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Introduction
Economists are concerned with three major issues; how to produce, what to produce, and how to distribute outputs from income. The paper shall look at how these principles affect peoples decisions about scarce resources.
Money and happiness
Money cannot buy happiness because most premises on the benefits of money are based on illusions rather than tangible facts. People do not live in vacuums; consequently, assessments of material success are based on comparisons with other people. An individual is likely to feel elated if he realizes that he or she is earning more money than his neighbors, family, or friends. The problem with such comparisons is that they are never static. When one enjoys a greater status because of his relative income, this position may be drastically altered when more people join his or her income bracket or when more people leave the lower bracket that he/or she was comparing himself to. In other words, the temporary pleasure that one receives from being better off than others quickly disappears when the lives of these others improve. The latter issues bring out the fact that pleasure from financial success is very temporary and should therefore not be depended on as a source of happiness. (Easterlin, 2004)
Another worrying trend about the pursuit of money is that it can never be enough since human nature is such that it easily adapts to situations. Acquisition of money can cause happiness at the beginning of ones journey, and however, as one gets used to a wealthy lifestyle, one no longer finds as much pleasure in the purchase of a car as he/she used to at the start. This is because the mind now thinks of such possessions as ordinary, and it is unlikely that ones sensory neurons will be excited by these same things. In the end, a wealthy individual soon realizes that there are others out there who are wealthier than he/she is. Such people eventually begin pursuing more wealth as their happiness has been compromised. Therefore, money leads to the pursuit of more money and deprives one of the pleasures of enjoying what one already has. (Lee, 2005)
Whether it makes sense for people to pursue money
From an economics standpoint, money is defined as a measurement unit that facilitates the comparison of transactions. The price an individual pays is the compensation that one is willing to offer another because of the transference of resources. (Mohanty, 2009) This implies that there are certain alternatives that individuals can choose and that pursuance of one alternative prevents one from enjoying the benefits of the other; the phenomenon is called opportunity cost. One must therefore make a choice to increase the value of ones interests as this is likely to increase satisfaction and hence ones happiness. Secondly, human beings always operate in a constraining environment. However, there are certain situations that impose more constraints than others; it, therefore, becomes necessary for one to think of ways that can increase ones objectives. (Rittenberg and Tregarthen, 2009) For example, a businessman with the option of placing his production plant either in the US or in Thailand is likely to choose the latter location over the former because he can save more money in Thailand, and this maximizes his profits. With regard to this argument, it is sensible to pursue more money because this is the means by which one can maximize ones objectives and hence ones self-interest.
Thirdly, human beings tend to make decisions about alternatives at a margin. In other words, a substantial focus is normally given to the choices that emanate out of doing a little less or a little more of a particular thing. For example, if the government decided to increase taxes on cigarettes today, it is likely that smokers would think twice before purchasing a packet. Most of them will only buy one when they really need one rather than when they simply feel like it. This means that people are often motivated to make decisions based on small changes surrounding certain choices; this is defined as a marginal utility. One would therefore be motivated to work harder and get more money so as to increase their marginal utility. (Mohanty, 2009) In this regard, it would make sense to pursue more money.
Factors that contribute to a decent living
Market structure can be a good indicator of peoples standard of living as it defines the degree to which goods and services interact. When this structure is poor, it can lead to inefficiency and inequity in resource distribution. People will therefore lack the ability to purchase goods and services, and this will cause a drop in their standard of living. Effective market structures can be measured by stock prices and the national stock index.
Peoples ability to get jobs can also be a suitable gauge of their standard of living. Jobs provide individuals with opportunities to make money and hence engage in the exchange of goods and services. Those who lack them may be placed at a disadvantage as they do not possess the means to maintain their living standards. This parameter is usually denoted by unemployment levels. Countries with low unemployment figures normally have high standards of living and vice versa. Another factor that is closely associated with unemployment is inflation. Governments that intervene poorly in the economies of their countries can lead to high inflation tendencies and low standards of living. Citizens of such countries normally suffer from an excess supply of print money and a shortage of economic activities. This factor can be measured by inflation rates, and it is desirable for the amount to be below.
Conclusion
Economics offers a suitable framework for predicting peoples behavioral patterns concerning material resources. However, acquisition of these resources may not lead to full satisfaction as there are other social or psychological factors that come into play.
References
Easterlin, R. A. (2004). The Economics of Happiness Daedalus, 133 (2): 26-33. Web.
Lee, D.W. (2005). Who Says Money Cannot Buy Happiness? The Independent Review, 5(3).
Mohanty, L. (2009). Basic terminology in economics-class notes. Touro University International.
Rittenberg L. and T. Tregarthen (2009). Chapter 1: Economics: The Study of Choice Principles of Microeconomic Analysis. FlatworldKnowledge.com. Web.
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