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Money ≠ Happiness. QED.

The formula for human well-being used to be simple: Make money, get happy. So why is the old axiom suddenly turning on us?

6. This year's model home: "Good for the dysfunctional family"

that great momentum has carried us away from something valuable, something priceless: It has allowed us to become (very nearly forced us to become) more thoroughly individualistic than we really wanted to be. We left behind hundreds of thousands of years of human community for the excitement, and the isolation, of "making something of ourselves," an idea that would not have made sense for 99.9 percent of human history. Adam Smith's insight was that the interests of each of our individual selves could add up, almost in spite of themselves, to social good—to longer lives, fuller tables, warmer houses. Suddenly the community was no longer necessary to provide these things; they would happen as if by magic. And they did happen. And in many ways it was good.

But this process of liberation seems to have come close to running its course. Study after study shows Americans spending less time with friends and family, either working longer hours, or hunched over their computers at night. And each year, as our population grows by 1 percent we manage to spread ourselves out over 6 to 8 percent more land. Simple mathematics says that we're less and less likely to bump into the other inhabitants of our neighborhood, or indeed of our own homes. As the Wall Street Journal reported recently, "Major builders and top architects are walling people off. They're touting one-person 'Internet alcoves,' locked-door 'away rooms,' and his-and-her offices on opposite ends of the house. The new floor plans offer so much seclusion, they're 'good for the dysfunctional family,' says Gopal Ahluwahlia, director of research for the National Association of Home Builders." At the building industry's annual Las Vegas trade show, the "showcase 'Ultimate Family Home' hardly had a family room," noted the Journal. Instead, the boy's personal playroom had its own 42-inch plasma TV, and the girl's bedroom had a secret mirrored door leading to a "hideaway karaoke room." "We call this the ultimate home for families who don't want anything to do with one another," said Mike McGee, chief executive of Pardee Homes of Los Angeles, builder of the model.

This transition from individualism to hyper-individualism also made its presence felt in politics. In the 1980s, British prime minister Margaret Thatcher asked, "Who is society? There is no such thing. There are individual men and women, and there are families." Talk about everything solid melting into air—Thatcher's maxim would have spooked Adam Smith himself. The "public realm"—things like parks and schools and Social Security, the last reminders of the communities from which we came—is under steady and increasing attack. Instead of contributing to the shared risk of health insurance, Americans are encouraged to go it alone with "health savings accounts." Hell, even the nation's most collectivist institution, the U.S. military, until recently recruited under the slogan an "Army of One." No wonder the show that changed television more than any other in the past decade was Survivor, where the goal is to end up alone on the island, to manipulate and scheme until everyone is banished and leaves you by yourself with your money.

It's not so hard, then, to figure out why happiness has declined here even as wealth has grown. During the same decades when our lives grew busier and more isolated, we've gone from having three confidants on average to only two, and the number of people saying they have no one to discuss important matters with has nearly tripled. Between 1974 and 1994, the percentage of Americans who said they visited with their neighbors at least once a month fell from almost two-thirds to less than half, a number that has continued to fall in the past decade. We simply worked too many hours earning, we commuted too far to our too-isolated homes, and there was always the blue glow of the tube shining through the curtains.

7. New friend or new coffeemaker? Pick one

because traditional economists think of human beings primarily as individuals and not as members of a community, they miss out on a major part of the satisfaction index. Economists lay it out almost as a mathematical equation: Overall, "evidence shows that companionship...contributes more to well-being than does income," writes Robert E. Lane, a Yale political science professor who is the author of The Loss of Happiness in Market Democracies. But there is a notable difference between poor and wealthy countries: When people have lots of companionship but not much money, income "makes more of a contribution to subjective well-being." By contrast, "where money is relatively plentiful and companionship relatively scarce, companionship will add more to subjective well-being." If you are a poor person in China, you have plenty of friends and family around all the time—perhaps there are four other people living in your room. Adding a sixth doesn't make you happier. But adding enough money so that all five of you can eat some meat from time to time pleases you greatly. By contrast, if you live in a suburban American home, buying another coffeemaker adds very little to your quantity of happiness—trying to figure out where to store it, or wondering if you picked the perfect model, may in fact decrease your total pleasure. But a new friend, a new connection, is a big deal. We have a surplus of individualism and a deficit of companionship, and so the second becomes more valuable.

