Stepping off the treadmill

Free Exchange: Stepping off the treadmill

IN response to the question "What have you changed your mind about?", Princeton psychologist and economics Nobelist Daniel Kahneman mentions the "aspiration treadmill", the idea that we simply readjust our expectations upward once we have reached a certain level of success. This would help explain why people who have a lot of money, or have a lot of leisure time, do not say on surveys that they are much more satisfied than do people who have less.

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This is not to say that money really doesn't matter much, as the life satisfaction surveys seemed to say. How much money you have matters to how you use your time, and how you use your time really affects the quality of your experience. What Mr Kahneman and his colleagues found is that wealthier Americans spend more time than the less wealthy in pleasant activities, but also put in more unpleasant hours at the job. That's how they afford all the pleasant activities. When you average over the nice vacations and the stress at work, there's little hedonic advantage over a less wealthy life. …

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My takeaway is that the tradeoffs involved in different kinds of lives within a certain income range leave people in that range with similar felt qualities of life. But the felt quality of lives within notably lower income ranges are notably worse. And this fact is reflected on life satisfaction surveys. That is, people don't simply adjust their expectations to their economic condition (at least not completely), leading everyone to be similarly satisfied with what they have. Money really matters.