This is the relationship between money and happiness 04-25

Can money buy you happiness? 

It’s a longstanding question that has many different answers, depending on who you ask.

Today’s chart approaches this fundamental question from a data-driven perspective, and it provides one potential solution: money does buy some happiness, but only to a limited extent.

Money and happiness

First, a thinking exercise.

Let’s say you have two hypothetical people: one of them is named Beff Jezos and he’s a billionaire, and the other is named Jill Smith and she has a more average net worth. Who do you think would be happiest if their wealth was instantly doubled?

Beff might be happy that he’s got more in the bank, but materially his life is unlikely to change much – after all, he’s a billionaire. On the flipside, Jill also has more in the bank and is likely able to use those additional resources to provide better opportunities for her family, get out of debt, or improve her work-life balance.

These resources translate to real changes for Jill, potentially increasing her level of satisfaction with life.

Just like these hypotheticals, the data tells a similar story when we look at countries.

The data-driven approach

World Bank

In general, this means that as a country’s wealth increases from $10k to $20k per person, it will likely slide up the happiness scale as well. For a double from $30k to $60k, the relationship still holds – but it tends to have far more variance. This variance is where things get interesting.

Outlier regions

Some of the most obvious outliers can be found in Latin America and the Middle East:

In Latin America, people self-report that they are more satisfied than the trend between money and happiness would predict.

Costa Rica stands out in particular here, with a GDP per capita of $15,400 and a 7.14 rating on the Cantril Ladder (which is a measure of happiness). Whether it’s the country’s rugged coastlines or the local culture that does the trick, Costa Rica has higher happiness ratings than the U.S., Belgium, or Germany – all countries with far higher levels of wealth.

In the Middle East, the situation is mostly reversed. Countries like Saudi Arabia, Qatar, Iran, Iraq, Yemen, Turkey, and the U.A.E. are all on the other side of the trend line.

Outlier countries

Within regions, there is even plenty of variance.

We just mentioned the Middle East as a place where the wealth-happiness continuum doesn’t seem to hold up as well as it does in other places in the world.

Interestingly, in Qatar, which is actually the wealthiest country in the world on a per capita basis ($127k), things are even more out of whack. Qatar only scores a 6.37 on the Cantril Ladder, making it a big exception even within the context of the already-outlying Middle East. 

Nearby Saudi Arabia, U.A.E., and Oman are all poorer than Qatar per capita, yet they are happier places. Oman rates a 6.85 on the satisfaction scale, with less than one-third the wealth per capita of Qatar.

There are other outlier jurisdictions on the list as well: Thailand, Uzbekistan, and Pakistan are all significantly happier than the trend line (or their regional location) would project. Meanwhile, places like Hong Kong, Ireland, Singapore, and Luxembourg are less happy than wealth would predict.

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People Have an Irrational Need to Complete 'Sets' of Things. 01-05

People are irrationally motivated to complete arbitrary sets of tasks, donations, or purchases—and organizations can take advantage of that, according to new research by Kate Barasz, Leslie John, Elizabeth Keenan, and Michael Norton. 

Here’s a tip for persuading people to finish more tasks, buy more products, or donate more money: Simply present assignments, requests, or items as arbitrary sets, rather than as individual units.

New research reveals that people are irrationally but effectively motivated by the idea of completing a set, even if it means working harder or spending more money—with no additional reward other than the satisfaction of completion and the relief of avoiding an incomplete set. Imagine arriving at your boss’s summer BBQ and presenting her with five beers in a box designed to hold six. No matter that your favorite craft beer store permits you buy bottles one at a time. Chances are you’d still buy six, just to fill all six spaces in the box.

“People really don’t like to leave things incomplete,” says Kate Barasz, an assistant professor of marketing at IESE Business School and lead author of the paper “Pseudo-Set Framing,” written while she was a doctoral student at Harvard Business School. The term “pseudo-set” refers to the idea that the set is kind of arbitrary—manufactured for the sole purpose of creating the idea of wholeness.

“People really don’t like to leave things incomplete”

Do you want customers to refer more of their friends to your company’s website? Ask them to refer friends in arbitrary “batches” of five at a time. Looking to increase charitable giving to your nonprofit organization? Ask potential donors to contribute a set of six gifts. Are you and your fiancé struggling to write thank-you cards for all those wedding shower gifts? Try batching the unwritten cards into sets of eight. Rather than feeling overwhelmed by the prospect of writing one note at a time, you’ll feel oddly motivated to finish a whole set at a time.

