Money = Happiness
What makes people happy for the long term? Romance, friendships, good health, and kittens. What doesn't? Money. So, why the heck are we working so hard for those extra few thousand dollars a year? Dayana Yochim steps off the "hedonic treadmill" to find out what really puts a kick in our step.
By Dayana Yochim (TMF School)
January 20, 2004
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 Yochim has 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 a peppy disclosure policy.
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Journal: Journal of Public Economics
ISSN : 0047-2727
Volume : 88
Issue : 7-8
Date : Jul-2004
Well-being over time in Britain and the USA
D.G. Blanchflower, A.J. Oswald
pp 1359-1386
Full text via ScienceDirect : sciencedirect.com
Abstract:
This paper studies happiness in the United States and Great Britain. Reported levels of well-being have declined over the last quarter of a century in the US; life satisfaction has run approximately flat through time in Britain. These findings are consistent with the Easterlin hypothesis [Nations and Households in Economic Growth: Essays in Honour of Moses Abramowitz (1974) Academic Press; J. Econ. Behav. Org., 27
(1995) 35]. The happiness of American blacks, however, has risen. White women in the US have been the biggest losers since the 1970s. Well-being equations have a stable structure. Money buys happiness. People care also about relative income. Well-being is U-shaped in age. The paper estimates the dollar values of events like unemployment and divorce. They are large. A lasting marriage (compared to widowhood as a `natural' experiment), for example, is estimated to be worth $100,000 a year. |
