Recession Not As Depressing As It Seems

If you're feeling down, don't worry. You've got company. Economists and psychologists say that recessions tend to make nearly everyone less happy.

The good news, though, is that recent research suggests that as long as you don't lose your job, your mood probably won't sour as much as the GDP. What's more, you're unlikely to stay feeling down for long, even if the recession turns out to be a particularly long and economically painful one.

"Unemployment is a psychological as well as a financial disaster, and general anxiety is not wonderful," says Daniel Kahneman, a Princeton University psychology professor who won the 2002 Nobel Prize in Economics. "But I expect that the people who are not directly affected by the recession will only show small changes in their mood and satisfaction with life."

Still, most of us will feel less happy in the next few months than we did, say, a year or two ago. That, though, has more to do with control and less to do with actual wealth. "The loss of wealth is upsetting, but it's not just the losing money that gets you down," says Dan Ariely, a professor at the Sloan School of Management at MIT and the author of Predictably Irrational. "Not being able to understand what is going on is a main driver of unhappiness as well."

In fact, research suggests that money and happiness really aren't very well linked. A study published in 2006 by Kahneman and others found that "people with above-average incomes are relatively satisfied with their lives but are barely happier than others in moment-to-moment experiences."

Drops in wealth do seem to reduce happiness, but even that is short-lived. The American Enterprise Institute's Arthur Brooks, who wrote Gross National Happiness, says our moods tend to adjust to new economic realities quickly. "We do find in poor economic times, you get dips in happiness, but they don't last long," says Brooks. "Money may buy happiness, but not very much."