Data & Research July 2, 2010

Money Can’t Buy Happiness (but it can help)

Recent research reveals that while life satisfaction usually rises with income, day-to-day happiness comes from other things.
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According to a University of Illinois news release, the Gallup World Poll conducted surveys on a wide range of subjects in a representative sample of people from 132 countries from 2005 to 2006, which included a global life evaluation, asking respondents to rate their lives on a scale that ranged from zero (worst possible life) to 10 (best possible life). Participants also answered questions about positive or negative emotions experienced the previous day, and the poll asked respondents whether they felt respected, whether they had family and friends they could count on in an emergency, and how free they felt to choose their daily activities, learn new things or do “what one does best.”   

Like previous studies, the new analysis found that life evaluation, or life satisfaction, rises with personal and national income. However positive feelings, which also increase somewhat as income rises, are much more strongly associated with other factors, such as feeling respected, having autonomy and social support, and working at a fulfilling job.   

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“This study shows that it all depends on how you define happiness, because if you look at life satisfaction, how you evaluate your life as a whole, you see a pretty strong correlation around the world between income and happiness,” said University of Illinois professor emeritus of psychology Ed Diener, a senior scientist with the Gallup Organization, in the news release. “On the other hand it’s pretty shocking how small the correlation is with positive feelings and enjoying yourself.”  

Diener and his study co-authors Weiting Ng, of the Singapore Institute of Management, and James Harter and Raksha Arora, of The Gallup Organization, report the countries surveyed represent about 96% of the world’s population and reflect the diversity of cultural, economic and political realities around the globe. They claim this is the first “happiness” study of the world to differentiate between life satisfaction, the philosophical belief that your life is going well, and the day-to-day positive or negative feelings that one experiences.  

The findings appear this month in the Journal of Personality and Social Psychology.  

Compliance July 2, 2010

Solis Makes the Case For Change in Stock Drop Case Law

Lawyers representing U.S. Department of Labor Secretary Hilda L. Solis have argued that the holding of company stock in a defined contribution plan is not entitled to a presumption of prudence.
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In attacking what has come to be known as the “Moench presumption” – after the 1995 3rd U.S. Circuit Court of Appeals case that first articulated it – the government’s position could, if granted, change a central legal underpinning to a large body of federal cases that has developed in the years since Moench. 

The Labor Department lawyers asserted in the friend of the court brief filed with the 2nd U.S. Circuit Court of Appeals in two consolidated stock drop cases against the McGraw-Hill Companies that the Employee Retirement Income Security Act (ERISA) does not carve out any exceptions to its mandates that fiduciaries act strictly with prudence and due care in carrying out their duties on behalf of participants and beneficiaries. The lower court decision throwing out the two suits should be reversed, the government argued (see Judge Dismisses Ratings Agency Lawsuit). 

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Moenchcontended that, based on the diversification exemption applicable to company stock, an employee stock ownership plan (ESOP) fiduciary that invested plan assets in employer stock is entitled to a rebuttable presumption that he acted consistently with ERISA. 

“ERISA does not support application of a presumption of prudence with respect to employer stock held by a defined contribution plan,” the Labor Department lawyers argued. “There is no textual basis for otherwise relaxing ERISA’s strict fiduciary obligations with regard to employer stock and, given Congress’s evident concern with the management of employer stock expressed elsewhere in the statute, the district court’s application of a presumption relaxing ERISA’s prudence standard was inappropriate.” 

Noting that plaintiffs in the two McGraw-Hill cases alleged company stock was an imprudent and overpriced investment in light of allegations the company had released “improper and flawed” ratings of mortgage-backed securities, the government lawyers declared:  “It is never prudent to overpay for plan assets and a presumption to the contrary is wholly unwarranted.” 

The Solis brief is at http://www.dol.gov/sol/media/briefs/gearren%28A%29-6-4-2010.htm .

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