Beyond Dollars and Cents: Unraveling the Economics of Happiness in Career Choices
As a young individual entering the senior year of my Bachelor's Degree, a poignant amount of my headspace has been occupied by solving the familiar question, “What do I want to do with my professional career?”. Many individuals try to solve this question with the help of considerations such as family, location, personal interests, and skills; balancing these out to find the best fit considering one's personal profile. Although the most common and damning criterion I’ve run into comes down to two things: money and well-being.
Historically, for Canadian university graduates, choosing a career based on earnings potential has been a surefire way to secure comfort. A high paycheck enabled a stable lifestyle, where purchasing a home with a mortgage, paying weekly car payments, and checking out with a whole basket of groceries remained within reach – all while having disposable income to enjoy occasional dine-out meals and save for retirement.
In today's economic conditions, this same basket of goods is much pricier, and Canadians can no longer expect to receive the same with their salaries. This is reflected by a 17% increase in the Canadian Consumer Price Index (CPI) from 2018 to 2023, which measures the overall change in consumer prices based on a representative basket of goods. Food costs in the nation continue to outpace inflation steadily, housing affordability has hit an all-time low, while woefully, interest rates have hit 20-year highs. It's no wonder young and newly-self reliant Canadians (aged 18-24) experience the highest stress related to personal finance in the country.
Consequently, saving for retirement is forced onto the back burner. Many young workers prioritize the short-term with only 31.3% investing in an RRSP. Financial planner Shannon Simmon's commentary on recent saving trends is that young Canadians are “thinking about it, but the cost of living is so high, and I don't know that anyone feels like they can really … put enough money towards it at this age”.
For many young professionals, an over-arching gloom of financial uncertainty overshadows their hopes for future financial security.
As the economic backdrop is set, selecting a career based on the criteria of earnings potential and the subsequent promise of financial stability no longer holds the same weight, and it can be explained through the economic theory of utility maximization.
The traditional theory posits that individuals make decisions based on the rational pursuit of maximizing satisfaction. It assumes that humans are utility maximizers who make choices to optimize overall welfare. According to this view, individuals evaluate the potential benefits and costs of various options to select the one that provides the highest utility levels. Utility is often measured in terms of monetary value but can also encompass broader factors like emotional, psychological, and social well-being.
In the context of career choices, it suggests that individuals may prioritize enjoyment and well-being. When choosing a career path, one will assess the expected utility of different options, considering not only financial rewards but also intangible aspects that contribute to overall well-being. Factors such as job satisfaction, personal fulfillment, work-life balance, and opportunities for skill development are considered alongside potential income. Some individuals may opt for careers that align with their passions and interests, believing that the intrinsic rewards and sense of purpose they derive from their work will lead to higher overall satisfaction. This phenomenon is heightened as our present-day economic landscape limits the sense of utility from increasing salary.
Results of a recent survey indicate that 66% of Canadians prioritize enjoying their work over a good salary – 8% higher than the global average. Demonstrating that as young Canadians ponder their professional paths, they increasingly look beyond the conventional pursuit of financial stability.
As financial expectations loom large, the pursuit of personal satisfaction has taken on greater significance. The conventional notion that a high paycheck guarantees comfort and security is being challenged, and young Canadians are embracing the idea that a fulfilling and purpose-driven career can lead to higher overall well-being. As the economics of happiness continue to shape career choices, this generation is redefining success, placing well-being at the forefront of their professional aspirations.