The trouble with the rat race is, even if you win, you are still a rat.
——attributed to Lily Tomlin
Wants and needs
Most people in consumer societies believe they need more money than they have, no matter how wealthy they already are. Their actions suggest they are convinced that more money means more happiness. But when people reach the financial goals they have set for themsleves they feel no happier. Instead of wondering whether the yen for more money is the problem, they raise their threshold of sufficiency. This is a vicious cycle. In part, it continues because it is not the absolute level of income that affects our wellbeing but the relative amount: it’s no good being twice as rich if everyone else is twice as rich too. Studies have shown that most people would prefer an income of $50 000 if the average is $40 000 to an income of $70 000 if the average is $100 000,1that is, most people would rather be poorer, provided others are poorer still.
For 2004–05 the typical, or median, level of disposable income for all families with children has been calculated at $50 500.2The
average disposable income is higher than the median. For the middle class, rising incomes in recent decades have been accompa-nied by an even faster rise in expectations about what is needed to live a decent life. Since aspirations always stay ahead of actual incomes, many people, who by any historical or international standard are wealthy, feel they are doing it tough. In late 2002 a Newspoll survey asked a representative sample of Australian adults whether they agreed or disagreed with the following statements:
• You cannot afford to buy everything you really need.
• You spend nearly all of your money on the basic necessities of life.3
Sixty-two per cent of Australians believe they cannot afford to buy everything they really need (see Figure 3). When we consider that Australia is one of the world’s richest countries and that Aus-tralians today have incomes three times higher than in 1950, it is remarkable that so many people feel their incomes are inadequate.
It is even more remarkable that almost half (46 per cent) of the richest 20 per cent of households in Australia—the richest people in one of the world’s richest countries—say that they cannot afford to buy everything they really need.
Obviously, perceived needs change as incomes rise. When confronted with the question of whether they can afford every-thing they really need, people usually begin to think of the every-things that they would like to buy but cannot at present afford. The thoughts of wealthier people might turn to a new car, a fancier stove and a holiday in the sun; poor people would tend to think of a plumber to fix the leaking cistern, a new coat and money for a school excursion. When asked, wealthier people feel keenly their
inability to afford what they feel they need, although on closer ques-tioning they usually concede that they could do without an exten-sion to their home, a vehicle upgrade or a holiday house. Their daily consciousness and their political attitudes are, however, driven by their sense of lack rather than a realistic appreciation of what they actually need—or, indeed, what they actually have. A decade ago
‘everything you really need’ would not have included a plasma-screen television, an ensuite bathroom, a phone that takes pictures and an outdoor kitchen, but for many people now it does. Pressured by their social milieu and advertising, people feel dissatisfied with what they have, so that what begins as a novelty becomes a ‘must have’.
The confusion between wants and needs is at the heart of affluenza. When people see wants as needs, it is not surprising
30 40 50 60 70 80
<$20 000
$20 000–
$29 999
$30 000–
$39 999
$40 000–
$49 999
$50 000–
$59 999
$60 000–
$69 999
$70 000+
per cent
FIGURE 3: Proportion of Australians agreeing that they cannot afford to buy everything they really need, by income group
that two-thirds say they cannot afford everything they need.
And their feelings of deprivation are real, since thwarted desire is transformed into a sense of deprivation. Of course, the purpose of the advertising industry is to convert perceived wants into perceived needs. Psychologists who treat people with compulsive shopping disorders often begin by helping them understand the difference between wants and needs.4 Breaking the link is a vital stage in the therapeutic process, although in order to do it the therapist must dissolve a deeper association—
between the acquisition of goods and a sense of self-worth, which is precisely the association advertisers labour to create.
One group of psychologists works hard at trying to cure the disorders caused by another. Of course, it is a very unequal battle. A group called Debtors Anonymous uses a twelve-step program similar to that of Alcoholics Anonymous to break the nexus between wants and needs and teach their members to develop self-worth through other activities.
As noted, the respondents to the Newspoll survey were also asked whether they agreed or disagreed with the statement that they spend nearly all their money on the basic necessities of life.
Fifty-six per cent of the respondents agreed (see Figure 4). More than a quarter of the wealthiest households in Australia believe they spend nearly all their money on the basic necessities of life.
