacht for hundreds of millions of dollars than if that person spends the same amount on a lost Leonardo da Vinci painting that someone recently found in their attic. The latter scenario mostly just involves money moving around (which causes no harm), whereas the former scenario not only moves money around but ALSO uses up a ton of labor and resources.

There is a libertarian counterargument that may seem to refute what I’m saying. It goes like this: if people enter into transactions willingly and with full knowledge of what they’re giving and getting, then they are better off because of those transactions, so all transactions are good, even ones involving buying frivolous yachts for hundreds of millions of dollars.

To take this to an extreme, let’s suppose a billionaire goes around paying people to undergo torture (let’s assume that, like most people, these people hate torture). The billionaire offers enough money that these people are willing to accept the offer even though it is absolutely awful for them. Now by standard libertarian logic, the world is still better off since the billionaire chose to pay them, and the participants being tortured were willing to do it.

On the other hand, compare how much worse off the world is in that case compared to if the billionaire instead paid people to make beautiful things, or to run non-profits that seek to make the world better, or used that money to fund new startups, or just gave the money directly to those same people instead of requiring that they be tortured for it. In fact, the world would be better off if the billionaire did “nothing” with the money – leaving it in the bank so others can borrow it rather than using it to pay for torture.

The issue is not that the world is strictly worse off if a billionaire pays people to undergo torture (you could imagine a world where both the billionaire and the torture sufferers are slightly better off post-transaction – this only requires that the torture sufferers accept the deal with complete knowledge of the consequences and that they really do value the payments enough to make the torture worthwhile according to their values).

The issue is that there is a tremendous loss of value if a billionaire pays people to undergo torture relative to what could have been if the billionaire used the money for almost anything else. Paying people to be tortured does not destroy money (the money merely exchanges hands), but it does unnecessarily destroy value (people’s time is spent being tortured, which is horribly dis-valuable, instead of doing things with that time that are valuable). In this hypothetical example, the billionaire’s huge sum of money could have been spent on numerous things that would have produced value, and yet, they found one of the very least valuable ways to spend via voluntary exchange (by purchasing people’s suffering).

Buying a yacht is far less extreme than paying people to be tortured, but the torture example helps illustrate the point: using money never destroys that money; money always just moves hands, and some uses of money produce a lot of value in the world, and some don’t (and some even destroy value). Another way to put it is: buying a multi-hundred-million-dollar yacht creates VERY little value relative to the resources and amount of labor it consumes. A ten-million-dollar yacht, as a point of comparison, might make the billionaire slightly less happy, but it would produce a lot more value per unit of labor used. And a one-million-dollar boat is even better still on this ratio.

Since people’s time and physical resources are finite, when they are used on one thing, they are necessarily not used on another. To take it to extremes in order to illustrate the point, a society that spends most of its resources and work hours on making luxury goods that produce just a modest benefit for only a small number of people (as with yachts) is far worse at supporting human values than one where labor, time, and resources produce widespread benefit, with a higher “unit of what humans value” produced per hour of labor. A society that spends its time and resources building public parks and quality roads is a better one for flourishing than one which focuses instead on building pyramids to bury kings (even if the laborers are paid the same amount in each case).

I’m not saying it’s unethical to spend money on things you enjoy (I don’t think it is unethical so long as you don’t harm others). But it’s interesting to consider that, for very large expenditures for enjoyment (like multi-hundred-million-dollar yacht purchases), the amount of labor and resources they consume relative to the value they create may be bad societally relative to other equally frivolous-seeming purchases.

Note: as some commenters pointed out, there is substantial value in buying a yacht in terms of redistribution of wealth – it’s usually better for the world that the wealth moves from the billionaire to the yacht crew, etc. That’s absolutely true, but it would also be true for most usages of the money spent by billionaires, and the points I’m getting at here (about usage of labor and resources) are separate and independent from redistribution effects.

This piece was first written on February 24, 2023, and first appeared on this site on April 30, 2023.

Increasingly, people in the U.S. are concluding that society is really F’d up. But the reasons are subtle, hidden, and complex, so each group picks their favorite simple enemy to blame. Problems go unfixed.

Points in favor of the claim that people are increasingly coming to this realization:

1. This helps explain Trump’s election in 2016. Many rural Republicans and disaffected independents believed society was going down the tubes. They didn’t think that electing the same people (who would use the same old solutions) would fix it.

2. COVID-19 exposed malfunctions of various authorities (the FDA, Surgeon General, CDC, etc.) that are pretty hard to ignore. Liberals blame Trump for these failures, which may be fair, but another possibility is that these American institutions have been rotting for a lot longer. I don’t know enough to say with confidence.

3. Costs for health care, education, housing, infrastructure projects, and energy ($ per kWh) have (as far as I can tell?) been rising for a long time, with debates raging over the (surely complex) causes. People feel the sting of these rising costs. Meanwhile, many argue that wages have stagnated (which has been vigorously debated). What’s more, inequality seems to have risen, though this, too, is debated.

4. An appalling number of people in the U.S. end up in jails and prisons. Shockingly, we have one of the highest incarceration rates in the world. This is obvious to the communities that are most impacted. Though still awful, the numbers have fortunately been improving somewhat in recent years [H/T Alyssa Vance].

