Why Earning Too Much Is Making You Unhappy

How much money would you need to be financially comfortable? Take a second. Think about it. Write that number down.

OK, next question: What, in life, makes you the most content on a day-to-day basis? Write down your top three.

Now look at all you have on your sheet of paper.

When I did this exercise, I came up with $60,000 and (1) time with my family, (2) being outside/exercising, and (3) a good night's rest. At first glance, my answers don't seem to have anything to do with each other. The same may be true for you.

Dig deeper and you may find they are intricately related. In fact, the higher your first number actually is, the harder it may be for you to experience your three sources of contentment.

An American disconnect
Time and again, studies have shown that once people reach a certain threshold of income -- the level varies based on which study you're reading -- money has little to do with happiness. Even then, it's not money that necessarily makes us happy; it's also the simple absence of money-related stress and anxiety.

We can say this is obvious, that we already know this -- but that doesn't jibe with all the information we have about anxiety and depression in the United States.

According to the Centers for Disease Control, between 1988 and 2008, "the rate of antidepressant use in the United States among all ages increased nearly 400%." Close to 20% of Americans now suffer from some type of anxiety disorder. And about twice as many Americans die from suicide than they do from homicide each year.

It would be ridiculous to say that all of this could be explained by one or two variables. These problems are far too complex, diverse, and personal to be pigeonholed into a neat explanation.

What's clear is this: Whether by dint of new medical treatments or a breakdown in healthy societal structure, we have measurably more chronically unhappy people in the United States than we have in the past.

Let's get real
If we want to begin the conversation about how we are designing out lives, including the role that work and money play, I think a nice starting point could be found with Dr. Jennifer Aaker, a professor at the Stanford Graduate School of Business.

Pulling from the research of others, Aaker says what typically makes us happy isn't money, intelligence, education, or youth -- even though we implicitly think it is. Instead, happiness and contentment has more to do with autonomy over how we spend our time, and with things such as volunteering, humor, and social skills. Boiled down to two words, it's all about social connections.

If we want to get happier, Aaker would argue, we need to focus more on social connections, and less on money and status.

A solution based on the concept of "enough"
The term "threshold earners" -- as best I can tell -- was recently made popular in an American Interest article from early 2011 by Tyler Cowen. Though the piece focuses on economic inequality, it's Cowen's definition of threshold earners that interests me most:

"A threshold earner is someone who seeks to earn a certain amount of money and no more ... in order to experience other gains in the form of leisure -- whether spending time with friends and family, walking in the woods, and so on." 

When I first read this, I realized that it offered an approach that helps combine the answers to both my first and second questions.

Specifically, viewing mandatory employment through this lens forces individuals to stop and think carefully about what is and is not necessary -- and how to spend more time doing what makes them happy.

Taken from an evolutionary viewpoint, we evolved as "threshold earners." Though it might be difficult to grasp, for 99% of human history on Earth, we lived some form of hunter-gatherer lifestyle in tribes. The concept of "work" didn't exist -- but we'd probably consider any activity designed to get food as work.

It made absolutely no sense for our ancestors to be anything but threshold earners. Meat left uneaten spoils. Fruits and vegetables left out will mold. Both will probably become dinner for some other animal. Once we were satiated, we stopped "working" and focused on other things. That's how we are designed to function.

The only difference now is that we live in a society that can make it difficult to let this lifestyle play out. Threshold earners are an example of a group of people -- consciously or not -- taking steps match this evolutionarily stable behavior.

This need not be an excuse for laziness
A key concept to understand is that a threshold earner is not, by definition, simply a slacker or a dropout. Rather, it is someone who is free to pursue his or her interests without constant coercion in the form of mandatory employment duties.

And as best I can tell, this is the real beauty of the trend: By becoming a threshold earner, you become the locus of control for determining what "enough" is, instead of outside forces -- namely, a cultural and economic system that thrives on never having enough -- ruling the day.

Though it might not be practical for you to quit your job tomorrow to maximize time with your family, the idea of threshold earning provides a mental framework for you to examine how you spend your day. Take the time to consider: What's the threshold I need to earn? It might be lower than you think. And that realization alone could be a huge weight off of your shoulders.

If you're interested in minimizing your time on activities designed solely for earning money, and maximizing those which will truly make you happy, wise investing can make a big difference. In our brand-new special report, "Your Essential Guide to Start Investing Today," The Motley Fool's personal-finance experts show you why investing is so important and what you need to do to get started. Click here to get your copy today -- it's absolutely free.


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  • Report this Comment On August 31, 2013, at 3:45 PM, dstwhit wrote:

    Excellent article, Brian.

    Thanks!

  • Report this Comment On September 02, 2013, at 12:34 AM, TMFTopDown wrote:

    In today's fast-paced world, it's all too easy to get caught up in the rat race and forget about what's most important for your livelihood.

    Thanks for the reminder!

    Steve

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