All this suggests that Australian households—especially middle-income and wealthy households—have an inflated, perhaps grossly inflated, understanding of how much money they need to maintain a decent standard of living. It also confirms the view that as people become wealthier perceptions of the necessary consumption levels rise. This has profound implications for the conduct of politics in Australia.
The delusion of growth
The results of the Australian survey have been replicated by surveys asking the same questions in the United States and the United Kingdom. Table 2 shows the results for the three coun-tries, along with GDP per person in 2000.5 In all cases, the top and bottom income groups each account for about 15 to 20 per cent of households. Incomes are those before tax.6 The figures for the United Kingdom and Australia are surprisingly similar.
Overall, six in ten people in each of the two countries say they cannot afford everything they really need. Nearly half of high-income households are dissatisfied with their high-incomes, while four out of five in the lowest income group are dissatisfied.
<$20 000
$20 000–
$29 999
$30 000–
$39 999
$40 000–
$49 999
$50 000–
$59 999
$60 000–
$69 999
$70 000+
0 10 20 30 40 50 60 70 80 90
per cent
FIGURE 4: Proportion of Australians agreeing that they spend nearly all their money on basic necessities, by income group
TABLE 2: Attitudes to needs, by income group—‘You cannot afford to buy everything you really need’
Lowest Highest GDP per income income person Total group group in 2000
Country (%) (%) (%) (US$ PPP)
United Kingdom 61 79 46 23 509
Australia 62 79 47 25 693
United States 50 63 33 34 142
Note: PPP denotes purchasing power parity.
Australians and Britons appear, however, to be much more dis-satisfied with their incomes than Americans, and this is the case at both the high and the low ends of the scale. Overall, half of Amer-icans say they cannot afford to buy everything they really need, compared with six in ten Britons and Australians. Nearly half the wealthiest households in the United Kingdom and Australia say their incomes are inadequate, whereas only one-third of wealthy Americans take that view. Thus the proportion of ‘suffering rich’ in Australia is even higher than in the United States, which is widely regarded as the nation most obsessed with money.7
These survey results for Australia, the United Kingdom and the United States illustrate how we have become deluded by eco-nomic growth. It is now well established that once income levels reach a particular threshold further increases do not increase national happiness. As economists Bruno Frey and Alois Stutzer observe, ‘In general, people in rich countries are clearly happier than are those in poor countries . . . But, for the rich countries, it does not seem that higher per capita income has any marked effect
on happiness’.8When we plot measures of life satisfaction against income levels, life satisfaction increases with GDP per person up to about US$10 000 and then flattens out. Similarly, in rich coun-tries increases in material standards of living are not associated with increases in life satisfaction. Figure 5 illustrates this for Japan.
Similar figures could be drawn for other rich countries.
Real and imagined hardship
Recent studies help us understand the distinction between real and imagined hardship. One survey asked respondents whether they could afford to spend money on items such as annual holidays, a night out and hobbies.9By looking at specific behaviours, rather
1958 1963 1968 1973 1978 1983 1988
700 600 500 400 300 200 100 0
Real GDP per capita
Life satisfaction
Index (1958 = 100)
FIGURE 5: Life satisfaction and income growth in Japan, 1958 to 1992 (NB: as income and life satisfaction are measured differently, here the values of each in 1958 have been set to 100. Thus the figure shows the values for subsequent years as percentage changes to the 1958 levels.)
than general attitudes to financial circumstances, the survey elicited information on whether households actually go without necessi-ties. With the exception of new clothes, the items in question—
holidays away, eating out, having friends for a meal, and hobbies—cannot be considered physical necessities, although most would be regarded as essential to a reasonable standard of living in Australia today. Being able to participate in society is important to our wellbeing. As a child whose parents cannot afford to send them on a school excursion well knows, the inabil-ity to participate can be distressing.
In the case of items such as a week’s holiday away, a night out once a fortnight and having friends around for a meal, the propor-tion of households saying they cannot afford them is relatively low, at 5 to 27 per cent, when compared with the general belief of 62 per cent of households that they cannot afford everything they really need or the 56 per cent who say they spend nearly all their income on the basic necessities of life. In other words, most Aus-tralians see items such as a week’s holiday and a night out as
‘needs’ and ‘basic necessities of life’, at least for the middle class.
