April 23, 2020
Kenyon has temporarily adjusted its operations due to the COVID-19 pandemic. Read more here.
The 2014 Baccalaureate speaker, chosen by the seniors, was Associate Professor of Economics Jay R. Corrigan. A member of the faculty since 2002, he specializes in agricultural, environmental, experimental, and resource economics, as well as publicsector economics. His research focuses primarily on estimating the value consumers place on new product traits. A graduate of Grinnell College with a Ph.D. from Iowa State University, he also serves on the faculties of the College’s programs in environmental studies and public policy. Watch the Baccalaureate service online.
Hello Class of 2014. How are you?
I want to start by thanking you for choosing me to give this address. I consider it one of the great honors of my teaching career. And as a token of my gratitude, I will do my best to keep my remarks brief. In a moment, I’m going to talk about what economists have learned about what makes people happy, but I want to start with a story.
When I was just one year older than you are now, my college roommate married his high school girlfriend. The ceremony was moving. The location was beautiful. The weather was perfect. The food was delicious. And the day ended in tears.
But I don’t want to talk about any of that. Because when I think back to that day, something else really stands out. And that “something else” might give you some insight into the way economists think.
I was the best man. And the morning of the wedding, my roommate’s mother pulled me aside and told me that one of the best man’s traditional responsibilities is to spend the morning of the wedding running errands for the groom’s mother. A note to all of the young men in the audience: Don’t fall for this. It is total fiction. Indeed, I had my doubts about it at the time, but I went ahead and helped her because it was obviously the nice thing to do, and because she was, and is, a very forceful woman.
What I didn’t know when I agreed to help her was that I would be driving her Porsche while I was running these errands. I’ve never been a car guy, but I did know that this was very expensive German sports car, and that it would almost surely be the fastest car that I’d ever get to drive. But that wasn’t what was so remarkable about the day. What was remarkable was that that day represented such a tidy little socioeconomic field experiment. Because for those few hours, a 23-year-old, struggling graduate student got to look the part of a much richer person. And I have to tell you, I was absolutely amazed by how people treated me. For one thing, people were nicer to me in traffic. For another, when I was sitting at a stoplight with the top down, I could hear people whisper “Porsche.” And as a young man, the most remarkable thing was that six women whom I had never met in my life asked me if I could take them for a drive in my car. Never before or since has that happened. In each of those six cases, I felt like I had to tell them that it was actually my friend’s mom’s car, and she hadn’t given me permission to give anyone a ride. So, sorry but no.
Which is all to say that this was an extraordinarily memorable day, because it gave me just a glimpse of how different my life might be if I had a lot more money. And as an aspiring economist, I couldn’t help but wonder if that life would merely be different, or if it would be, in fact, a better and happier life.
Of course, I’m hardly the first person to think about the relationship between money and happiness. As we all know, the Wisdom of the Ages tells us that money cannot buy happiness. Somewhat inconveniently, though, the Wisdom of the Ages is not at all consistent with the data.
Forty years ago this year, Richard Easterlin was one of the first economists to dive into this data. Easterlin knew from earlier survey research where people were asked to rate how happy they were, say, on a scale of 1 to 10, that rich Americans were, on average, happier than poor Americans, but he didn’t know why. Specifically, it wasn’t clear whether the rich were happier because they had a lot money, or if they were happier because they had more money than the people around them—in other words, because they enjoyed higher relative status. But he came up with a very clever way to tease out an answer. Instead of simply looking at the rich and the poor within a given country, he decided to compare the average level of happiness across countries. Because he realized that if you really could buy happiness, then the average person living in a rich country should be happier than the average person living in a poor country. But what he found was that the average person living in Nigeria was just as happy as the average person living in Poland, who was just as happy as the average person living in the United States. That is, he found no relationship between countries’ average income and their average happiness. What Easterlin concluded from this was that rich Americans are happier than poor Americans not because they have a lot of money, but because they have more money than those around them. This result has become known as the Easterlin Paradox. That is, that once a society achieves an average income of about $10,000 per person, further increases in income do nothing to make the average citizen happier.
So if this is true, what does it mean for you? From an individual standpoint, it suggests you’re likely to be happier earning, say, $50,000 per year in rural Ohio than you would be making two or three or even four times that much in a major city. That’s because in rural Ohio, your neighbors’ incomes will be modest, but in the city, you’ll constantly be reminded that other people have so much more than you.