Appearing in a forthcoming edition of Journal of Experimental Psychology: General, “Pseudo-Set Framing” was co-written by Barasz; Leslie John, the Marvin Bower Associate Professor at HBS; Elizabeth Keenan, an assistant professor at HBS; and Michael Norton, the Harold M. Brierley Professor of Business Administration at HBS.

The Canadian Red Cross puts pseudo-sets to the test

The researchers proved the efficacy of pseudo-set framing through a series of laboratory and real-world field studies.

In one study, they teamed up with the Canadian Red Cross, a humanitarian charitable organization, to find out whether pseudo-set framing could influence gift-giving behavior during its 2016 holiday online fundraising campaign.

More than 7,000 potential donors were randomly (but evenly) directed to one of three landing pages.

The first page emphasized cash donations.

The second page emphasized specific gifts over cash donations. This page also included an image of a globe. For each new item added to the donor’s online cart, a location marker would appear in a particular geographic region, signaling that the item would be donated to that part of the globe.

The third page invited donors to give one of each of six items in order to complete a so-called “Global Survival Kit”—in other words, a pseudo-set. This page had a globe on it, too, but instead of location markers, it featured a line that grew closer to circumnavigating the globe each time an item was donated.

The rationale: “Who wants to donate six blankets, when you can donate one blanket and feel just as good?” Barasz says. “But, if you frame it as a set, then there is a reason to want to complete the set and to donate all six of the items.”

The results of the field study were stark. Among those who chose to give gifts, 21 percent of those in the “Global Survival Kit” condition chose to donate all six items, compared with just 5 percent in the “gift” condition and 3 percent in the cash condition.

“The strength of the increase was a really nice surprise,” says Doug Wayne, director of national digital marketing and web strategy at the Canadian Red Cross, who decided to collaborate with the research team after meeting Norton through a colleague. “Ultimately, it speaks to how powerful that framing is.”

People incur the cost of a bad gamble just so they can complete a pseudo-set

In fact, the human drive for completion is strong enough that people will strive to complete arbitrary sets even when there’s a risk associated.

In another study, 201 participants had the opportunity to accept up to four online gambling opportunities, with the chance of winning up to 25 cents. (The stakes were notably low—the online equivalent of nickel slots.)

The chances of winning decreased with each successive gamble, and participants could stop and cash out at any time. Gamble 1 offered a 90 percent chance of winning a nickel and a 10 percent chance of winning nothing, Gamble 2 offered a 75 percent chance of winning, and Gamble 3 a 50 percent chance. In the first three gambles, there was no chance of incurring a loss. But Gamble 4 offered a 50 percent chance of winning a nickel and a 50 percent chance of losing a dime.

The odds were stupid. It made no rational sense to take that last gamble. And yet….

The researchers rigged the system so that all participants won the first three gambles, such that they’d all be facing the final risk having accrued 20 of the possible 25 cents. Everyone saw their successive winnings displayed both numerically and graphically on screen.

However: Half of the participants saw a visual display consisting of five nickels—with separate blank circles depicting money not yet earned. The other half saw a single quarter, divided into fifths such that unearned money was depicted as a missing piece.

Overall, 29 percent of participants in the single-quarter condition chose to accept all four gambles, compared with 16 percent in the five-separate-nickels condition. For them, the need to complete that picture of a quarter seemed to supersede their rational knowledge of the bad odds.

“People persist with completing pseudo-sets even when it’s costly for them to do so,” John says. “That, to me, is especially compelling as a researcher—that completing this totally arbitrary set is so motivating to people that they are willing to participate in an obviously bad bet.”

Future research and advice for managers

The researchers acknowledge that it’s possible for a pseudo-set to backfire. For instance, a person who might have given seven items to the Red Cross might decide to give a single set of six items instead. And a badly designed pseudo-set could prove annoying or demotivating—say, if the arbitrary set comprises 200 parts. “If the number of tasks required to fill a ‘pie piece’ is prohibitively high, people may decide not to engage at all to avoid anticipated dissatisfaction with partial completion,” the authors write in “Pseudo-Set Framing.”

Future research may investigate the ideal size of a pseudo-set in any given situation. In the meantime, Barasz offers this rule of thumb, especially with regard to encouraging people to complete repetitive tasks: “My advice to a practitioner would be to find out, on average, how many people usually complete, and then make your set slightly larger than that,” she says.  

