A cliché and a joke about money and happiness:
The cliché: Money can’t buy happiness.
The joke: Those who say money can’t buy happiness just don’t know the right places to shop.
My son, Colton, added the perspective of an adrenaline-seeking young adult when we were discussing this topic around the dinner table recently by stating, “What do you mean money can’t buy happiness? Have you ever seen an unhappy person on a jet ski?”
Money and happiness is a topic that has interested me for some time. I recently finished reading the book Shiny Objects: Why We Spend Money We Don’t Have in Search of Happiness We Can’t Buy, by James A. Roberts, a marketing professor at Baylor University. In this book Roberts summarizes findings from academic studies about money and happiness. The consensus from this book and other material I have read on the topic is:
The cliché is mostly, but not completely, true. The joke and my son’s remark, while funny, are mostly false. However, they each contain a kernel of accidental and unexpected truth. Allow me to explain.
Research has shown that if you are truly poor, and struggling to meet your basic needs, more money can, indeed, buy increased happiness. However, as income increases the rise in happiness disappears, and it does so sooner than you might expect.
People with household incomes of about $50,000 report being significantly happier than those earning less. Not coincidently, the median household income in the United States is also around $50,000. Between income levels of $50,000 and $75,000 happiness increases slightly with increased income. However, those earning more than $75,000, even significantly more, are no happier than those earning $75,000. In other words, it appears the conditions conducive to happiness can be purchased for between $50,000 and $75,000 a year. I interpret this as meaning that being able to provide for your needs (and an occasional want) increases happiness, but buying “shiny objects” does not.
The reason for this is explained wonderfully by blogger and best-selling author Seth Godin: “If your happiness is based on always getting a little more than you’ve got…then you’ve handed control of your happiness to the gatekeepers…You are always on a treadmill, unhappy today, imagining that the answer lies just over the next hill. All the data shows us that the people on that hill are just as frustrated as the people on your hill.”
If buying “shiny objects” doesn’t lead to happiness, what does? Fortunately academic studies have provided some answers. These studies show that:
- People who practice good financial habits such as paying bills on time and keeping debt under control are happier than people who don’t.
- Regular savers and investors are happier than people who don’t save (these first two points support the premise of The Micawber Principle).
- People who spend money on others are happier than people who spend money on themselves.
- People who spend money on experiences are happier than people who spend money on things. This can include activities such as get-togethers with family and friends, travel, education, and activities to develop new talents or hobbies.
- Since strong relationships with others are one of the strongest predictors of happiness, spending money to have new and interesting experiences with those you care about might be the surest way to use money to promote happiness.
For those who insist that happiness can be purchased, the research summarized above gives you some good ideas of the right places to shop. Try “The Paying off Debt” store, “The Saving and Investing” store, “The Giving Store” and “The Experiences Store.”
As for the jet ski? Sorry Colton. It can provide some momentary pleasure and fun, but not lasting happiness.
What are your thoughts and feelings about money and happiness?