Money Can't Buy Happiness

It seems only natural that happiness should flow from having more money. Even if they don’t admit it, people still behave as though it were true. More money means you can have what you want and do what you want. The house you dream of? It’s yours. The new car you desire? Here are the keys. The freedom to enjoy your favourite pastimes? Here’s your racket, the court is down there, just past the pool.

So the puzzle is this: why do social scientists consistently find only moderate relationships between having more money and being happy? Some have even suggested that this moderate connection might be exaggerated. In reality money might have very little to do with happiness at all.

Most puzzling, though, is that people often seem aware at some level that money won’t make them happy. And yet they continue to work away earning money they don’t objectively need.

First, though, let’s look at the three reasons money doesn’t make us happy:

It’s relative income that’s important. As I’ve noted previously, money is relative. It turns out we don’t mind so much about our actual level of income, so long as we’re earning more than other people around us. Unfortunately as we earn more money we’re likely to be surrounded by richer people so we often end up failing to take advantage of the positive comparison.

Material goods don’t make us happy. Acquiring things like houses and cars only have a transient effect on happiness. People’s desires for material possessions crank up at the same, or greater rate, than their salaries. Again, this means that despite considerably more luxurious possessions, people end up no happier. There’s even evidence that materialism make us less happy.

People don’t shift to enjoyable activities when they are r...

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... satisfied with life. Through the ‘focusing illusion’ we convince ourselves that satisfaction equals happiness. Unfortunately it doesn’t. Even though we appear to have everything, we are left feeling that something is missing, but are unable to identify what that thing is.

That thing is simply this: feeling happy. Right now. In the moment.

What will make you feel happy right now?

References

Kahneman, D., Krueger, A. B., Schkade, D., Schwarz, N., & Stone, A. A. (2006). Would You Be Happier If You Were Richer? A Focusing Illusion. Science, 312, 1908-1910.

Schnall, P., Landsbergis, P., Belkic, K., Warren, K., Schwartz, J., & Pickering, T. (1998). Findings In The Cornell University Ambulatory Blood Pressure Worksite Study: A Review. Psychosomatic Medicine, 60, 697.

Schwartz, B. (2007). There Must Be An Alternative. Psychological Inquiry, 18, 48-51.