UpdateI’d like to apologize for forgetting to link to the article yesterday.
The New York Times has an article exploring the issue of whether there may be more important things than a country’s economic development. A worthy topic, but sadly the article references what is possibly the worst academic survey every conducted.
[B]eyond a certain threshold of wealth people appear to redefine happiness, studies suggest, focusing on their relative position in society instead of their material status.
Nothing defines this shift better than a 1998 survey of 257 students, faculty and staff members at the Harvard School of Public Health.
In the study, the researchers, Sara J. Solnick and David Hemenway, gave the subjects a choice of earning $50,000 a year in a world where the average salary was $25,000 or $100,000 a year where the average was $200,000.
About 50 percent of the participants, the researchers found, chose the first option, preferring to be half as prosperous but richer than their neighbors.
I think that’s the stupidest thing I’ve ever heard. They seem to think that people choosing the $100,000 option are twice as wealthy in absolute terms than the people choosing $50,000, but that is utter bollocks.
If the average salary of the world increases by 8-fold and yours drops by half, than in absolute terms you have only 1/16 of the wealth that you had before. Money is not some kind of nano-gel with the ability to transform into an amount of physical material in proportion to the number of units you have, it’s an abstraction that represents the portion of the economy’s total wealth that one controls. The value of individual money units is a simple proportion based on the total amount of money units in existence, this is why we have things like inflation-a concept that seems to have escaped the Harvard School of Public Health.
If they had said ‘town’ or ‘community’ than it might make some sense, because your currency value is still based on the larger economy and in fact would represent a large share of the world’s wealth, but if you’re talking about the entire WORLD’S average income than people who chose the second scenario, much like the people who designed this survey, just don’t know the most basic of math skills.
Unless they were really were testing for basic logic skills, and the whole ‘values of wealth’ thing was just obfuscation.
Update:
Saru linked to a paper by the two Harvard professors in question, which contains a survey with various questions making the same test in both monetary and non-monetary terms. It contains one question identical to, and one almost identical to the one listed in the NYT article, except it is phrased exactly the way it should be. The raises the question, was this a mistake by the NYT writer or editor, or did the professors give the reporter a dumbed-down explanation that wasn’t as clear as their actual paper?
I see that Andrew Revkin, who wrote the NYT article, is one of their regular science writers, but even science journalists aren’t supposed to be experts, and aren’t even expected to fully understand the science themselves. He should have had the professors check his article before publication, and they should have caught that mistake.
First survey:
In the questions below, there are two states of the world (State A and State B). You are asked to pick which of the two you would prefer to live in. The questions are independent. For each question, circle either A or B, or if undecided, both A and B. “Others” is the average other person in society.
[…]
Note that prices are what they are currently and prices (the purchasing power of money) are the same in States A and B.
A: Your current yearly income is $50,000; others earn $25,000.
B: Your current yearly income is $100,000; others earn $200,000.
Second survey:
Note that prices are what they are currently and prices (the purchasing power of money) are the same in States A and B.
A: Your current yearly income is $200,000; others earn $100,000.
B: Your current yearly income is $400,000; others earn 800,000.