In a comment to this entry on Gardner and Oswald’s finding that people who won between £1000 and £120,000 in the lottery were happier than people in two control groups, Tony Vallencourt writes,

Daniel Kahneman, Alan Krueger, David Schkade, Norbert Schwarz, and Arthur Stone disagree with this result. It’s funny, yesterday, I came across this post and then across Kahneman et al’s result in Tuesday Morning Quarterback on ESPN’s Page 2.

I [Vallencourt] wrote it up on my blog. I’m not sure who I believe, but I know that I’d like to have more money myself.

One possibility is that regular $ (which you have to work for) isn’t such a thrill, but the unexpected $ of the lottery is better.

I actually wonder about the £1000 lottery gains, though, since I suppose that many (most?) of these “winners” end up losing more than £1000 anyway from repeated lottery playing. Even the £120,000 winners might gamble much or all of it away.

Regarding unexpected $, I have the opposite problem: book royalties are always unexpected to me (even though I get them every 6 months!). I’ve always felt that a little mental accounting would do me some good–I’d like to imagine these royalties as something I could spend on some special treat–but, bound as I am to mathematical rules of rationality, I just end up putting these little checks into the bank and I never see them again. “Mental accounting is said to be a cognitive illusion but here it might be nice. Perhaps I could think of these royalties as poker winnings?

And, yes, I too would prefer to have more money–but I don’t know that it would make me happier. I naively think that, if I had the choice between happiness state X, or happiness state X plus $1000 (i.e., I’m assuming that the $1000 doesn’t make me any happier), I’d still like to have the extra $. But maybe I’m missing the point. And, of course, as the Tuesday Morning Quarterback points out, extra money doesn’t usually come for free—you have to work for it, which takes time away from other pursuits.

So maybe this is really a problem of causal inference. Or, to put it in a regression context, what variables should we hold constant when considering different values the “money” input variable? Do we control for hours worked or not? Different versions of the “treatment” of money could have different effects, which brings us back to the point at the beginning of this note.