Even among low-income households, only about 20 per cent say they have to do without special meals, new clothes and leisure activities, and 56 per cent of households in the lowest income group say they can afford a week’s holiday each year.
Another study, by the Australian Bureau of Statistics,10found that on average 16 per cent of households could not pay their gas, electricity or telephone bills on time; this included 5 per cent of the wealthiest households. Although wealthy households can experience cash-flow problems that make them late in paying their bills, it would be fair to assume that the stress caused by the inability to pay bills on time is much greater among the poorest
households. The same applies to the other items the Bureau of Statistics asked about. On the other hand, any household forced to pawn something, to go without meals or home heating or to seek assistance from a welfare organisation is experiencing genuine hardship. It is noteworthy, though, that even in the very lowest income group only about 10 per cent of households are so affected, and across the whole population perhaps only 3 or 4 per cent fall into this category. There could be other markers of genuine hardship that the Bureau’s questions did not pick up, but even so it appears that a substantial majority of households in the lowest income group do not report hardship of this kind. As Bray notes,
‘. . . while lower-income households have, on average, higher levels of [financial] stress, many of these households experience no financial stress at all’.11
As one would expect, in the highest income group the inci-dence of genuine hardship is virtually zero. Yet nearly half of this group say they cannot afford to buy everything they really need.
It is reasonable to conclude that, using any reasonable definition of ‘needs’ and ‘basic necessities of life’, a substantial majority of Australians who experience no real hardship believe they are
‘doing it tough’. This might be seen as an unfortunate delusion on the part of the people concerned—except that the notion that large swathes of the Australian population are suffering some form of deprivation is one of the underlying suppositions of political debate and policy formulation in Australia. Among other things, it provides the basis for the political appeal of middle-class welfare and tax-cutting auctions at every federal election.
The debate about how to define a ‘poverty line’ has gone on in Australia for decades and has often been used as an excuse for doing nothing about poverty itself. Although we might not be
able to agree on whether 5 or 15 per cent of Australians live in poverty, most people would agree that poverty is caused by unem-ployment, family breakdown, illness and disability. It should be apparent by now that the poverty debate is irrelevant for under-standing affluenza: we might not know precisely where poverty ends and an adequate income begins but most of us know afflu-ence when we see it.
When we pose the question ‘How much is enough?’ we are not concerning ourselves with the material shortages faced by the gen-uinely poor in Australia. The debate about how to define more clearly the poverty line is irrelevant to the lived experience of at least 80 per cent of Australians. In considering the definition of over-consumption, a lesson can, however, be learnt from attempts to define poverty: consensus is unlikely. It is no easier to determine whether buying a new car every two years or every four years signi-fies overconsumption than it is to determine whether an avocado is a basic food item or a luxury one. Trying to answer the question of how much is enough in material terms makes sense for people enduring material deprivation, but it is meaningless for middle- and high-income Australians. For the average Australian, asking how much income is enough is akin to asking how long is a piece of string.
When questions are too hard to answer it is often the case that we are asking the wrong question or thinking about the answer in the wrong way. To ask whether $40 000 a year is ‘enough’ misses the point. The problem of affluenza is not so much that we consume too much but that we measure our lives in terms of money and material things. Of course, any affluenza-afflicted Aus-tralian who seriously asks themselves whether they have enough will become aware that the more important question is ‘What am I missing out on that money cannot buy?’
For some, the answer to this question might be ‘nothing’.
They might have a job they find rewarding, time to spend with their family and friends and time to pursue their passions—be they macramé, mountain climbing or saving the environment—
and they might have learnt all they wish to learn about them-selves, their society and the world. For such a person, pursuing a higher income in order to fulfil a material desire, if they still have one, could make sense.
But, for a person who finds their work stressful and unre-warding, who lacks the time or emotional energy to engage fully with their friends and family, who longs to spend more time on their hobbies or improving their mind, to ponder how much more money they need to be happy is a diversion—not a path towards happiness. The purpose of becoming rich, both as indi-viduals and as a country, is to relieve ourselves of the burden of worrying about money, yet as our incomes have grown we seem to have become more preoccupied by our wealth, not less.
Part Two