Abstract

This paper reviews evidence that individual income has little direct relationship to subjective wellbeing (SWB) above the level at which basic needs can be met. However economic development does lead indirectly to higher levels of national average SWB by creating more individualistic cultures which encourage their members to pursue personal happiness over honor. Whether or not this is seen as a socially positive development depends in a circular fashion on the cultural values of the person making the judgement.

It is fundamental to our understanding of marketing as a socially productive activity that the provision of consumer goods and services enhances human well-being. Certainly, the provision of life's basic necessities such as food, shelter and medical care achieves this goal (Ahuvia & Freedman 1998, Veenhoven 1991). But consumer cultures are almost defined by extensive consumption in ways that go beyond meeting life's basic needs. At these higher levels of consumption, what is the relationship between income and subjective wellbeing (SWB)?

For people living in developed economies, correlations between income and SWB are surprisingly low, generally explaining less than 2% of the variance in SWB between individuals (Ahuvia & Friedman 1998, Andrews & Withey 1976; Diener, Horwitz, & Emmons 1985; Diener, Sandvik, Seidlitz, & Diener 1993; Campbell, Converse, & Rodgers 1976; Clark & Oswald 1994, Larson 1978). By using more sophisticated financial measures such as permanent income, annuitized net worth, or household economic demand this R² can be boosted to about 5% (Ackerman & Paolucci 1983; Douthitt, MacDonald, & Mullis 1992; MacDonand & Douthitt 1992; Mullis 1992). But even taking this into account, Mullis (1992) still concludes that the “most striking feature of the findings . . . is the low level of variance predicted by measures of (objective) economic well-being” (p 132). These conclusions are further supported by research sometimes showing measurable, yet very small correlations of around 0.10 or less between ownership of various goods and SWB (Leelakulthanit, Day & Walters 1991; Oropesa 1995). Further supporting the limited ability of consumption to create SWB beyond meeting our basic needs, these correlations are primarily due to differences between the very poor and the non-poor, so increases in income among the non-poor show an even smaller, although still measurable, positive relationship to SWB (Ahuvia & Freedman 1988; Diener, Horwitz, & Emmons 1985; Diener & Oishi 2000).

It seems then that individual economic advancement produces little long-term happiness. But on a macro level, data comparing rich and poor nations tells a different story. Studies consistently find strong correlations (about .60 - .70) between national wealth and national average levels of SWB (Cummins 1998; Diener, Diener, & Diener 1995; Diener & Fujita 1995, Schyns 1998). Since these cross-cultural statistics compare the average level of happiness for large groups of respondents, they are not directly comparable to individual level statistics[1]. Nonetheless, they still indicate that economic growth is associated with happy societies.

While the strong correlation between national wealth and nationally aggregated levels of SWB is well established, the mechanism underlying this finding is anything but certain. Yes, richer nations do provide a higher material standard of living for their citizens, but they also tend to be more open, free, and pluralistic, which may contribute to the wellbeing of their populations. More important still is that richer nations tend to have individualistic, rather than collectivistic, cultures. Based on past studies, individualism/collectivism stands out as the most promising construct for explaining differences in national average levels of SWB (Cummins 1998; Myers & Diener 1995). When individualism is controlled for, the correlation between GNP per capita and SWB goes away, but when GNP per capita is controlled for, the correlation between individualism and SWB while reduced, remains significant[2] (Diener et al 1995). For example[3], the collectivist cultures of Japan and South Korea, despite their economic development, are outliers of social anxiety and low SWB scores among the worlds more prosperous states. Along with these industrialized collectivist countries, poorer collectivist countries like India stand out as reporting extremely low levels of SWB, even when compared to other lesser developed countries. The statistical connection between individualism and higher levels of SWB would be even stronger if it were not for the social and economic collapse of the relatively individualistic former Soviet Republics. There, melancholia has become so epidemic that a man I met in St. Petersburg joked that being Russian isn’t a nationality, it’s a diagnosis. Defenders of collectivism are quick to retort that these finding are mere methodological artifacts due to problems in translation, the way collectivists use Likert scales, and cultural values such as humility. But while these points need to be taken very seriously, the best current evidence suggests that they cannot explain away these results (Diener Suh, Smith, & Shao, 1995).