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The Indian government is about to endorse giving all its citizens free money 01-05

The Indian government is set to endorse Universal Basic Income, according to one of the leading advocates of the scheme.


Professor Guy Standing, an economist who co-founded advocate group Basic Income Earth Network (BIEN) in 1986, told Business Insider that the Indian government will release a report in January which says the idea is "feasible" and "basically the way forward."

The idea behind universal basic income is simple: a regular state payment made to all citizens (one variation specifies adults), regardless of working status.

Advocates say it would provide a vital safety net for all citizens and remove inefficient benefit systems currently in place; critics say it would remove the incentive for citizens to work and prove to be wildly expensive.

It has, however, attracted a growing amount of attention across the world, in both rich and developing countries.

Standing, professor of development at the School for African and Oriental Studies, is considered one of the leading proponents of UBI. He has advised on numerous UBI pilot schemes, and recently returned from California, where he consulted on a $20 million trial set to launch in California this year.

He was closely involved with three major pilot schemes in India - two in Madhya Pradesh, and a smaller one in West Delhi.

The pilots in Madhya Pradesh launched in 2010, and provided every man, woman, and child across eight villages with a modest basic income for 18 months. Standing reports that welfare improved dramatically in the villages, "particularly in nutrition among the children, healthcare, sanitation, and school attendance and performance."

He also says the scheme also turned out some unexpected results.

"The most striking thing which we hadn't actually anticipated is that the emancipatory effect was greater than the monetary effect. It enabled people to have a sense of control. They pooled some of the money to pay down their debts, they increased decisions on escaping from debt bondage. The women developed their own capacity to make their own decision about their own lives. The general tenor of all those communities has been remarkably positive," he said.

"As a consequence of this, the Indian government is coming out with a big report in January. As you can imagine that makes me very excited. It will basically say this is the way forward."

The report will likely form part of the Economic Survey, a document prepared annually by India's Ministry of Finance. Arvind Subramanian, the Chief Economic Adviser to the Government of India, confirmed to Basic Income News in October that the pros and cons of universal basic income would be a theme of the upcoming report.

Standing said: "I don't expect them to go the full way, because it's such a dramatic conversion. But [BIEN] now have a huge network in India, and we've got a big conference scheduled in March in Delhi funded by the Canadian government, and partly funded by the Azim Prenji Foundation which is the biggest philanthropic foundation in India."

The Economic Survey will be published on January 31.

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It’s Not a ‘Stream’ of Consciousness 05-11

It’s Not a ‘Stream’ of Consciousness 

IN 1890, the American psychologist William James famously likened our conscious experience to the flow of a stream. “A ‘river’ or a ‘stream’ are the metaphors by which it is most naturally described,” he wrote. “In talking of it hereafter, let’s call it the stream of thought, consciousness, or subjective life.”

While there is no disputing the aptness of this metaphor in capturing our subjective experience of the world, recent research has shown that the “stream” of consciousness is, in fact, an illusion. We actually perceive the world in rhythmic pulses rather than as a continuous flow.

Some of the first hints of this new understanding came as early as the 1920s, when physiologists discovered brain waves: rhythmic electrical currents measurable on the surface of the scalp by means of electroencephalography. Subsequent research cataloged a spectrum of such rhythms (alpha waves, delta waves and so on) that correlated with various mental states, such as calm alertness and deep sleep.

Researchers also found that the properties of these rhythms varied with perceptual or cognitive events. The phase and amplitude of your brain waves, for example, might change if you saw or heard something, or if you increased your concentration on something, or if you shifted your attention.

But those early discoveries themselves did not change scientific thinking about the stream-like nature of conscious perception. Instead, brain waves were largely viewed as a tool for indexing mental experience, much like the waves that a ship generates in the water can be used to index the ship’s size and motion (e.g., the bigger the waves, the bigger the ship).

Recently, however, scientists have flipped this thinking on its head. We are exploring the possibility that brain rhythms are not merely a reflection of mental activity but a cause of it, helping shape perception, movement, memory and even consciousness itself.

What this means is that the brain samples the world in rhythmic pulses, perhaps even discrete time chunks, much like the individual frames of a movie. From the brain’s perspective, experience is not continuous but quantized.

