[A Student’s Voice]
The purchasing capacity of every dollar is equivalent, but the capacity for pleasure elicited from every dollar differs. It is the pleasure capacity of money which presumably causes the cultural phenomenon of people dedicating their lives to gaining and spending it—otherwise known as consumerism. However, although money does have a pleasure capacity, it is far more relevant as a means of reducing suffering.
For instance, take three cars: a broken down Camry, a new Camry, and a BMW. The broken down Camry shows us how a financial deficit causes suffering. It does not fulfill the function of a car, as it often fails to arrive at its destination. In essence, insufficient funds force people to utilize a product which does not fulfill the very purpose for which it was created. Now, take the brand new Camry. This car, although not flashy, performs the function of the car—to get one to a desired location. Thus, having products that perform their functions, as the new Camry does, can be understood as avoiding a degree of suffering and disappointment—which is worthwhile. Then there is the brand new BMW: the dream token of happiness for so many people. With its numerous gadgets, high powered motor, and jealousy-inducing capacity, people end-up dedicating large parts of their lives to its acquisition. However, at the end of the day, it is equivalent to the new Camry in the sense that it performs the function of a car.
Studies of the Hedonic Treadmill are teaching us with a degree of scientific certainty that the superfluous add-ons that distinguish the BMW from the functioning Camry have no effect on long-term happiness. The Hedonic Treadmill holds that new products promote positive emotions only as long as they are able to satisfy the desire which induced the buying of the product. So, for about two weeks, having the BMW satisfies this desire, and driving it actually makes one happier. However, very quickly this satisfaction subsides, and the next, newest, nicest car is needed to keep the Treadmill spinning. Once the initial high of the BMW purchase abates, the satisfaction (you might say, suffering-avoidance) yielded from driving it is equivalent to what would earlier have been yielded by driving the Camry. But, note, it is only equivalent to the satisfaction that would earlier have been yielded from the Camry, because once the purchaser is adapted to the BMW, driving a lesser car actually causes suffering. This caveat is particularly important because people’s economic means are constantly in flux, and so just because you can afford the BMW at one point, does not mean that you will be able to afford it throughout your life. It is in fact very likely that at some point you will have to “downgrade” back to the proverbial Camry, at which point you will undergo the suffering that the downgrade elicits for a period equivalently to how long you initially got pleasure from the BMW. The whole series of transactions is then, at best, a wash. Corroborating evidence ofthe claim that hedonistic purchases like the BMW provide negligible, if any, long term positive effect comes from an often-cited study in positive psychology which concludes that once a person is making upwards of about $70,000, the correlation between income and happiness ceases. In contrast, before that threshold is met, purchases buy more real functionality (they reduce suffering) and a correlation between income and happiness is evident.
So the pleasure capacity of each dollar spent is highly dependent on the purpose of the thing purchased and where the person doing the spending stands on the income-scale. When we treat every dollar spent as of equal importance in our economic aggregates, we utterly miss these dynamics. Instead, we end-up treating the transaction which reduces suffering as equivalent to one in pursuit of futile consumerist goals. As a result, the correlation between blind monetary aggregates like GDP and social well-being are not just off, they are effectively non-existent.