Can money buy happiness? It’s a question philosophers have asked for millennia. While there is still plenty of debate on the topic in economics, just about everyone agrees money can only get you so far when it comes to happiness. That is, a lot more money only makes you a little bit happier, if at all.
“Money has never made man happy, nor will it; there is nothing in its nature to produce happiness.”
— Benjamin Franklin
Stop for a moment and ask yourself how you feel about this number. Would $75,000 be enough for you? If not, then why? How much would be enough?
Maybe money cannot buy you happiness, but what if there were a formula that could point the way to a deeper and wider range of happiness in your life? Enter happiness research—a confluence of research from the fields of neuroscience, sociology, psychology, and economics—which is shedding new light on what truly makes us happy. And, unlike most current work in economics, the research on money and happiness provides answers we can immediately apply to our everyday lives.
The formula for happiness turns out to be fairly straightforward: H = S + C + V.
H = sustained happiness. Not the kind you get from a piece of chocolate cake or a great first date but rather the kind of ongoing happiness you carry with you throughout your life. The type of real happiness humans long for and our Founding Fathers had in mind.
S = your individual set point. This is your natural level of happiness, akin to your body temperature or heart rate. They may go up or down for periods of time, but your temperature and heart rate will eventually settle back to your natural, steady state. Your level of happiness behaves the same way. In fact, when it comes to wealth and your set point happiness, researchers have found that even multimillion-dollar lottery winners eventually settle back into their previous level of happiness. There is a wide range to set-point happiness, and some people are naturally happier than others. This doesn’t mean you are powerless when it comes to your happiness, however. The good news is less than 50 percent of your happiness is attributable to your set point, which means you can control much of your own happiness if you choose to.
C = conditions in your life. These are the things you cannot change in your life, such as your race, age, or childhood family situation, and things that may change slowly over some extended period of time, like marital status and occupation. Think of conditions as the elements of your life that remain relatively constant from one day to the next. The good news here is humans are very, very adaptable to the conditions in their lives. Even serious cancer patients and impoverished third-world communities can report relatively high degrees of happiness.
V = voluntary activities which you have immediate control over. Prayer, meditation, social involvement, exercise, and volunteering are all examples of the kinds of choices you can make regarding your time, money, and energy from day to day and hour to hour that can have a lasting impact on your happiness.
In short, despite the fact that money can’t buy happiness, there are lots of things that can affect your happiness—some you can change and some you can’t.
Choice Conflict—Limit Your Options If You Want to Be Happier
Like many of the concepts we’ll discuss regarding money and happiness, too much of a good thing can lead to less happiness. Take choices for example; we know from the research that greater control over your living space, career path, and representative government—just to name a few examples—can significantly improve your happiness. Humans want to have choices when it comes to their environment. However, too many choices can paralyze you, often leading to no choice being made at all.
Running Toward a Number
“The elephant cares about prestige, not happiness.”
One of the most interesting findings in the research on wealth and happiness and whether money can bring happiness is the universal tendency for humans to prefer relative wealth over absolute wealth. What this means is a wealthy farmer in China with a few cows will generally report feeling just as happy as a wealthy farmer in Texas with a herd of six hundred cows. People tend to compare themselves with other people in their community, and consequently their happiness can rise or fall depending on where they see themselves in comparison to those around them. This might be why you often see a highly successful sibling or in-law as the antagonist in movies and books; they become constant reminders of our relative wealth.
This idea of comparing ourselves to those around us and constantly trying to keep up is related to something psychologists call the hedonic treadmill. The idea is derived from the word hedonism, meaning the pursuit of pleasure. The hedonic treadmill is simply a constant and increasing cycle of materialism in search of pleasure.
Conspicuous Consumption—Who’s Watching What You Buy?
Think for a moment about your most recent purchases. Have there been more material items or experiences? How conspicuous? Do you rely on brands, labels, and high prices to lend credibility to what you buy?
Interestingly, our digitally connected lives may be leading to positive changes in our conspicuous consumption. Economist Tyler Cowen points out that people are obviously emphasizing experiences, i.e., leisure, as they flock to social media to document their evenings, food, and travel. Nowadays they can instantly share those great pictures of Italy or Cancun with hundreds of Facebook friends. So maybe, just maybe, Facebook is encouraging us to connect with more people in meaningful ways—to share experiences instead of things. Of course, the ultimate goal should be to spend time with the ones you love and to ditch the idea that money can bring you happiness, not simply to have more Facebook-worthy vacations.
Happiness, as you can see, is complicated. We know that money can’t buy you happiness; however, many factors, like social status and conspicuous consumption, are directly influenced by our income. We may continue to work just as hard as previous generations because of those external benefits, or, we may enjoy working for a host of other reasons.
The question is not how can money buy you happiness, the question is: how can you best navigate the complicated journey of happiness?
Think of your success and happiness in terms of a dashboard instead of a leaderboard. A dashboard, like the one in your car, provides lots of information about your driving experience but tells you nothing about the cars around you. Your money, wealth and happiness can be measured in the same manner, i.e., relative to the internal conditions you control. A leaderboard, on the other hand, forces you onto that hedonic treadmill or status ladder.