Recs

4

Money = Happiness

What makes people happy for the long term? Romance, friendships, good health, puppies, and kittens.

What doesn't? Money.

You've heard it ad infinitum, "Money can't buy happiness." Now there's scientific data to give the old saw new teeth.

University of Southern California economist Richard Easterlin surveyed 1,500 people over nearly three decades to see what puts a kick in their step and a smile on their faces. His results, published in September in the online edition of Proceedings for the National Academy of Sciences, reveal that time with family and good health are the stuff of happiness.

Wealth, on the other hand, doesn't necessarily lead to joy and contentment. One reason: People with more money usually want more things. More McStuff.

Your Happy-o-meter
Easterlin tested two opposing theories of happiness:

First, the psychological theory that claims we're wired with an internal happiness "set point" to which, despite job loss, divorce, or a torn ACL, we eventually return.

Then there's the economic theory that an increase in wealth brings an increase of a sense of well-being.

Guess what? Wrong-o on both counts. Easterlin found that neither theory was supported by the data. Even though we do need a little pick-me-up after our newly refinished basement washes down the Potomac in a hurricane, the emotional turmoil subsides in a short time.

And as for money curing the blues? Sure, a $1,000 increase in salary lifts the spirits. But it's more like a caffeine buzz than a higher plateau of enlightenment.

If we're not wired for a certain level of happiness, and the annual bonus can't turn our frown upside down, why the heck are we working so hard?

Pedaling faster -- for what?
One reason we aspire to the fast track of wealth and power is a phenomenon scientists call the "hedonic treadmill" -- how the acquisition of commodities and clout provides a short-term emotional lift that makes us want more. We get a raise, spend it, the extra dough becomes moot, and we want more.

Been there. Done that. Evidently, so have 60% of my fellow Americans. The Department of Labor's annual report on consumer expenditures reveals that just 40% of Americans live below their before-tax means.

The sad truth is that we're twice as rich as we were in 1957, but only half as happy. As Dr. David G. Myers, an authority on the psychology of happiness, wrote in Does Economic Growth Improve Human Morale?: "Never has a culture experienced such physical comfort combined with such psychological misery. Never have we felt so free, or had our prisons so overstuffed. Never have we been so sophisticated about pleasure, or so likely to suffer broken relationships."

Myers dubbed us "the doubly affluent society." In nearly 50 years, we have twice as many cars per person, microwave ovens, plasma screen TVs, home computers, and $200 billion a year spent in restaurants and bars -- two-and-a-half times our 1960 inflation-adjusted restaurant spending per person.

Despite air conditioning, TiVo, low-fat cupcakes, and high-speed Internet access, we're not as happy as our parents and grandparents.

Bummer.

Even the most prosperous among us -- the Forbes' 100 wealthiest Americans surveyed by University of Illinois psychologist Ed Diener -- are just slightly happier than average.

Those who didn't make the Forbes list are unmoved by our growing affluence, either. According to Easterlin, the effect on subjective well-being of a $1,000 increase in income becomes progressively smaller the higher the initial level of income.

So, the more you make, the less more money matters.

How to be happy
What does matter? According to the University of Chicago's National Opinion Research Center:

  • People with five or more close friends (excluding family members) are 50% more likely to describe themselves as "very happy" than respondents with fewer.

  • A loving marriage: 40% of married American adults report themselves as "very happy," vs. 26% of those who are not married.

  • Good health.

  • A connection with a congregation such as your community or a religious group.

On the other hand, a survey of 800 college alumni showed that classmates who valued high income, job success, and prestige more than close friends and love were twice as likely to be "fairly" or "very" unhappy.

Happy people, it seems, concentrate on their own successes and don't compare themselves -- their income, their family time -- with others. They do not judge others or dwell on negative feelings. If they do dwell on the better performance of a colleague or friend, it is to learn ways for self-improvement.

"By far the greatest predictor of happiness in the literature is intimate relationships," Sonja Lyubomirsky, a researcher at the University of California-Riverside, told a Chicago Tribune reporter. "It's definitely not money."

Or, as the authors of "How to Be Happy, Dammit" say in Life Lesson #40: "It's not 'he who dies with the most toys wins.' It's 'he who has the most time to play with his toys and the most fun playing with them who wins.'"

In the end, happiness is about wanting and managing what you already have. And perhaps taking that $1,000 raise and treating your loved ones to a special night out.

Dayana Yochimhas never taken a happiness survey, but she rates herself as "pretty darn happy." This column originally ran in Sept. 2003. But really. Is happiness ever not timely? The Motley Fool has apeppy disclosure policy.


Read/Post Comments (3) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 03, 2009, at 10:18 AM, Nick1254367 wrote:

    Hi,

    Interesting thoughts! I believe it’s not possible to make a general statement on whether money makes people more or less happy. Money comes with a whole set of new elements that may have good or bad impact on our happiness, and depending on how susceptible we are to every one of them, the conclusion will go one way or the other (i.e. different from person to person). I recently made an effort to provide a more comprehensive picture of what these ad- and disadvantages are. I invite you to have a look at <a href="http://www.spreadinghappiness.org/2009/08/money- how-much-should-we-strive-for-it-to-become-happy">Money and Happiness</a> and tell me what you think!

    Thank you, Nick

  • Report this Comment On December 03, 2009, at 10:19 AM, Nick1254367 wrote:

    Hi,

    Interesting thoughts! I believe it’s not possible to make a general statement on whether money makes people more or less happy. Money comes with a whole set of new elements that may have good or bad impact on our happiness, and depending on how susceptible we are to every one of them, the conclusion will go one way or the other (i.e. different from person to person). I recently made an effort to provide a more comprehensive picture of what these ad- and disadvantages are. I invite you to have a look at <a href="http://www.spreadinghappiness.org/2009/08/money- how-much-should-we-strive-for-it-to-become-happy">Money and Happiness</a> and tell me what you think!

    Thank you, Nick

  • Report this Comment On December 03, 2009, at 10:20 AM, Nick1254367 wrote:

    Sorry, my post has been posted twice accidentally. Dear moderator, kindly remove the duplicated one. Thanks, Nick

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 493797, ~/Articles/ArticleHandler.aspx, 11/23/2014 7:14:29 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Dayana Yochim
TMFSchool

Today's Market

updated 1 day ago Sponsored by:
DOW 17,810.06 91.06 0.51%
S&P 500 2,063.50 10.75 0.52%
NASD 4,712.97 11.10 0.24%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes


Advertisement