What is wealth?  It's a question that's been on my mind a lot lately, and I'm sure on many others. Howard used to ask his Wesleyan and Yale students the question each year, and he kept a record of the responses.  Some version of "plenty of food and water, a house, an education, and a car" always came up first, followed by similar descriptions of material things.

In a New York Times column last year, psychologist Dan Gilbert explored the link between happiness and wealth.  He noted that the idea that money buys happiness is "entirely correct," up to a point.  So you might think that today, when we have more of material things than our grandparents did and "Middle-class Americans still enjoy more luxury than upper-class Americans enjoyed a century earlier," we'd be downright jolly.  But we are in a collective funk.  Depression and sadness are up.  Happiness and smiles are down.

Gilbert points to uncertainty as the cause of our malaise, citing research that has concluded, "human beings find uncertainty more painful than the things they’re uncertain about."  We fret about the Dow going down, but we don't know if it will.  We're more vulnerable to what might happen than what we know will happen.

Howard's students knew what Gilbert was talking about.  After defining wealth with words related to money and material things, they brought up more sophisticated ideas, like "freedom to choose among options for the future" and "security and freedom from fear of losing what you have."

Wealth is indeed about security.  It's the ability to survive for a longer period into the future under a wider range of conditions (a definition that also describes biological adaptation, as Howard notes).  In some conditions, having more material things help us do this.  More is better.  Under other conditions, more material things can actually diminish wealth.  Using more resources can create enough unintended and harmful consequences to reduce our options for the future.

Let's say you buy a house.  It shelters your family from storms and other threats, it provides a place to store food and other goods for some time, it has a water supply, a sanitary method to deal with waste, a heat source to keep you warm, and a power source for light, refrigeration, and other amenities that provide you with all kinds of benefits.  It's also roomy and well appointed.  It's the most house you could afford based on your salary.  Living in it makes you feel pretty rich.  Now let's say you have to take a pay cut or reduce your hours, and you start struggling to pay your water bill or power bill, or to even buy groceries.  Eventually, the whole house is at risk.

If you lose the house, what do you lose in terms of wealth?  The house isn't the wealth.  Wealth stems from the benefits the house provides.  Those benefits don't necessarily have to do with the size of the house or the thickness of its walls.  They have to do with your capacity to control your environment in preferred ways, to manage risks, meet your needs, and survive.  Losing the house and going bankrupt is a huge blow to wealth because it means an uncertain future, more risk, and fewer options.  You would have been better off focusing on long-term security, on your ability to continue for a longer period under changing conditions, than buying into the false sense of security that the big house delivered.

The same concepts apply to the economy or to our society as a whole.  There is a relationship between wealth and material resources, but it's conditional.  It's not a law of nature.  What really matters is the benefits we derive from using resources wisely - nutrition, health, protection from the elements.  In the past, when there were fewer people, vast supplies of easily exploitable resources, and few noticeable environmental impacts, we found that using more resources nearly always gave us more benefits.  But, we're entering a new era.  The key now is to use fewer resources to produce drastically more benefits.

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