"Feeling Up When the Economy's Down:
Skim the financial headlines these days and you’ll be struck by the sheer volume of bad news. Corporations announce layoffs by the tens of thousands. Millions of people have lost their homes to foreclosures, and millions more are underwater on their mortgages. And the country's overall economic growth remains anemic.
Given these developments, it’d be natural to think we’d all be facing an extended emotional funk lasting at least as long as it takes the economy to recover. Surprisingly, though, economists and psychologists say that’s not likely to happen, given the way most people adapt to their circumstances, both good and bad.
What Money Can’t Buy:
To be sure, there are plenty of grim faces out there, especially among those who’ve lost jobs. Economic losses hurt, and some believe that the national mood more or less tracks the Dow, which would put the American psyche somewhere between despondent and clinical. But it probably won’t last. Experts have spent decades studying the relationship between money and happiness, and there’s a growing body of evidence suggesting that the link between the two isn’t as strong as it might seem. Increases in wealth don’t lead to enduring gains in well-being, and conversely, decreases in wealth don’t make people permanently unhappy, either.
'There’s a level of loss at which you lose a sense of physical safety,' says David Mashburn, a former clinical psychologist who founded an HR consulting company and blogs about the psychology of work. 'When that happens, the person’s sense of subjective well-being falls pretty dramatically. I don’t think people in the United States are even close to that level.'
Beyond this dynamic noted by Mashburn, the evidence for why we’re likely to be just fine emotionally despite the recession rests on several grounds. First is the theory of relative wealth. We’re social animals, highly status-conscious, and we keep score of success not in absolute terms but by how we’re doing compared to the people around us. By that regard, the fact that the recession is so pervasive across the country is likely to spread the pain around, fostering a sense of lifeboat camaraderie. 'I don’t want to say that this is great,' says Sonja Lyubomirsky, a psychologist who studies happiness and teaches at the University of California at Riverside. 'It still sucks. The economy is bad, but overall it’s not as bad as it could be, because we’re all in the same situation.' In other words, you don’t worry about keeping up with the Joneses if they’ve just lost their four-bedroom colonial to a foreclosure.
Another argument has to do with something called 'hedonic adaptation.' This is the phenomenon by which people get accustomed to both luxuries and hardships. If you get something you wanted, its ability to make you happier dwindles over time, and your baseline for luxury ratchets up a notch. Buy yourself a BMW 535 sedan, and pretty soon you’ll find it hard to believe you ever settled for a Honda. Worse, you soon might find yourself convinced that you can only be truly happy behind the wheel of a BMW 735.
The good news is that the process works in reverse as well — we eventually adapt to reduced circumstances, although it’s more painful and tends to take a little longer. So if you have to scale back your standard of living by eating out less or vacationing in less trendy climes, you’ll feel the loss for sure but over time you’ll get used to it and it won’t feel so bad anymore. It’s as if your happiness level had a thermostat that keeps it from getting too extreme in either direction.
Further evidence of this phenomenon is supplied by the research of Harvard psychologist Dan Gilbert, who looked at people who had experienced something wonderful, such as winning the lottery, and those who had experienced something awful, such as becoming a paraplegic. In the long term, somewhat astonishingly, both groups reported similar levels of happiness. It seems you get used to what you have, good or bad.
The Key to Inner Happiness:
If money doesn’t lead to happiness, then what does? The research is pretty clear here as well: relationships with friends and family (who can’t be laid off), a sense of fulfillment (which many people don’t get at their job, even if they still have one), hobbies, and some kind of spiritual component to their lives.
And this spirituality doesn’t need to come from religion. Psychologist Andrew Shatt, who counsels corporate clients about leadership and co-wrote a 2001 book on resilience, says the spiritual component can be a club or even a political organization. 'Just something that was here before them, and something that’s going to be here after them,' he says.
Finally, there’s a possibility that some people might actually become happier through disruptions brought on by the recession. They’ll discover some hidden inner strength, or change careers to something more fulfilling, or have the time to repair a fraying marriage. Lyubomirsky likens it to receiving bad medical news. 'Some people get happier after a cancer diagnosis,' she says. 'They reprioritize their goals, or they discover who their true friends are. No one’s saying we should all get cancer, but tough situations can lead to greater happiness.'
Mashburn, the former clinical psychologist, points to a study on job stress from the 1970s in which researchers interviewed and examined employees at Illinois Bell Telephone over the course of intense layoffs as the telephone industry deregulated. Of the group of 430 supervisors and executives studied, about 65 percent experienced an increase in stress-related conditions, like heart attacks, strokes, obesity, and divorce. But the other 35 percent managed to thrive, staying committed to their work or to the process of finding a new job, and feeling as though they had taken control of their own fate. Moreover, this group considered the layoffs to be a challenge — something they could rise above. 'They didn’t feel that their fate was sealed,' Mashburn says. 'They said, "This is going to happen. There’s stress in life. I shouldn’t be surprised by this." '
In the end, many of us may end up being surprised by how well we handle the current financial storm. While no one would suggest it’s going to be fun, there’s undoubtedly something reassuring about knowing that we’re more adaptable than we think, and that our happiness is more than just a reflection of our net worth. Those are lessons that we’re likely to learn again when the good times return — whenever that is."
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