Other people's money more expensive than their Bashny.Net

Deng Xiaoping, describing the pros and cons of openness of the Chinese economy, said: "When you open the window and allow in fresh air, but flies."

Most people welcome economic growth and rising incomes, but this phenomena has consequences. Young families are moving to cities, often decay, and to free the labour market less confidence in the future, and the growth of inequality can be unpleasant even for those who become richer.

So it is probably not surprising that greater satisfaction which ordinary Chinese felt at the beginning of the reforms of Deng, later, with the acceleration of economic growth, came to naught. At least, so goes the work of Richard Esterline and his colleagues, performed in 2012 at the University of southern California.





Easterlin famous article of 1974, caused a hot discussion. It argues that growth of income does not make people happier. Since then, despite the obvious advantages of wealth, economists continue to discuss this issue. The most extensive study 2012 covers a number of countries. It took many years, and the result was a positive correlation between life satisfaction and income.

So far, however, it is not clear what is cause and what is effect. Andrew Oswald, Eugenio Proto and Daniel He from the University of Warwick believe that everything starts with happiness. Depressed workers are less productive, and they earn less. In addition, the high income and happiness may have a common cause. For example, if you have many friends, that it is easier to find a paying job, and life satisfaction, it is also higher.

One way to establish causality is the study of the randomized trials. Lottery distribute wealth randomly, so you can use them as material for research, but in most countries, buying tickets to only a small fraction of the population. In addition, people tend to participate in lotteries, can have its own characteristics, which cannot be extended to all. Economists could experiment, randomly distributing large sums of money. In developed countries, it would be too expensive, but in the poorer parts of the world doing this for charitable organization.

The center for the study of behavioral Economics of Busara located in the Kenyan capital of Nairobi, is conducting similar experiments with peasants and slum dwellers. The researchers studied the results of the distribution of funds, when like a lottery, 503 random families of 120 villages have received various amounts of cash, up to $ 1525. The average "win", $357, doing a typical inhabitant of these places twice as rich. The researchers examined the self-perception of local residents before and after receiving the money. Different techniques were used: a questionnaire where they were asked about life satisfaction, and screening for signs of clinical depression, and saliva for levels of cortisol, a hormone associated with stress.

Since the money was only part of the residents, the study does not answer the question of what happens when wealth grows evenly. But it helps to simulate the consequences of economic growth from which all benefit in different ways. As expected, recipients were more satisfied with life, levels of depression and cortisol also decreased.

But their lives did not received neighbors have deteriorated sharply. It turned out that when the neighbor gets $100, satisfaction of man falls by a greater amount than would rise, get he same amount. And the more funds were distributed in the village, the stronger was the discontent of those who received nothing. (However, the prevalence of depression and cortisol levels among deprived distribution is not affected.)

And the bitterness and joy was transient. The consequences of the changes are erased as addiction to them, economists call this phenomenon hedonic adaptation. The most noticeable changes in satisfaction were recorded in the process of distributing the funds. The issuance of money took place within six months (if, as it happens, when the country experienced economic growth, increasing income was extended for a longer time, the results could be different). A year later, the level of happiness and those who received the money, and their deprived neighbors were very close to the initial level.

It is important to note that the people spared, not worried about inequality at all, and lowering their own status with respect to the average. The participants did not respond to the change in the Gini coefficient within the village (he indicates the level of inequality). For example, in a village where one man becomes richer and the other poorer by the same amount, the Gini coefficient can vary, but the average income will remain the same. In the Kenyan experiment deprived people do not pay attention to it, they compared themselves with others.

Endless race

A survey of satisfaction of residents of Germany conducted by Ada Ferrer-I-Carbonell, may help to explain the reaction of Kenyans. She comes to the conclusion that how people compare themselves with others, there is asymmetry. Instead of having to evaluate the entire spectrum, in this case of income, we look only at those who are richer than us. When the case the others start to go better, we are unhappy, and if it grows our own income, we just move the rating scale and still looking only at those who receive more. In other words, we are doomed to eternal frustration due to the fact that get used to any achievements. Perhaps this encourages people to earn more and thus to push the economy to growth.published

 

P. S. And remember, only by changing their consumption — together we change the world! ©

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Source: insider.pro/EN/article/51116/