In a series of books since the mid-1990s, Clive Hamilton has attacked modern society as overly preoccupied with making and spending money. For the most part, political blame is apportioned to “neo-liberals” who, he alleges in Affluenza (2005), “have set out to promote higher consumption as the road to a better society”. But the Left has also not escaped criticism, and in What’s Left? The Death of Social Democracy, Hamilton elaborates on his view that social democrats share the neo-liberal assumption. They disagree over how actively governments should lessen inequalities of income and consumption, but not over whether rising income and consumption are desirable. 

To Hamilton, this “compulsion to participate in consumer society” is no longer driven by material need but by “the belief of the great mass of people that to find happiness they must be richer, irrespective of how wealthy they already are”. Yet Hamilton’s work provides no direct evidence for this proposition. The evidence is circumstantial: inference from consumer behaviour and a Newspoll finding that nearly two-thirds of its respondents agreed with the statement that “You cannot afford to buy everything you really need.” In a society that is very wealthy by comparison with the past and with elsewhere in the world, this figure is consistent with – though not proof of – an excessive preoccupation with money.

Yet other, similar research tells a different story. In the 2003 Australian Survey of Social Attitudes, for instance, only 20 per cent of those sampled indicated that they were finding it difficult to manage on their current household income. In the HILDA survey of the same year, reported on by Hamilton in a 2005 Australia Institute paper, around two-thirds of the people in this major longitudinal survey indicated satisfaction with their income. Satisfaction with standard of living, which incorporates the benefits of past purchases, was even higher than for income alone. The Australian Unity Wellbeing Survey consistently finds that around 77 per cent of its respondents are satisfied with their standard of living. Most people could find uses for more money than they earn. But preferring more money is not the same as believing that ever-greater amounts are needed for happiness.

Nor is the belief that money is the key to happiness evident in other survey research, which shows that Australians are willing to trade off more money to achieve other goals. In the 1999–2002 World Values Survey, Australians ranked sixteenth out of eighty nations in saying that leisure was “very important” in their lives. Fewer Australians than in most other countries thought good pay important in a job, while a greater number than in most other countries wanted jobs that were interesting, gave them an opportunity to achieve something and let them use their initiative. Australia Institute research corroborates the conclusion that material consumption is not all-important. When asked what would improve their quality of life, 75 per cent of those surveyed said more time with their family, and only 38 per cent opted for more money to buy things. The Institute’s survey on “downshifting” (taking a lower income to pursue other life goals) found that nearly one-quarter of adults did this in the decade to 2002. 

On this evidence, money is neither a source of majority discontent nor a goal to be pursued at the cost of all else. Commonsense was well ahead of the academic research in discovering that there is more to life than money. But if extra money is not essential to happiness, why do people prefer more of it? The simple and obvious answer is that if there is more to life than money, there is also more to life than happiness. Money can improve people’s lives in many ways that won’t necessarily feed into answers to questions like “All in all, how happy are you with your life these days?” 

To some extent, as Hamilton argues in his Quarterly Essay, consumption choices help to define who we are: what we wear, the car we drive, the food we eat, the books we read, the films we see – all of these things send signals to others about the kind of person we are. Typically, Hamilton offers a reductive reading of this consumption activity. “We no longer want to keep up with the Joneses,” he tells us, “we want to trump the Joneses by differentiating ourselves from them.” But surely these signals are as much about associating as differentiating. Most people want to fit in more than stand out, and they do so partly through shared tastes in consumer goods and services. In the language of social democrats, people feel “socially excluded” if they cannot afford the purchases expected of members of their preferred social group.

Aside from their social uses, consumer goods and services offer private benefits that are unlikely to influence overall judgments of happiness but are real nonetheless. It’s convenient to be able to read newspapers online, to microwave a meal quickly, or to make a call on a mobile while away from home. It’s unlikely that the millions of Australians who purchased these electronic innovations expected to be happier as a result, but they did believe that they would be better off in more modest ways. Few people seem to be downshifting from these technological advances. Even the Australia Institute has a website, and its press releases offer Clive Hamilton’s mobile number. 