Another clue that led to this discovery was the so-called wagon-wheel illusion, in which the spokes on a wheel are sometimes perceived to reverse the direction of their rotation. This illusion is easy to induce with a strobe light if the rotation of the wheel is such that each strobe flash captures the spoke location slightly behind the location captured on the previous flash, leading to the perception of reverse motion. The illusion results from “sampling” the scene in discrete frames or time chunks.

The telling fact, for perceptual scientists, is that this illusion can also occur during normal observation of a rotating wheel, in full daylight. This suggests that the brain itself, even in the absence of a strobe light, is sampling the world in discrete chunks.

Scientists have uncovered still more clues. It turns out, for example, that our ability to detect a subtle event, like a slight change in a visual scene, oscillates over time, cycling between better and worse perceptual sensitivity several times a second. Research shows that these rhythms correlate with electrical rhythms of the brain.


Consider a study that I conducted with my colleagues, forthcoming in the journal Psychological Science. We presented listeners with a three-beat-per-second rhythm (a pulsing “whoosh” sound) for only a few seconds and then asked the listeners to try to detect a faint tone immediately afterward. The tone was presented at a range of delays between zero and 1.4 seconds after the rhythm ended. Not only did we find that the ability to detect the tone varied over time by up to 25 percent — that’s a lot — but it did so precisely in sync with the previously heard three-beat-per-second rhythm.

Why would the brain do this? One theory is that it’s the brain’s way of focusing attention. Picture a noisy cafe filled with voices, clanging dishes and background music. As you attend to one particular acoustic stream — say, your lunch mate’s voice — your brain synchronizes its rhythm to the rhythm of the voice and enhances the perceptibility of that stream, while suppressing other streams, which have their own, different rhythms. (More broadly, this kind of synchronization has been proposed as a mechanism for communication between neural networks within the brain.)

All of this points to the need for a new metaphor. We should talk of the “rhythm” of thought, of perception, of consciousness. Conceptualizing our mental experience this way is not only more accurate, but it also situates our mind within the broader context of the daily, monthly and yearly rhythms that dominate our lives.

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Use Behavioral Economics to Achieve Wellness Goals 12-02

Use    Behavioral    Economics    to    Achieve    Wellness    Goals

Zhang Junya instant noodles (Wei Lih group) market a 5-pack hanging product, but tag each pack with a unique message according to its number in the line such as “Only two packs left! You need to be fast!” for the penultimate pack, making the consumer anxious they might miss out (loss aversion and scarcity bias) and also more aware that the product must be quite popular with other people if the other packs have already gone (social norms and social validation).

 Conventional wellness programs rely heavily on education and financial incentives to encourage employees, insurance plan members, or patients to lose weight, stop smoking, and manage their chronic health conditions. Those programs, though intuitively appealing, achieve less success than new, practical approaches derived from behavioral economics, which help us identify and overcome some of the psychological barriers that undercut our health goals. The first step in benefiting from behavioral economics is getting past our reliance on our old ways.

Education alone doesn’t work. Consider: on April 12, 2007, New Jersey Governor Jon Corzine was in the front passenger seat of a car involved in amotor vehicle accident. The accident lacerated flesh and broke bones, and he required mechanical ventilation in a trauma center before eventually recovering. Corzine had been a highly paid CEO of Goldman Sachs and a U.S. senator before becoming New Jersey’s governor. He was a controversial figure politically and financially, but no one would ever call him stupid. Nevertheless, he wasn’t wearing a seat belt, and reports suggest he never had.

Employers, health insurers, doctors, and health systems increasingly recognize that everyday behaviors are among the most important determinants of health. How we live our lives — whether we smoke, exercise, take our medications, and wear seat belts — substantially determines how long we live and the health we enjoy. Everyone is interested in wellness, yet everyone’s first suggestion for achieving it is education.

That approach seems reasonable, until you think through the implicit assumptions: If we tell people that smoking is dangerous, they will stop. If people are informed about the benefits of exercise, they will go for a run. If only someone had told Jon Corzine that seat belts save lives…

Health education is critically important, but if we devote resources to educating people about what they already know but don’t do, we may overlook more practical solutions.

The next step beyond education has been the use of financial incentives, which target behavior rather than knowledge. The implicit argument is that if we pay people for health-promoting behaviors, they will engage in them. It works to a certain extent, but typically not as much as program sponsors would like.

If we lower the co-payments on medications, as value-based insurance design suggests, adherence does go up, but not by enough to matter. 

