Laura Rowley Money & Happiness

I was in a severe funk last week after receiving a message with four cruel words -- no, not, "I don't love you," but rather: "Operating system not found."

When my laptop flashed those four little words, I experienced the stomach-churning sensation of horror that accompanies losing one's wallet, or writing the wrong date on the calendar and missing an important meeting. I had multiple programs that had never been backed up, not to mention a massive file of digital photos that recorded, among other things, my youngest daughter's first three years of life. My laptop's crash caused me much unhappiness indeed.

Misery loves company, and I found a significant amount in a new report from the University of Chicago's National Opinion Research Center, which discovered that unhappiness crept upwards from 1991 to 2004. Overall, 92 percent of participants reported at least one significant negative life event in 2004, compared to 88 percent in 1991, the last time the survey was conducted.

The report is considered the Lexus of well-being assessments because of its comprehensive methodology, covering 60 different life events.

"We're not really studying happiness but the occurrence of objective problems," says Tom Smith, the study's author. "The more problems people have, the lower their evaluation of their psychological well-being, and the greater the likelihood they score high on scales that measure stress and anxiety."

The theory is simple: Bad events make people feel bad. Find out how many and what types of problems people are having, and you get a collective reading of society's well-being.

Living Above Their Means -- Unhappily

The survey asks specific questions in the domains of health, work, finances, material hardships, family/personal, law/crime, and housing -- for instance, whether someone has been hospitalized, experienced a spouse's death, or declared bankruptcy. Health problems afflicted roughly three-quarters of adults, and all other categories (excluding law/crime) affected 20 to 33 percent of people. Just 14 percent had events related to law/crime.

More people experienced difficulties related to living above their means: The number of respondents harassed by bill collectors jumped to 16 percent, from 12 percent in 1991. That's despite a 1996 law, the Fair Debt Collection Practices Act, designed to curb such abuses. The greater harassment is "entirely a function of higher overall debt," says Smith.

In other personal finance categories, the number of people who reported going without health insurance rose to 18 percent, from 12 percent in 1991. Respondents also experienced more hunger, homelessness, evictions, utility shut-offs, and transportation difficulties, although the rise in such problems was smaller.

Who suffers most? Single parents, the unemployed, people with low incomes, minorities, central-city residents, and younger people, according to the study. And adversity tends to beget adversity. "If you're high in financial problems, you tend to be high in job-related problems, and family and personal relationship problems -- because it tends to have a ripple effect," says Smith. "Financial problems in general also correlate with health problems."

Money Buys Happiness -- to a Point

The study found that troubles decline as income quartiles rise. So does money buy happiness? Smith puts it a different way: "Money makes you happier -- as long as it keeps you from being poor."

In other words, the higher the income, the less likely one is to be evicted, go hungry, live in a crime-ridden neighborhood, have a child drop out of school, lack the wherewithal to see a doctor, or be forced to hide the car from the repo man. Once basic needs are met, however, studies show rising income doesn't translate into a direct rise in well-being, Smith says.

Aside from giving me proper perspective on my laptop headaches, what purpose do these broad happiness diagnostics serve? Scholars increasingly argue they should be used to make public policy in wealthy societies, supplementing (but not supplanting) economic indicators such as the gross domestic product. This is because the richer a society becomes, the less its well-being depends on money. Over the last 50 years, U.S. GDP has tripled, while reported life satisfaction has flat-lined, and depression rates have jumped 50-fold.

"Because simple needs are largely satisfied in modern societies, people today have the luxury of refocusing their attention on the 'good life' -- a life that's enjoyable, meaningful, engaging, and fulfilling -- and using economic and other policies in its service," write psychologists Martin Seligman of the University of Pennsylvania and Ed Diener of the University of Illinois in a recent article in Psychological Science in the Public Interest. The European Union already monitors well-being through its "Eurobarometer," and the German Socioeconomic Panel Survey assesses life satisfaction along with income and employment.

Leave Fulfillment to Me

I agree it's smart for policymakers to get a better handle on well-being. Certainly governments can improve well-being by addressing employment, housing, access to health care, discrimination, education, crime, and public transportation. (For example, research has shown nearly everyone hates commuting, and an investment in bullet trains might alleviate some incivility in the morning rush.)

But implementing well-being in less tangible areas is problematic, to say the least. In his recent book "Happiness: Lessons from a New Science," British economist Richard Layard describes the conditions that make people happy and offers somewhat vague recommendations to achieve them: "On performance-related pay, we should worry about its tendency to encourage the rat race," he writes. "On taxes, we should recognize the role they play in preserving the work-life balance."

But once we move out of the arena of basic needs, creating a meaningful life is an issue of personal accountability -- not a public policy problem. Fulfillment requires identifying my values, establishing personal and financial goals that reflect them, and making sacrifices to achieve them.

I don't need the government to discourage my employer from offering a performance bonus to protect me from the rat race. I can just say no. I don't need Uncle Sam putting his hand in my pocket to help me achieve work-life balance. I can set my own priorities.

I'd prefer that policymakers devote their time and my taxes to improving schools, housing, health care, and employment opportunities for the millions of Americans who live below the poverty line -- 36 million at last count, more than a third of them children. The happiness thing I can handle.