It seems then that collectivism/individualism is related to SWB at a national level, but how does economic development fit in? GNP per capita has been shown to have correlations of around .80 with national levels of individualist values (Hofstede 1980). Cultural theorists have surmised that increased affluence eventually cuts the ties that bind (Coleman 1990, Galbraith 1992, Triandis, McCusker & Hui 1990). Collectivism is a mechanism for solidifying and organizing group cooperation. Over time, often several generations, wealth erodes people’s dependence on networks of generalized social reciprocity. The tasks that one used to call on neighbors or kin to perform -- and had to be willing to reciprocate in performing -- are now outsourced to paid professionals. Liberalized capitalist economies offer job opportunities outside of family/clan based business and often outside of the local geographic area. Marriages become based on individual feelings of love, and not the concerns of the extended family group. Economic development also leads to smaller families and hence child rearing practices that promote individualism (Triandis, McCusker & Hui 1990). We see this in countries like Japan and Singapore, where the older generation fears that its youth will grow spoiled by affluence, losing its work ethic and sense of collective obligation.

At a social level, these changes incur a clear cost in social capital (Bellah, Madsen, Sullivan, Swidler, & Tipton 1985; Putnam 1995, Taylor 1989), but at a psychological level, SWB seems to increase. Kasser’s work (Kasser 1997; Kasser & Ryan 1993,1996, 1998; Kasser, Ryan, Zax, & Sameroff 1995)[4] helps us understand why this is the case. In Kasser’s view, the secret to SWB is meeting one’s intrinsic needs. Elements of these intrinsic needs, like the need for affiliation or community feeling, can sound deceptively collectivistic. But on closer examination we see that meeting one’s intrinsic needs is dependent on ‘being true to one’s inner self’ rather than conforming to social pressure or seeking the approval of others. This is the essence of the “independent self,” the psychological hallmark of an individualist culture (Markus & Kitayama 1991, Wong & Ahuvia 1997). For example, Kasser measures the importance one places on meeting one’s intrinsic needs using scale items such as “I will follow my interests and curiosity where they take me.”

Collectivism, particularly as manifested in Asian societies, revolves around face, honor, and public reputation. Once we see collectivism as a cultural survival mechanism born of the absolute necessity for group solidarity, we see that it is serious business. It is not surprising, then, that it often relies highly on social coercion via threats and rewards to one’s public reputation to ensure compliance with group norms, since the stakes for the group are so high. These coercive pressures are exactly the types of extrinsic motivations that Kasser identifies as the root of low SWB scores, because they often conflict with the desire to follow one’s own inner compass. Strong social relationships are essential for high SWB, but in Kasser’s view these relationships should be intrinsically motivated (e.g. “Someone in my life will accept me as I am, no matter what” and “I will assist people who need it, asking nothing in return”) rather than dependent on your ability to bring face to the group or being tied to practical networks of reciprocal obligation. In this way, Kasser’s intrinsically motivated personality is “individualistic” when that word is meant as a synonym for iconoclastic self-expression, although not when individualism is used as a synonym for selfishness.

In sum then, I am proposing a model in which economic development frees people from networks of social obligation. This, in turn, reduces social capital, but increases one’s ability to make choices that meet one’s intrinsic needs. By choosing a career, spouse, and lifestyle to meet one’s intrinsic needs, one increases SWB. Thus individualistic cultures tend on average to produce higher levels of SWB, even though the direct pleasures of consumption play little part in this phenomenon.

So far this argument, coming from an American academic, has a decidedly chauvinistic tone. The happy countries are developed individualistic democracies like America[5]. Our current economic competitors may make more reliable cars than we do, but their populations are generally less happy. To correct this impression, I need to end with two important caveats.