The landmark MI FREEE study, which made medications free after a heart attack, increased medication adherence from a disappointing 39% at baseline to 44% — better, but still disappointing. If we pay employees for completing health-risk assessments, some fill them out, but most don’t. Increasing the payments improves participation, but that gets expensive as costs quickly outpace diminishing returns. If the savings or rebates for desired behavior are buried in other payments — as when employers reduce health insurance premiums for workers who meet certain health standards — the rewards are hidden among other paycheck deductions and become less salient. The results are often disappointing.

Money has its limits as a carrot, yet an enormous industry in wellness is devoted to this highly transactional approach of delivering points, badges, miles, or dollars to encourage good behavior. Section 2705 of the Affordable Care Act increases the amount of money employers can put at risk for improving these behaviors or outcomes. The transactions are more effective at changing behavior than education alone, but the premise underlying these programs is that people make decisions rationally.

However, several decades of research reveal that many of our decisions don’t reflect rational choices, but rather irrational thinking that occurs in predictable ways. Experts in behavioral economics have been able to harness this predictability and lead us to the healthful behaviors we seek.

Let’s say you want to improve medication adherence among your employees, the members of your pharmacy benefit plan, or your patient population (depending upon whether you are an employer, an insurer, or a provider). You start by offering an automatic prescription-refill program, but instead of a traditional opt-in program, present a required choice: (1) the inconvenience of refilling prescriptions manually each time or (2) having the refills sent automatically. This changes the architecture of the selection to that of an enhanced active choice: It highlights the disadvantages of the lesser alternative while retaining individuals’ freedom to decide. When we tried this approach with CVS Caremark members, the number of people choosing automatic refills more than doubled.

Or consider an employer who is unhappy with the completion rate for employee health-risk assessments (HRAs). Instead of merely doubling the incentive from $25 to $50, use existing groupings within the workforce and randomly pick one group each week to win at each worksite. Anyone within that group who has completed his or her HRA wins $100; if more than 80% of group members complete the HRA, each member of the group gets a $25 bonus. 

The odds can be structured to yield the same overall cost as the basic doubled-incentive approach, but the design harnesses the strong effects of social norms and avoidance of regret. People hate the idea that their team might be selected, other members of the team get a prize, and yet they themselves lose out because of something they didn’t do that was easily within reach. The result: The HRA completion rate rose from 40% to 64%, compared with the 40% to 44% increase yielded by merely doubling the incentive.

How can we encourage the adoption of behavioral economics approaches? The first step is getting employers, insurers, and providers to reconsider the assumptions that underlie conventional approaches like points, miles, and other traditional incentives. A key lesson from behavioral economics is that the size of an incentive matters far less than how it is framed and messaged, how it travels along existing pathways of social networks, and how it connects to individuals emotionally. Here are some specific suggestions for implementation:The aim of behavioral economics is not just faddish games that work one time to achieve a minor health goal. Its techniques have been used to significantly increase weight loss, smoking cessation, and diabetes management. 

Behavioral economics approaches sometimes involve what is called automated hovering, whereby wireless data from internet-enabled scales, blood pressure cuffs, glucometers, or pill bottles help large numbers of patients stick to health-promoting activities. 

Substituting technology for otherwise expensive personnel helps achieve scale. We are currently running a large trial of automated hovering, funded by the Centers for Medicare and Medicaid Services Innovation Center, that aims to reduce rehospitalizations and new cardiovascular events in patients after a heart attack.

• Instead of giving a reward (such as a cash payment for completing a health-risk assessment or for not smoking) only to people after they meet a goal, give it to everyone in an account that they can see (like an online bank statement or even a physical gift card that isn’t yet activated). And take it away only if success is not achieved. This approach makes the reward tangible and within reach today, when the action needs to happen. It also takes advantage of our natural aversion to loss (people work harder to retain something than to earn it).

• Use separate checks or gift cards to deliver benefits that would normally be buried in a paystub. In short, make the smaller incentives easier to see and, therefore, more influential.

• Construct teams so that individual efforts become group achievements. For example, rather than merely encouraging individuals to walk more, create teams whose success depends on each member walking a minimum amount (say, 7,000 steps a day). Teams would also compete against each other for prizes or bragging rights. By enlisting social norms, you capitalize on the most powerful of human motivators.

• Turn repetitive activities, like taking medication, into a daily game in which people are eligible to participate only if they took their medication the previous day. Such an approach effectively pairs the routine with engaging and emotionally positive experience.

Increasingly, technology platforms can help deploy these science-based approaches in organizations that need them.

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