Drake Bennett of the Boston Globe recently wrote an article on Happiness and its relationship to money, 'Happiness: A Buyer's Guide'.  Although several points he makes are accurate there are several failings in the article.  I try to document them below.

First, he describes how paying for things for other people makes us happy (i.e. increases our reported, or subjective, well-being), but he does not extend the notion of purchasing things for other people to doing things for them with your time or effort.  What I mean here is what about when you don't pay money, but instead expend time and effort to do something for or with someone else while not spending any money at all? If you admit that prosocial acts are inherently beneficial and increase your subjective well-being, might not the same or similar acts when you don't spend money result in similar effects?

This brings us to the second point, might not paying for prosocial acts and events crowd out the voluntary or 'free' ways of doing the same thing? Yes, I might feel better signing a check to an aid organisation, but in doing so I might decide not to dedicate my time and energy to the same organisation.  There is not discussion about which of these two acts might, in fact, make me happier.  There is no discussion of acts at a zero price.

Finally, suppose that I believe that I can increase my happiness by spending money on relational activities, but I believe I need more money to achieve these goals. Believing this, I choose to work more.  In working more, however, I have less time to dedicate to friends and family, to those very things that make me happy because of their relational benefits.  The article fails to acknowledge that you need to maintain your current level of work or income and change your spending to relational (rather than straight consumption) acts to increase your subjective well-being, otherwise you might substitute away from the things that sustain you in order to get more money to spend on those things. 

Maybe it takes thinking like an economist to consider these problems i.e. substitution, zero price, crowding out,. But these ideas were not discussed in the article.  They should have been.