Economic Wisdom to Apply in Your Twenties

Chapter 86

Chapter 11 Section 2 The Marginal Utility of Happiness Is Diminishing

After Li Gang graduated from university, he was assigned to work in a remote mountain township government.Knowing that he has no social background, he works extra hard.

Two years later, the county magistrate went to the countryside and fell in love with this down-to-earth young man. Li Gang was transferred to be the county magistrate's secretary.

But before he had time to get excited, Li Gang discovered that the political competition was fierce, both openly and secretly. His pressure was greater than when he was in the countryside, and his work became more steadfast and hardworking.

Two years later, the county magistrate was promoted to serve in the city.The county magistrate also noticed Li Gang's efforts, and the county magistrate assigned him to an agency of the city government.

It is a qualitative leap from the county to the city, and Li Gang is very excited.When he first arrived in the city, housing was tight, and there was no single dormitory, so Li Gang could only live in a warehouse at the corner of the office building.Li Gang didn't care about the poor housing, but his wife was still in the county, and he took a long-distance bus to and from every week. Gradually, he felt extremely hard both mentally and financially.

After some hard work, the leader promised to solve the housing problem for him.Li Gang ran around again, and finally transferred his wife to a counterpart unit in the city, and established his own family in the city.Li Gang felt that he could finally relax and enjoy life.

But watching the people around him get promoted one by one to become the chief department and the deputy department, Li Gang had to suffer for these administrative levels.If a staff member has been working for a long time without being promoted, he will be looked down upon by others.In order to be promoted, he had to work hard again...

In the era of material shortage in the past, the whole society regarded economic development as the destination of happiness.But these years of theoretical research on happiness have found that with the development of the economy, people's happiness has not increased.According to the research report of two Swiss scholars, from 1946 to 1991, the per capita income of the United States increased from 11 US dollars to 000 US dollars (based on the 27 US dollar value).However, this increase in material wealth has been accompanied by a decrease in the average level of happiness.If the full score is 000, then the happiness level in 1996 was 3, but it dropped to 1946 in 2.4.

Bernard Shaw said: "Economics is an art that makes people happy." Economists believe that the reason why people pursue happiness so persistently is because happiness can bring people utility, that is, physical and spiritual satisfaction.If happiness is also regarded as a commodity that can be consumed, happiness still cannot escape the doom of diminishing marginal utility.When we are enjoying a kind of happiness that we have finally obtained, in fact, the marginal utility that this kind of happiness brings to us is diminishing.When this sense of happiness gradually disappears, we will pursue another life goal or state of life, and then gain new happiness.

Economists have always tried to maximize happiness.American economist Samuelson once gave a happiness equation: happiness = utility/desire.This formula tells us that the degree of happiness is directly proportional to utility and inversely proportional to desire; when the desire is given, the greater the utility, the happier; when the utility is given, the greater the desire, the more painful.

Samuelson's happiness equation points us to the path to happiness: in order to be happier, we must increase utility or decrease desire.It is still an old saying in economics, "There is no free lunch in the world", and increasing utility requires increasing income.However, economics also tells us that everything has a margin, and marginal utility always exists. In the process of increasing income, it should be just right.If we lose leisure time in the pursuit of wealth, we may gain not happiness but pain.Therefore, it is easier to obtain happiness by controlling desire than by increasing utility.In the eyes of economists, people who live a happy life must not be slaves to desire.

Wisdom sketch: the happiness index in the outer suburbs is higher than that in the city
In 2006, the Beijing Municipal Bureau of Statistics released the Beijing Municipal Harmonious Society Index Monitoring Report.The report shows that the happiness of citizens in 10 outer suburbs and counties is higher than that of citizens in the city center.According to expert analysis, the reason for this phenomenon is that in the pursuit of economic development, the economic development of the city center is faster than that of the suburban counties. I just felt the happiness brought about by economic development.

(End of this chapter)