Money, Happiness And The Pursuit Of Both

On Monday I noted that money doesn't make people happy but that I felt wealthier people were happier. Here's a piece from Forbes that explores the relationship between money and happiness and ends with the following conclusion:

Money doesn't really make us very happy. Not only do we want what we don't have, we really don't know what we want, and we think the things that we want will make us happy, which they tend not to do.

I guess that clears things up, right?

Seriously, I think they are right. Money doesn't make us happy. It doesn't hurt though, and can remove a lot of the frustrations in life that do make us unhappy.

Here's another thought:

Which is somewhat along the lines of what another wonk suggests, that the country is in the grips of "luxury fever." That is, families with annual incomes of $50,000 try to emulate the consumption of those with $70,000, who in turn try to emulate those with $140,000, ad infinitum.

Simply put, when we see something we like that someone else has, we want it, too.

This is similar to the dynamic we discussed in my post titled Which do You Prefer: Making More Money or Making Less but Being Paid More than Others? You may be happy with what you have, but when you see someone else with more, you want it too (and can become unhappy as a result).

In the end, they wrap up with the same question they started out by answering...and come to the same conclusion:

And yet, does all of this spending make us happy?

Researchers from the University of Illinois and the University of Pennsylvania proclaim with totemic authority that, in a 1985 survey, respondents from the Forbes list of the 400 richest Americans and the Maasai of East Africa were almost equally satisfied and ranked relatively high in well-being. The Maasai are a traditional herding people who have no electricity or running water and live in huts made of dung.

Money certainly brings on its own sets of issues -- especially serious money like that managed by the Forbes 400.

What do you think? How is money related to happiness?

Comments

[Bellen]

For another look at money and happiness, check out Oprah's Money Diet. The 3 families involved are way over their heads in debt - all for consumption. I found it fascinating, sickening, and scary because I know lots of people like that.

[John M.]

Once a person has enough money to take of their basic needs hapiness is all about how a person perceives themselves. I think that the happiest people strive to find the right balance between work vs. play, serving your needs vs. serving the needs of others, following the crowd vs. standing apart from the crowd. For many showing others that you are rich seems to be the only way to feel respected. Therefore self respect would seem to me to be the key to hapiness.

[samerwriter]

This is the trap described in "The Overspent American" -- people always think they'll be happy with "just a little more" than what they have. Apparently this feeling is consistent across most income levels.

Of course, when you get a little more, you spend a little (or a lot) more, and you wind up in the same position you were in before. As described by The Overspent American, and also alluded to in your other post you linked, what really makes people happy is making substantially more than their peer group. But that seems to be a shallow and temporary happiness.

Ultimately we need to stop comparing our possessions to our colleagues and peers and find a different measure to determine quality of life.

[Cranky Chick]

Money gives you freedom to get more out of life. That's what we're all looking for - the ability to work less and live more. I would be much happier if I didn't have to worry about making a living. Would I still be unhappy at times with all the money in the world? Of course. But with money, I've got a whole lot more resources available to me to solve the non-money problems that might make me unhappy.

I say, yes, money CAN make you happier.

[John M.]

If money makes you happy, explain to me why there are so many stories about people who win the lottery and end up miserable. It is true that if managed properly money gives you more opportunities to be happy, but is also gives you more opportunities to make poor choices that in the long run will make you more miserable.

[Jon Morrow]

I think this is another one of those never-ending debates. Not because it's impossible to solve, but because you're talking about an abstract concept: happiness. Where money is easy to define (a person with a high figure in their bank account), happiness isn't. Do you measure it through suicide rates, complaints of depression, number of smiles per day? Or do we use the highly inaccurate method of asking people to rate their happiness?

If you use the latter strategy, I think you're going to find an enormous number of happy rich people. Because 1) wealthy people have a high level of mental training, allowing them to better cope with their emotions, and 2) wealthy people are highly conditioned through positive self talk, leading them to say they're happy, even if they're not.

