KEY POINTS:
The human tendency to be alarmist has perhaps never been so manifest as our current preoccupation with the global financial 'crisis'.
Lost in all doomsday prophecies regarding the fallout from the downturn is the fact that the best type of 'crisis' is one that doesn't matter much, in terms of its impact on well-being. And happily this is the exact type of crisis we are now undergoing.
The reason for the market crash is the belief that perpetual and growing debt is manageable. The reason for gloom is the realisation that stock values and company profits have crashed. The figures ain't pretty. Sharemarkets around the world have fallen about 50 per cent in the past year.
Ouch? Only a little. In reality, the picture is far rosier. The bulk of the financial loses are concentrated in the sectors of the community that can most afford them - the rich.
And the poor don't care because they are too poor to have any shares.
There is evidence of a slowdown in the housing market, but this has as many winners (the poor) as losers (home owners). Reduced fuel and food prices are bringing relief to many household budgets and job figures have remained relatively steady.
Even if the crash does spread to the real economy, its impact is unlikely to diminish the real prosperity of most of us.
In recent decades, scientists have made considerable headway into finding what makes us happy.
As it turns out, our well-being is far removed from the action (or lack of it) on the stock market. Once we are above the poverty line, money makes only a small contribution to our level of happiness.
People who focus on the accumulation of wealth are actually more likely to be unhappy.
Materialistic values are counter-productive as over time they heighten insecurity, which is one of the primary causes of unhappiness.
In 2005, a report showed that individuals in the lowest income group (up to $25,000) were almost twice as likely to be satisfied with life than individuals in the highest income group ($100,000+).
Far more important than money to our well-being is good health, optimism, a sense of control, challenging work and active leisure and a sense of purpose and acceptance.
Thus, it is not surprising that a study published recently by the Legatum Institute indicated that Australians are the most prosperous people on the planet, despite the fact that we don't rank in the top 30 in terms of our gross national income.
The study noted that in developed nations the keys to prosperity included good health, freedom of choice, political rights and civil liberties, family and community life, as well as continued high levels of income.
Of course, people living below the poverty line do it tough. But this is not because of a deficit bank balance.
Rather, it's because they don't have the resources to acquire some of the things that are essential for well-being, such as shelter and adequate health facilities.
Putting the theory into practice means that in order to acquire the warm inner glow you need to reduce your work hours (unless you are passionate about your job), undergo regular medical checks, spend more time with family and friends, ditch the plans to buy more 'stuff' and get an active hobby.
To the extent that money impacts on happiness, there is one golden rule that applies - especially in hard economic times. It happens to be the exact opposite of what the Government is urging you to do.
Now is not the time for placing yourself under added financial stress. This means that it is important to do everything possible to cut personal debt. In a nutshell, stop discretionary spending (even if you get a windfall gain from the Government's most recent economic stimulation package) and only buy something new after you have saved for it.
If you can't save for it, forget it. You'll be doing yourself a favour. Retail therapy is a con. Debt stress is a reality. You might reason that you are different from the herd and try to beat the happiness road map by continuing with the fanatical drive to acquire more 'stuff'. Be warned, you'll probably fail.
Your chances of being happy by ignoring the science of well-being are on a par to your chances of getting a low-documentation loan.
If you're unconvinced by the above roadmap and are still fixated on your budget bottom line, there's only one thing to do - pretend you're happy. The studies indicate that convincing yourself that you're happy is the next best thing to actually being happy.
And if you still don't believe me that the market conditions you are facing are really just piffle, take a trip to most parts of Africa - there you will experience real human destitution: it's called war, hunger or disease.
* Mirko Bagaric is a professor of law at Deakin University in Victoria.
