Monday, January 15, 2007
Today's Ramble - 1/15/07
Richard Layard, in his excellent book "Happiness: Lessons from a New Science", argues that loss-aversion is an inconvenient fact of human nature. Studies show that, on average, if someone loses $100, his mood worsens twice as much as it would if he gained $100. Studies have also shown happiness falls relatively little (i.e. 2 points) when family income drops by a third. By comparison, a separation results in an 8 point fall. Lay-off or firing results in a 6 point fall. Subjective health down 20% equals a 6 point drop. So, think about spending more time building relationships or getting healthy. The positive impact will be greater than working those extra hours in order to secure a pay increase. If a one-third drop of income is worth 2 points, then a one-third increase is worth 1 point. If a 20% drop in health is worth 6 happiness points, a 20% improvement in health will increase your happiness score by 3 points. That's equal to a doubling of your income! Keep that in mind the next time you think about how you will "spend" your precious time.