Indeed, we seem to be genetically wired for community. As biologist Edward O. Wilson found, most primates live in groups and get sad when they're separated—"an isolated individual will repeatedly pull a lever with no reward other than the glimpse of another monkey." Why do people so often look back on their college days as the best years of their lives? Because their classes were so fascinating? Or because in college, we live more closely and intensely with a community than most of us ever do before or after? Every measure of psychological health points to the same conclusion: People who "are married, who have good friends, and who are close to their families are happier than those who do not," says Swarthmore psychologist Barry Schwartz. "People who participate in religious communities are happier than those who are not." Which is striking, Schwartz adds, because social ties "actually decrease freedom of choice"—being a good friend involves sacrifice.

Do we just think we're happier in communities? Is it merely some sentimental good-night-John-Boy affectation? No—our bodies react in measurable ways. According to research cited by Harvard professor Robert Putnam in his classic book Bowling Alone, if you do not belong to any group at present, joining a club or a society of some kind cuts in half the risk that you will die in the next year. Check this out: When researchers at Carnegie Mellon (somewhat disgustingly) dropped samples of cold virus directly into subjects' nostrils, those with rich social networks were four times less likely to get sick. An economy that produces only individualism undermines us in the most basic ways.

Here's another statistic worth keeping in mind: Consumers have 10 times as many conversations at farmers' markets as they do at supermarkets—an order of magnitude difference. By itself, that's hardly life-changing, but it points at something that could be: living in an economy where you are participant as well as consumer, where you have a sense of who's in your universe and how it fits together. At the same time, some studies show local agriculture using less energy (also by an order of magnitude) than the "it's always summer somewhere" system we operate on now. Those are big numbers, and it's worth thinking about what they suggest—especially since, between peak oil and climate change, there's no longer really a question that we'll have to wean ourselves of the current model.

So as a mental experiment, imagine how we might shift to a more sustainable kind of economy. You could use government policy to nudge the change—remove subsidies from agribusiness and use them instead to promote farmer-entrepreneurs; underwrite the cost of windmills with even a fraction of the money that's now going to protect oil flows. You could put tariffs on goods that travel long distances, shift highway spending to projects that make it easier to live near where you work (and, by cutting down on commutes, leave some time to see the kids). And, of course, you can exploit the Net to connect a lot of this highly localized stuff into something larger. By way of example, a few of us are coordinating the first nationwide global warming demonstration­—but instead of marching on Washington, we're rallying in our local areas, and then fusing our efforts, via the website, into a national message.

It's easy to dismiss such ideas as sentimental or nostalgic. In fact, economies can be localized as easily in cities and suburbs as rural villages (maybe more easily), and in ways that look as much to the future as the past, that rely more on the solar panel and the Internet than the white picket fence. In fact, given the trendlines for phenomena such as global warming and oil supply, what's nostalgic and sentimental is to keep doing what we're doing simply because it's familiar.

8. The oil-for-people paradox: Why small farms produce more food

to understand the importance of this last point, consider the book American Mania by the neuroscientist Peter Whybrow. Whybrow argues that many of us in this country are predisposed to a kind of dynamic individualism—our gene pool includes an inordinate number of people who risked everything to start over. This served us well in settling a continent and building our prosperity. But it never got completely out of control, says Whybrow, because "the marketplace has always had its natural constraints. For the first two centuries of the nation's existence, even the most insatiable American citizen was significantly leashed by the checks and balances inherent in a closely knit community, by geography, by the elements of weather, or, in some cases, by religious practice." You lived in a society—a habitat—that kept your impulses in some kind of check. But that changed in the past few decades as the economy nationalized and then globalized. As we met fewer actual neighbors in the course of a day, those checks and balances fell away. "Operating in a world of instant communication with minimal social tethers," Whybrow observes, "America's engines of commerce and desire became turbocharged."

Adam Smith himself had worried that too much envy and avarice would destroy "the empathic feeling and neighborly concerns that are essential to his economic model," says Whybrow, but he "took comfort in the fellowship and social constraint that he considered inherent in the tightly knit communities characteristic of the 18th century." Businesses were built on local capital investment, and "to be solicitous of one's neighbor was prudent insurance against future personal need." For the most part, people felt a little constrained about showing off wealth; indeed, until fairly recently in American history, someone who was making tons of money was often viewed with mixed emotions, at least if he wasn't giving back to the community. "For the rich," Whybrow notes, "the reward system would be balanced between the pleasure of self-gain and the civic pride of serving others. By these mechanisms the most powerful citizens would be limited in their greed."

Once economies grow past a certain point, however, "the behavioral contingencies essential to promoting social stability in a market-regulated society—close personal relationships, tightly knit communities, local capital investment, and so on—are quickly eroded." So re-localizing economies offers one possible way around the gross inequalities that have come to mark our societies. Instead of aiming for growth at all costs and hoping it will trickle down, we may be better off living in enough contact with each other for the affluent to once again feel some sense of responsibility for their neighbors. This doesn't mean relying on noblesse oblige; it means taking seriously the idea that people, and their politics, can be changed by their experiences. It's a hopeful sign that more and more local and state governments across the country have enacted "living wage" laws. It's harder to pretend that the people you see around you every day should live and die by the dictates of the market.

