What is your take on Daniel Kahneman's theory? Happiness is not more than 60-75k/year

This topic comes up on here often but it is always interesting. As far as trading goes it seems like the important aspect is time's affect on memory, and I guess you could say the weight of positive and negative experiences. Because our memory lies to us about what really happened it is that much more important to be as systematic as possible and keep a physical track record of why you did what you did and how it worked.

I'm curious with these huge surveys done to try to measure life satisfaction and overall happiness if they take mental disorders into consideration and weed those people out or how they accounted for it. I don't know the exact number but I would guess at least 1 our of 5 people have some sort of anxiety, depression or bi-polar disorder which would muddy the waters. Many of these people should seemingly be happy or satisfied with life but they aren't because their brain is fucked up.

I'm also curious about how having children changes people's feelings towards life satisfaction. Before I had kids my life was just insanely awesome. Now with a 3 year old and a 1 year old I need happy pills just to keep me from blowing my brains out and no amount of money will change this. But I have a feeling 10 years from now when I look back on this horrible dark period of my life I might say that it was all worth it. Now that I think about I just caught my self in the trap of what Kahneman was talking about...was my life really that great before kids or does it just seem like it to me because my more immediate experiences have seemed negative? I seriously don't remember if I was happy or not I just now realize I should have been.
 
The kids will be more fun and rewarding in a few years.
But you have to draw smart boundries with you wife and your kids otherwise you could be doomed to kids birthday parties on weekends the rest of your life.

Seykota said you get want you want out of the markets.
I have four kids ages 3 to 13. Having observed others and my own family... I think overall you get what you want and deserve out of kids.
 
Quote from riskaddict:

Now with a 3 year old and a 1 year old I need happy pills just to keep me from blowing my brains out and no amount of money will change this.
More...

Do you not have fun with your 3 year old at least? My son just turned 2 and we have a blast. Sure there are plenty of moments where I want to pull my hair out when he is cranky, but overall he and I play non stop when I am home and have a great time. Granted I don't get to see him half of the week because I leave before he is up and get home long after he is asleep.
 
i think I have read this premise10 years back.. it definitely is thought provoking. (ie. that the sweet point is 50-70K) and having more doesnt necessarily help as you keep up with the Joneses and there is no end to that.


but read this.. excerpt from the book
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http://www.amazon.com/Farewell-Alms-Economic-History-Princeton/dp/0691141282


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The final great surprise that economic history offers—which was revealed

only within the past thirty years—is that material affluence, the decline in

child mortality, the extension of adult life spans, and reduced inequality have

not made us any happier than our hunter-gatherer forebears. High incomes

profoundly shape lifestyles in the modern developed world. But wealth has

not brought happiness. Another foundational assumption of economics is

incorrect.

Within any society the rich are happier than the poor. But, as was first

observed by Richard Easterlin in 1974, rapidly rising incomes for everyone in

the successful economies since 1950 have not produced greater happiness.11 In

Japan, for example, from 1958 to 2004 income per person rose nearly sevenfold,

while self-reported happiness, instead of rising, declined modestly. It is

evident that our happiness depends not on our absolute well-being but instead

on how we are doing relative to our reference group. Each individual—by acquiring

more income, by buying a larger house, by driving a more elegant

car—can make herself happier, but happier only at the expense of those

with less income, meaner housing, and junkier cars. Money does buy happiness,

but that happiness is transferred from someone else, not added to the common pool.
 
People forget that the ownership of millions of dollars can buy experiences that 60-75K per year cannot.

These experiences may be important to some and meaningless to others.
 
What many of these studies rely upon is the law of diminishing returns. Simply stated, it says that each person's utility curve flattens out as income increases. The concept of utility can best be explained economically through eating pizza. When one is starving the first slice of pizza tastes great. The 2nd slice is also pretty good. Third slice is just OK now, 4th slice getting worse and by the fifth slice you don't want to look at pizza any more. This is called a utility curve and income follows the same path for the most part. When one is poor each dollar of new income feels great. And continues to do so until a certain point. Then each marginal dollar starts to lose it's effect, it's not positive or negative. At some point it can potentially start bending down. One could imagine this when one has so much money that the quality of friendships starts to go down, people start using you for your money, family members constantly asking for loans, expensive divorces, etc. Where that maximum utility actually is people will debate. But I think that level given is fair. Granted it should be adjusted for cost of living. Someone living in NY on 60k is not the same as someone living in Kansas City on 60k.

It should also be noted that further evidence to back up this claim could be found in Norway. The people there are reported to be the happiest people on earth. Their incomes when adjusted for all social benefits they receive would be equivalent to about 65k to 70k in US dollars in the midwest.
 
In his book <i>Status Anxiety</i>, Alain de Botton points out that there are two main types of love: interpersonal love (romantic, affectionate, for children etc.) and love "from the world" - otherwise known as status, which is a form of love from those who don't know you based on your position, power, money and abilities.

Interestingly, both types matter to humans, although it has long been fashionable to decry status as superficial. Economic and social status <i>does</i> have a real effect on happiness.
 
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