But you might’ve noticed that I said that this is what you should do if Easterlin’s results were true. Writing in 1974, Easterlin found no relationship between income and happiness across countries. But just because you can’t find something doesn’t mean that it’s not there. With the benefit of another 40 years’ worth of data, the most recent World Happiness Report (yes, there is such a thing) finds that, when it comes to explaining the difference in happiness across countries, the single most important factor is the difference in income across countries. This means that the Easterlin Paradox isn’t such a paradox after all. It remains true that we get some considerable satisfaction out of earning more than our peers, but it’s also true that money matters all by itself.
So can money buy happiness? Yes, it would appear that it can. But you should know that happiness is very expensive. The typical American rates their happiness as a seven on a 10-point scale. If you were that typical American and you wanted to move from a seven to an eight on the 10-point scale, and you wanted to do it solely by making more money, you’d need to increase your income by a factor of four. For example, you’d need to go from making $50,000 per year to making $200,000 per year. And if you wanted to increase your score on the happiness scale by still another point, from an eight to a nine, you’d need to increase your income by another factor of four, or from $200,000 to $800,000 per year. So, again, money can buy happiness, but you, like me, probably can’t afford it.
That’s depressing, I know. But there is good news, and that’s that money is just one of the things that determines how happy you are. There are many others. Some, though, are beyond your control. If you’re beautiful, you’re likely to be happier. If you live in a country governed by well-functioning democracy, you’re likely to be happier. If the unemployment rate is low, you’re likely to be happier whether or not you have a job. As I say, there’s not much you can do about any of those things.
So what is within your control (other than how much money you earn)? There are many things. I’m going to focus on just four.
Number one, you should do everything that you can to find a job. Even if you have plenty of money, being unemployed (that is, wanting a job but not having one) will make you miserable. Many of you have already found work and I, like your parents, applaud you for that. But I know that others of you are still looking. If you’re in that second group, believe me when I say that you will find work. I say this so confidently because the current unemployment rate among college graduates is just 3 percent. And while that’s actually high by historic standards, it’s less than one half the current unemployment rate among high school graduates, and, indeed, it’s lower than the unemployment rate for high school graduates has ever been. Related to all this, if you have the choice of jobs, pick the one where you’re most likely to get along with your colleagues. It saddens me to think of all the people I’ve known who landed their dream job but later quit because they hated their coworkers.
Number two, once you’ve found a job, live as close to the office as you can. You may not be able to afford a very big place, but that’s a tradeoff that’s worth making because a short commute has a surprisingly large effect on happiness, while living in a big house has a surprisingly small effect.
Number three, be generous. Spending money on others will make you happier than spending it on yourself. (Full disclosure: My wife works in Kenyon’s fundraising office, but that doesn’t make my previous statement any less true.)
And Number four, be very careful when deciding who you will marry. At no point in history has an emotionally fulfilling marriage done so much to make a person happy as it does today.
Related to this last point, please humor me a moment longer while I tell another story. When I was a senior in college, I agonized over where to go to graduate school, and I talked through the decision with everyone who would listen—my parents, my friends, my advisers, my swim coach, and on and on and on. But most importantly, I talked about it with my classics professor, and she gave me the best piece of advice I’ve probably ever received. She said, “Where to go to graduate school isn’t important enough to justify the anguish you’re putting yourself through.” “Who you marry,” she said, “is that important, but little else is.” I remember being struck by how bracingly socially conservative that sounded. And I’m guessing many of you feel the same way right now. But I have realized that she was absolutely right. I went on to marry my college girlfriend, and that is easily the single the best decision I have ever made. If I’d chosen to go to the University of Illinois instead of Iowa State, my life would not be that different today. But if I hadn’t married my wife, I would be dramatically less happy.
This, by the way, is not to say that all of you should marry one of your classmates, though a startling number of you will. It’s just to say that there are a small number of decisions in life that are truly important. Do your best to get those decisions right, and try not to worry too much about the less important stuff.
I’ll close by saying that since I was 20 years old, my only career goal has been to teach at a college like Kenyon. I am very lucky to have landed my dream job. And I thank all of you here—students and parents—for making it possible for me to do what I do.
Congratulations to everyone here today. And to the Class of 2014, I wish you the very best of luck as you start your new lives.