Right around this time, an obvious question is doubtless occurring to you. Is it foolish to propose that a modern global economy of 6 (soon to be 9) billion people should rely on more localized economies? To put it more bluntly, since for most people "the economy" is just a fancy way of saying "What's for dinner?" and "Am I having any?," doesn't our survival depend on economies that function on a massive scale—such as highly industrialized agriculture? Turns out the answer is no—and the reasons why offer a template for rethinking the rest of the economy as well.

We assume, because it makes a certain kind of intuitive sense, that industrialized farming is the most productive farming. A vast Midwestern field filled with high-tech equipment ought to produce more food than someone with a hoe in a small garden. Yet the opposite is true. If you are after getting the greatest yield from the land, then smaller farms in fact produce more food.

If you are one guy on a tractor responsible for thousands of acres, you grow your corn and that's all you can do—make pass after pass with the gargantuan machine across a sea of crop. But if you're working 10 acres, then you have time to really know the land, and to make it work harder. You can intercrop all kinds of plants—their roots will go to different depths, or they'll thrive in each other's shade, or they'll make use of different nutrients in the soil. You can also walk your fields, over and over, noticing. According to the government's most recent agricultural census, smaller farms produce far more food per acre, whether you measure in tons, calories, or dollars. In the process, they use land, water, and oil much more efficiently; if they have animals, the manure is a gift, not a threat to public health. To feed the world, we may actually need lots more small farms.

But if this is true, then why do we have large farms? Why the relentless consolidation? There are many reasons, including the way farm subsidies have been structured, the easier access to bank loans (and politicians) for the big guys, and the convenience for food-processing companies of dealing with a few big suppliers. But the basic reason is this: We substituted oil for people. Tractors and synthetic fertilizer instead of farmers and animals. Could we take away the fossil fuel, put people back on the land in larger numbers, and have enough to eat?

The best data to answer that question comes from an English agronomist named Jules Pretty, who has studied nearly 300 sustainable agriculture projects in 57 countries around the world. They might not pass the U.S. standards for organic certification, but they're all what he calls "low-input." Pretty found that over the past decade, almost 12 million farmers had begun using sustainable practices on about 90 million acres. Even more remarkably, sustainable agriculture increased food production by 79 percent per acre. These were not tiny isolated demonstration farms—Pretty studied 14 projects where 146,000 farmers across a broad swath of the developing world were raising potatoes, sweet potatoes, and cassava, and he found that practices such as cover-cropping and fighting pests with natural adversaries had increased production 150 percent—17 tons per household. With 4.5 million small Asian grain farmers, average yields rose 73 percent. When Indonesian rice farmers got rid of pesticides, their yields stayed the same but their costs fell sharply.

"I acknowledge," says Pretty, "that all this may sound too good to be true for those who would disbelieve these advances. Many still believe that food production and nature must be separated, that 'agroecological' approaches offer only marginal opportunities to increase food production, and that industrialized approaches represent the best, and perhaps only, way forward. However, prevailing views have changed substantially in just the last decade."

And they will change just as profoundly in the decades to come across a wide range of other commodities. Already I've seen dozens of people and communities working on regional-scale sustainable timber projects, on building energy networks that work like the Internet by connecting solar rooftops and backyard windmills in robust mini-grids. That such things can begin to emerge even in the face of the political power of our reigning economic model is remarkable; as we confront significant change in the climate, they could speed along the same kind of learning curve as Pretty's rice farmers and wheat growers. And they would not only use less energy; they'd create more community. They'd start to reverse the very trends I've been describing, and in so doing rebuild the kind of scale at which Adam Smith's economics would help instead of hurt.

In the 20th century, two completely different models of how to run an economy battled for supremacy. Ours won, and not only because it produced more goods than socialized state economies. It also produced far more freedom, far less horror. But now that victory is starting to look Pyrrhic; in our overheated and underhappy state, we need some new ideas.

We've gone too far down the road we're traveling. The time has come to search the map, to strike off in new directions. Inertia is a powerful force; marriages and corporations and nations continue in motion until something big diverts them. But in our new world we have much to fear, and also much to desire, and together they can set us on a new, more promising course.

Want to see how the "satisfaction index" has changed over your lifetime? Find some of the data mentioned in this article—and a few other numbers that will surprise you—at:

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