Messages of Hope

The Paradox of Affluence

Published / by Jana

One out of seven passages in the Gospel Luke is about money. Not much has changed in couple of thousand years. We still wonder how much is enough and how to relate to what we do and don’t have.

Statistical evidence indicates that money does not make us content. In a 2006 paper, “The Affluence Paradox: More Money is Not Making Us Happier – a review of statistical evidence,” authors John Stutz and Erica Mintzer demonstrate statistically, using a variety of measures, that “in the early stages of rising income, affluence does correlate with well-being, but at a certain point wellbeing levels flatten out. At high levels the trend can reverse.”

They cite a tool called the Well-Being Curve, “which posits three possible relationships between affluence and well-being.” The vertical axis is “wellbeing,” the horizontal axis is “affluence,” ranging from “developing” to “affluent.” There are three curves on the chart, indicating the “possible” relationship between wellbeing and affluence, the “assumed” relationship, and the statistical “reality” of the relationship.

“The conventional assumption (is) that well-being is directly proportional to affluence: well-being is assumed to rise indefinitely, in a straight upward line, as affluence rises.” The reality is, however, that “well-being remains constant or even decreases above a certain level of affluence. Beyond this point, whatever marginal satisfaction we may gain from additional luxuries is offset as we ‘work to pay for them, learn to use them, maintain them, dispose of them and perhaps feel guilty about having them when others have so little.’” The third curve represents a “more fruitful path of the good life, whereby additional fulfilment is achieved best through avenues other than wealth, such as cultivating “relationships, creativity, community, nature and spirituality.”

Switzerland considered a radical proposal about money this year. The guaranteed minimum income is designed to decouple money and merit. Swiss voters had a chance to consider a guaranteed minimum income for all its citizens. They were given the opportunity to consider this referendum because over 100,000 signatures in favour of putting it to a vote were gathered. Its time has clearly not yet come: 77% of voters were against it.

Here are two points proponents make about the scheme, which called for all adults to be paid an unconditional monthly income whether they worked or not:

  • the scheme is designed to get ahead of the reality that as work is increasingly automated, fewer and fewer jobs will be available to workers (a 2015 report of the Committee for Economic Development of Australia indicates that almost 40 per cent of Australian jobs that exist today have a moderate to high likelihood of disappearing in the next 10 to 15 years)
  • it values the unpaid work that goes on in our society: “In Switzerland over 50% of total work that is done is unpaid. It’s care work, it’s at home…so that work would be more valued,” says one proponent

Other countries – Canada, Finland, Holland, the UK – are engaging in or considering pilot programs along these lines. And the idea is under consideration by some here in Australia. In June of this year on The Conversation website, commentary by Mark Liddiard, Senior Lecturer in Social Policy at Curtin University, asks, “Could the idea of a universal basic income work in Australia?”

At first glance, the concept of a universal basic income seems both costly and at odds with our prevailing sense of conditionality. That is, what benefit to individuals or society as a whole can possibly flow from letting the idle live in uninterrupted idleness? And how could any politician conceivably sell such an idea in Australia, where the divisive narrative of “lifters and leaners” has been a key plank in justifying recent welfare cuts?

The idea of universal basic income has a long history of support from both sides of politics. One of the reasons for this is that a key objective is to reduce disincentives to work. This sounds counter-intuitive – giving everyone a basic income to live on without working would surely increase disincentives to work?

But we know that welfare tapers – or the loss of welfare income for each dollar earnt in the labour market – can often be steep enough to ensure that work does not pay, or pays so little extra for a full week of work, that it discourages job seekers. With a universal basic income, those who want to work keep job income on top of their basic income.

An added advantage is dramatically reducing the costs of administering ever more complex welfare benefit systems. In Australia the cost of administering Centrelink is around $3 billion, so simplification can offer huge potential savings, as pointed out in last year’s Review of Australia’s Welfare System report.

The language of “lifters and leaners” may help to sell welfare cuts but works less well in the context of the working poor – those in insecure employment faced with low and stagnating wages.

A system whereby the “strivers” get enough to live on – and also get to keep whatever else they earn – while the “skivers” do not starve but are tangibly worse off – may prove to be attractive to an increasingly disaffected electorate.

If you’d like to learn more about the universal basic income, there is a 2015 paper produced by the Royal Society of Arts called “Creative citizen, creative state: the principled and pragmatic case for a Universal Basic Income.” For one proponent, it boils down to one simple question, “How can we guarantee the dignity of everybody.”

When we find ourselves in conversations about money, or sex, or religion – any of those things we’re not supposed to talk about in pubs and parlours but which we can’t help ourselves discussing because they are such big parts of our lives – this could be our guiding principle: how do we guarantee the dignity of everybody.

Money is not the thing, the thing is the moral questions that money forces us to grapple with; the spiritual disciplines it demands of us. God help us to pursue, as Paul writes to Timothy, “righteousness, godliness, faith, love, endurance, gentleness.”