First, Westerncentric as it is to assert that individualistic culture leads to higher levels of SWB, it is even more Westerncentric to accept SWB as the ultimate measure of a culture’s success. In the West, we tend to see individual happiness as the be-all and end-all of life. America even considers “the pursuit of happiness” a fundamental right. This belief is so enshrined in our culture that many Westerners take it as a law of nature that all people value their own happiness above all else. This popular fallacy assumes that if you trace the motivation of any action back far enough, you’ll find a desire for happiness at its root. Even when people buy status-oriented products clearly aimed at impressing others, this fallacy assumes that at some deep hidden level they must believe that earning the envy of others will make them happy.

But personal happiness is just one of many possible values that may underlie human action. Cross cultural research shows that values like “enjoying life” and leading “an exciting life” are stronger in individualist societies, whereas “social recognition,” “preserving my public image,” being “humble,” and “honoring parents and elders” are particularly strong in collectivist societies (Triandis, McCusker, & Hui 1990, p. 1015). In writing the teaser headline “EVERYBODY WANTS TO BE HAPPY” for the book The Pursuit of Happiness (Myers 1993), the publicist may have been correct, but being happy certainly isn’t everyone’s top priority. Upon seeing that headline, an Indian Ph.D. student of mine remarked simply “I don’t.”

Anecdotes don’t constitute scientific proof but they are thought provoking. I have frequently been struck by the low priority given to SWB in conversations I have had with people from Asian collectivist cultures. I recall a conversation with a young Singaporean man who was engaged to be married. He confided in me that he had only lukewarm feelings for his bride. When I asked him if he felt he would be happy in the marriage, he looked at me with a you-just-don’t-get-it expression on his face and said, “that’s not really the point. In Singapore, after you’ve been going out for a certain amount of time, you get married.” In another incident, a Korean student wrote to me that becoming rich was his first priority because he wanted to buy his parents a new Mercedes so that they could gain face. Once again, when I asked him if he had given much thought to what career would make him the happiest, he replied that his being happy wasn’t the point.

Defenders of collectivism give away the store when they allow Western psychologists to set the success criteria for a culture. If Western cultures may have the edge in producing happy people, Asian cultures may have the edge in producing people who value and meet their social obligations. In the long run, these cultures will be successful to the extent that they produce the kind of people they value having.

Secondly, American individualistic culture doesn’t even win at its own game. On average, Americans are happier than Japanese, Chinese, Koreans, and Indians, but we lose hands down to the Danes and the Swiss (Diener & Oishi 2000). Exploring the reasons for this finding is beyond the scope of this paper. But American psychologists and social theorists need to bear it in mind as we labor to help our culture excel at the success criteria we have set for ourselves.

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[1] Diener and Oishi (2000) explain this well.

The question sometimes arises as to why the national income and average SWB correlations are so high, whereas the correlations of income and SWB within nations are so modest in size. The explanation lies in aggregation, and in what gets averaged out of the error term when mean values by nations are considered. For example, personality may have a substantial influence on SWB, but individual differences in temperament are averaged out when only the mean level of SWB is considered for a nation. National values in SWB reflect only mean between-country differences. Thus, the error term for national-level correlations will be much different than that for correlations based on individuals within nations. Therefore, the absence of individual differences in the between nation correlations gives the figures a differ interpretation then within nation correlations.

[2] In a similar study, Schyns (forthcoming) did not replicate this finding. However, her study failed to control for the strong influence of social disruption in the former Soviet Republics as a confounding factor in her analysis. Schyns’ sample included several ex-Soviet nations that were exceptionally unhappy, fairly poor, and yet fairly individualistic. These outliers had a dramatic influence on her statistical analysis and masked the true influence of individualism/collectivism on SWB.

[3] Data supporting these examples can be found in Diener and Oishi (2000).

[4] Following in the tradition of Ryan and the Rochester School.

[5] Some poor but happy Latin American outliers notwithstanding (Diener & Oishi 2000)