If we want an accurate answer, I think will have to measure the serotonin levels (or whatever chemical regulates happiness) and compare it to the person's prosperity relative to their economy. For example, the Africans you mentioned probably have an above average quality of life compared to other tribes, so in the perspective of their local economy, they are wealthy.

Anyway, it's an interesting article that creates an interesting discussion, but I don't think anyone really cares enough to produce a truly scientific answer.

[Jon Morrow]

I also wrote a post in response to your previous post about it and left a track back. You can read it here:

http://www.realestateanswered.com/why-are-rich-people-happier.html

I'd love to see some more discussion on it.

[Dennis Mangan]

Money pretty obviously does make one happy. It's a form of power, and it's better to be powerful than powerless. At any rate, see Will Wilkinson, who writes plenty on money and happiness, and who thinks there's a definite connection. http://happinesspolicy.com/

[Rhonda Hull]

Happiness just is, like the sun. It is our ability to access it that determines our degree of happiness. Money is just money. It's what we do with it, and the degree to which we are authentic with it that brings authentic happiness. Thanks for the perspective.

[DR. ARTFREDO C. ABELLA - BAGUIO CITY,PHILIPPINES]

Money, Happiness and the pursuit of both are equally important in life. Money just like happiness, love, friendship, social acceptance and integrity are all igredients indispensable to the day to day activities of man. Money in the first place is something that we must learn how to live with it but must also strive to seek and acquire it if in want. Money is the moribund of life, some have died seeking for it, some have none and starve because of it. Others have strike the treasures at the end of the rainbow and became wealthy while others have barely enough. Others say money is the effect and not the cause since most of the money woes is the result of overspending, hence the effect is insolvency. Money is a medium of exchange, exchange of values, exchange of goods, services and payment of debts. These are the reasons why money is the most sought matter in this world. Money is like a friend once you spend it is like dispensing of your friends in the end you have nothing left and instead crave for it. Money is like a manure if it is not spread it smells while if you share, it serves as a manure for other green plants to grow. Money is like an employee once you invest, it provides you with income be it interest or dividend. When in fact it is better than an employee because it does not provide you with labor problems, it will not go on strike nor will it file suit against you. Money is just an energy because it can exchange one form of energy to another. Pay a laborer to build you a mansion house which is in its original form an energy. Money is just a tool, it is a tool to pay for salaries, tuition fees, food, shelter and clothing. It is a tool to settle financial obligations. So the economist would say: " Buy all what money can buy for you, buy love, hapiness, joy, airplanes, education, hotels, trains, sex, submarine - buy all what money can buy for you in this world." Happiness on the other hand is a state of mind, one would say I will be happy if I have billions of dollars. Is he sure he will be happy after attaining that wish? Remember much money goes with responsibility and accountability. Happiness is something one must be able to attain. Happiness is a choice while money is a decision for us to make. I said happiness is a choice since one can be happy even if he lives a simple life that is his choice - to live a simple life and be happy. While money is a decision - one must decide to be hard working to earn lots of money. He must be frugal, pay himself first, invest and save most of his money in the bank to earn interest income that is a decision that he must make for himself and nobody else. Ralph Wlado Emerson once said:
"Happiness is a state of mind, a person is happy and not affected by the external environment sorrounding him. A person is happy because he is a happy person." While money is a tangible asset that we must learn how to live with it. Money is like water that is why in accounting it is called a liquid asset. The pursuit of both must be tempered with a touch of art and beauty. Bill Gates donated billions of dollars to fund for the research in the cure of aids, a noteworthy project which will make him defintely a happy and the most wealthy individual in earth today. Among the selected rich and silent individuals, they regard money as the trees and the forest itself - it must be conserved and not squandered, it must bear fruits or income and must be preserved for the future generations to come. There is always the saying:
"Good money drives out bad." This means that hard earned and honest money drives out the woes in life - debts and financial obligations. In the end one would assail, how can a man arrive at happiness coupled with the money he must live with. It reminds us of the King in the River Dee when asked by a layman - " My King what is the secret of your happiness in life to which the King answered him? You know my son there is only one secret I have in my life and that is I envy nobody and nobody envies me that is the secret of my happiness and longevidity in life.