Hamilton won’t accept that greater material wealth, except in the case of the very poor, can have positive effects. On the contrary, he asserts that the richest people in the world, the Americans, “are saying they are miserable” and that “it is the process of getting rich that causes the problems.” And in his ten theses on consumption he maintains that “in rich countries increased consumption is now associated with declining wellbeing.”

In a minority of cases, where people have muddled their priorities, this may be true. But as a generalisation it is not correct. While happiness has not increased as levels of consumption have gone up, nor has it decreased. It is remarkably stable. In the US, an overwhelming majority, more than 80 per cent, say that they are happy. This was as true in the latest survey, taken in 2005, as it was in the first, taken in 1946. Happiness questions are asked less frequently in Australia than in the US, but here, too, only a small minority regard themselves as unhappy. In the latest publicly available Australian survey, conducted in 2003, just 6.5 per cent of respondents rated themselves below the mid-point on a 0–10 happiness scale. 

The “rash of psychological disorders – anxiety, depression, substance abuse” that Hamilton attributes to the consumer culture is hard to see in the wellbeing data. A 1995 happiness survey, like the 2003 poll, put the proportion of unhappy people at 6 per cent. Yet the Australian Bureau of Statistics’ National Health Survey shows an increase in “mental and behavioural problems” from 5.9 per cent of the population in 1995 to 10.7 per cent in 2004–05. While some level of mental distress, as registered in the empirical research, is consistent with overall wellbeing, anxiety about one thing need not wipe out happiness felt about other things – these discrepant results require further investigation. 

The increase in reported depression may not represent any real change in mental wellbeing. It could instead be the result of increased reporting or reclassifying other states of mind. Initiatives like beyondblue have reduced the stigma attached to mental illness, and presumably encouraged more people to acknowledge that they have a problem. New drugs are probably part of the explanation, too, providing a relatively easy chemical fix for those who are feeling down, but one that requires them to visit a doctor and say that they are depressed.

Even if more people have mental-health problems, is the “consumer culture” to blame? Consuming more is not, in itself, typically bad for wellbeing. In every survey, those who do the most consuming – those on higher incomes or with greater wealth – have higher average wellbeing than the poor or relatively poor. In the National Health Survey, people in the lowest income quintile are more than twice as likely as people in the highest income quintile to report mental-health issues. The employed, exposed to the market economy through their labour as well as their consumption, are less than half as likely as the unemployed to experience a mental-health problem. 

These findings are more consistent with the social-democratic view than Hamilton’s: a lack of resources is a risk factor for low wellbeing and poor mental health. And indeed, the Australian Survey of Social Attitudes found that 18 per cent of those saying they had difficulty managing on their current household income were unhappy, compared to 5 per cent of those who said that they were “coping” and 2 per cent of those who described themselves as “living comfortably” (though the vast majority of people with low incomes do not report unhappiness or mental-health problems).

Of particular concern in any analysis of wellbeing are the unemployed. As noted, the unemployed experience higher rates of reported mental-health problems than the employed. European research suggests that this is not just the result of lower income. Even in countries where unemployment benefits make up 70 or 80 per cent of an unemployed person’s previous income, they still report significantly reduced wellbeing. German longitudinal research suggests that repeated unemployment has a “scarring” effect – even after work is found again, wellbeing is still below what it was before the initial job loss. Yet Hamilton’s low-growth strategy can only increase the number of unemployed people. Only two years of negative or low growth in the early 1990s nearly doubled the unemployment rate, and we did not get back to pre-recession unemployment levels until 2004. Is it any wonder that social-democratic parties prefer economic growth to Hamilton’s misery-creating policies?

Australian politics tends to operate through tackling perceived problems rather than implementing over-arching agendas such as Hamilton’s “politics of wellbeing”. But implicit in our recognition of problems is a rough conception of wellbeing that accords with the research on happiness and life satisfaction. Unemployment, low income and slow economic growth all make it harder to achieve the materially based aspects of wellbeing. Social-democratic parties – and, for that matter, all mainstream parties – sensibly focus on policies that aim to create the conditions for wellbeing. After that, it is up to individuals to make the right trade-offs between the competing components of a happy life.

Andrew Norton is a Research Fellow at the Centre for Independent Studies and also edits its magazine, Policy. He co-edited A Defence of Economic Rationalism and is the author of The Unchained University and a regular contributor to newspapers on higher education issues.