Tuesday 26 September 2006

Pic of the day: "Here's hoping this feeling of joy lasts for ever and ever." But unfortunately it doesn't... science shows that the most widespread effect of a wage rise is demand for another wage rise.

Need money?

If you are reading this from the comfort of your home, the answer is probably "no". Because if you, like me, have Internet access at home, you hardly live in abject poverty. Most of the world still does, although much of it is slowly coming out of it. (The exception being those countries that are in war or civil war, or where the leaders wage war against their own citizens.) You may feel dirt poor by Norwegian standards, or by the standards of Lausanne, Switzerland or Boulder, Colorado. But by the standards of Mombasa or Mogadishu you are probably doing OK.

Now, WANTING more money is another thing entirely. Most people do. While a few are just collectors, most want money as a step toward getting something else. Or perhaps because they have already gotten something else, and now are faced with the problem of paying for it. These are all familiar feelings. I have been through each of them. And if you suddenly stopped me on the street and asked me if I would say no to free money, I would probably thoughtlessly answer like everyone else. But actually that is not quite true. Because I already did say no, or rather I did not say yes.

This happened a few years ago, when one of our earlier bosses at work took me aside one day and recommended that I apply for a wage rise. I nodded politely and did nothing about it. It is not like the money evaporates, anyway. There is only so much to go around, and other people at work want it too. It's not like I earn less and less anyway: Even though I am not unionized, I still get my salary increased over time, just not by the extra steps up for those who belong to labor unions. So far it has easily kept pace with inflation, which is really low these days. And it's not like I actually work harder for each year. Or smarter, but I'm not writing about work.

Lots of unscrupulous people try to take advantage of the simpleminded or overly optimistic by offering them quick, easy money. From lotteries ("a tax on people who are bad at maths") to recent religious movements that preach money by faith or "positive thinking", in which you don't need to actually do anything valuable for others, just wait for the money to float to you. For some reason, the idea of being a parasite seems to appeal to people. This is nice, since they will have plenty of opportunity for that when they grow old and infirm.

"But wait!" you cry, or at least my best friend did. "You actually said no to money? You could have given it to me!" Well, that was partly a joke, I think. But surely I could give the money to the poor, thus making the world a little better and improving my own conscience with the same strike? Well, yes, sure I could. But it is not, as my British friends sometimes put it, bloody likely. If I wanted to give money to the poor, I would already do so, instead of just clicking daily on the Hungersite. I'm certainly not swimming in money - I'm earning far below average for an adult Norwegian - but I could eat more bread and less snacks or something. There is always a way if you really want something. But I don't really want to give to the poor unless I know them personally. Which I don't go out of my way to do either. (Here in Norway, most of them are decidedly unpleasant personalities, if not outright dangerous.)

The thing is, science has found through extensive statistical analysis that above a certain level, increasing income will cause the expenses to increase MORE than the income, causing the human to resort to borrowing. This tendency persist for a long interval of increasing income, far longer than I realistically could achieve in this lifetime. While this is not an exact and immediate effect like the Law of Gravity, it is still such a strong current that my little boat would probably be carried off. And in any case, as I said, the money is not lost. Other people have it now. Let THEM give to the poor if it is so important. Why me? Because I am intrinsically better than other humans? I told you, I have observed myself for years. I know myself. I am intrinsically smarter than 99 out of 100 humans (and then some, probably) but this does not at all translate into less temptations and more empathy. May God give that at some time it does! Then the Flynn Effect would give us a society full of loving, caring people denying their egoism. Is this what we see today? I think not.

I think many people honestly wish for more money because they want to do good with it, not for their own enjoyment. I also firmly believe that these people and their honesty are very superficial, like the shell of an egg, and there is some very different content right under that surface, which they are not aware of. This content is greed, which is a delusion.

It is a very understandable delusion. If you don't have any money (or the equivalent), you will be short of food and clothes and shelter and transportation. It is not like we can just swing from one branch to the next and pick fruit when we are hungry. So at a very low level, any added money is a big boon. The change from being hungry to being fed is a dramatic improvement of life. Likewise the change from sleeping on the streets to sleeping in a bed inside is a dramatically better quality of life. Things continue like this for a while, but soon the improvement is much less. You can say the cost of improving your quality of life rises exponentially. You know that kind of graph, right? The one that rises slowly and then faster and faster and shoots through the roof. At first, with mere survival as the starting point, you may double your standard of living for four times the cost. But to triple it, you need nine times the money, and to increase it by 10, 100 times as much. We all who can read this live further up than that again on the scale. Even a small improvement would cost a fortune. And because we expect it to increase as rapidly as it did at the start, we will always be disappointed.

When news announcers sometimes trip up and read "billion" for "million" or the other way around, this is not strange. The human mind was not constructed for working with that kind of numbers. We are not limited to "one, two, many", but well before 1000 we start to lose our intuitive sense of numbers. Quick, roughly how much bread could you buy for your pay, if you did not have to buy anything else? If you are anything like me, you would be groping for a calculator or at best start doing longhand in your brain. You don't have an immediate, intuitive grasp of these kind of numbers. Or at least I don't.

This shortcoming is not reserved for counting money alone. We make many blunders when we try to deal intuitively with things outside the stone age range. For instance, say you have a small home that is 10 by 7 meters (or yards), which is what my Sims tend to start with. That would be 70 square meters. Now, miraculously you get to double your living area to 140 square meters/yards. If you keep the same proportions, how much longer will the house be after you doubled its area? If you are an adult, you probably did not answer "10 meters longer", but did you know it would be only 4 meters longer, from 10 to 14 meters? And only 3 meters broader. This makes no sense since neither four nor three are particularly large numbers, in fact each of them is well below half as much again as you already had. It really doesn't look twice as big. And this is the case with many things in our lives. They don't really look as great as we had expected.

Because of this law of diminishing return, people don't continue to grow happier as they earn more. They certainly do at first, when they are poor. But then it stops, and eventually reverses as our expectations outpace the possible. So while money is hardly evil, it ceases to be important at some point (varying with where you live, the size of your family etc). Most people don't realize this, and forge ahead, wasting their time and attention which could by now be put to better use, even for themselves.