5. Student debt growth is out of control, and it’s hard for most students to ignore this.

6. People don’t have adequate savings, the saving rate seems to be relatively low, and a disturbing number say they don’t have enough cash to deal with emergencies. “About four out of 10 Americans said they had enough in savings to cover a surprise $500 expense. Another 21 percent said they would rely on a credit card, while 20 percent said they’d cut back on other expenses. Another 11 percent said they’d turn to family or friends for the money” (source). That being said, the wording of the survey that generated those results was rather confusing, so the results should be interpreted with caution. Note that “a 2016 study [found] that 76% of households had $400 in liquid assets, after…monthly expenses” (source).

7. There is a huge racial wealth gap (even more so than an income gap, I believe), contributing significantly to poorer quality of life for Black Americans.

8. Eric Weinstein’s “the Portal” podcast, which seeks to give explanations about what the hell has gone wrong in America, rose extremely rapidly to popularity. Its theories are quite interesting, in my opinion. It is nuanced (and hard to summarize), but it blames a significant portion of the problem on broken institutions that were predicated on rapid economic/productivity growth that we didn’t end up having, the collective behaviors of the Baby Boomer generation, misleading justifications given to us about immigration, a broken scientific establishment, and a propped up system of harmful deceptions.

So what’s really to blame for the U.S.’s problems?

Trump blames immigration, China, and the left.

The left blames Trump, Wall Street, the right, and (sometimes) capitalism/wealthy people/big tech.

Yang points to automation and globalization.

The BLM movement points to racism and police violence.

The right blames the left, declining moral values, and political correctness.

Libertarians (and the right, too) blame regulation and bloated government.

What seems to me to be the case: many of the explanations by different groups have some truth in them. But they are each only pointing at a part of a much greater problem without really getting to the core of it.

I think that many of the biggest issues in society are simply not being addressed, and their root causes go largely undiscussed. We are spoon-fed simple, misleading explanations for very complex things.

To solve complex problems, we have to know what’s true. To know what’s true, we need to resist political bias, wishful thinking, scapegoating, and overly simplistic (yet appealing) explanations.

To fix society, we must unearth the (hard to spot) root causes and cooperate in order to implement reasonable solutions.

What’s at stake here is way bigger than left, right, democrat, republican, or libertarian. What’s at stake here is the flourishing or decay of our society.

Is society actually getting worse, though? I think the perception is that it is. Is it actually worse than 50 years ago? I really doubt that. Is it worse than 15 years ago? It’s hard to say, and depends on what you care about, but it seems to be worse on at least some metrics, like: the cost of healthcare, the cost of education, student debt, inequality, political polarization, and so on. It’s also improved on some metrics, like GDP per capita. Any way you slice it, society has serious problems. Whether they’ve been getting worse on net is harder to say.

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This piece was first written on September 1, 2020, and first appeared on this site on March 19, 2023.

Here’s a list of some of those theories (as I interpret them), explained in extremely concise terms as best as I could manage:

The List of Thinkers and Their Core Ideas:

1. Peter Singer

We would ruin expensive shoes to save a drowning child we walked by, but not forgo expensive shoes to save one far away. We say it’s wrong to torture animals, yet our factory farms constantly torture them to make the meat/eggs we choose to buy. We should do more good.

2. Nick Bostrom

Technology is often good, but not always, and sometimes it is incredibly dangerous (e.g., nuclear weapons, engineering of viruses). If we invent enough technologies, eventually we may invent one that totally devastates civilization, even if actors are well-intentioned.

3. Eliezer Yudkowsky

Each year, AI gets more powerful. It’s on course to eventually be smarter than the smartest human in almost all ways. But these AIs are alien minds that won’t embody what we care about sufficiently well. When that happens, it will likely go extremely badly for humanity. Nobody knows how to make such a system safe.

4. Robin Hanson

Many of the explanations for why we do things don’t make sense (if we did X for claimed reason Y, we’d also do Z, which we don’t do). The most parsimonious explanation is that much of our behavior is just social signaling, which we engage in without even realizing it.

5. Elon Musk

If we let climate change or A.I. get out of control before we get off this planet, we’re F’d. Let’s get off this planet before it’s too late.

6. Jonathan Haidt

We often think we use our reason to arrive at moral conclusions, but mainly we use our reason to try to rationalize or justify what our moral intuition tells us. Political parties/groups have differing moral intuitions, and there are good people on all sides.

7. Noam Chomsky

We view the U.S. as a democracy, yet large corporations and a small group of elites have far more sway over what happens than anyone else. We view the U.S. as a world benefactor, yet its actions abroad are self-serving.

8. Andrew Yang

Automation is eventually going to take away a massive number of jobs (with e.g., self-driving cars and trucks, automated checkout, and AI assistants). We need to figure out how to make society work for all as jobs disappear and wealth becomes even more unequally distributed.

Of course, I had to vastly oversimplify your views to fit them in this format – hopefully I did so about as accurately as the format allows.

This piece was first written on August 26, 2020, and first appeared on my website on May 18, 2026.