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Can money buy happiness? Maybe not directly, but it’s simplistic to say money has nothing to do with how happy people are.
For example, and to demonstrate the role money might play, list several things you think could add to your happiness. Really, stop now and make a quick list.
Now, couldn’t most of the things you listed be obtained or facilitated with money?
For example, good relationships are known to increase happiness, and money can buy you a plane ticket so you can visit friends or family.
You can probably find a way to use money to help with any happiness factor. And if you have more money you have more opportunities to boost your happiness.
Science supports both of these ideas. Research shows that happiness levels rise with income (to a point), and it shows you can spend money in ways that bring greater happiness.
But what you think makes you happy might not help at all. So let’s look at the science of money and happiness to see how much you need and how to use it.
Happiness Research – How The Press Misrepresents It
Does a higher income boost happiness levels?
The science of “happiness economics” addresses this and related questions, but the press often misrepresents or misinterprets the results of the research done.
For example, consider a recent Huffington Post article titled, “Research Proves That Money Can’t Buy Happiness.”
It reports on a study that looked at weddings. The authors found that “spending a lot of money on a lavish wedding doesn’t make a couple’s future prospects for happiness any more likely than spending less.”
In fact, it was found that couples who have expensive weddings are much more likely to divorce.
That’s interesting, but it “proves” nothing about whether higher income can boost happiness, or whether you can spend money in better ways to be happier.
Or consider this headline from Payscale.com: “Study Proves Money Can’t Buy Happiness.” First of all, this “study” was actually a poll done by American Express.
In the poll people were asked about their “bucket lists,” and money (on average) came in eighth, after things like traveling, having kids, becoming a better cook.” Notice that these other items on the lists are all situations that can be arranged using money.
Perhaps the poll just determined what we already know, which is that people like to downplay their desire for money, even as they buy lottery tickets and go to casinos at record rates.
Income And Happiness – What The Science Really Says
Whether you’re a reporter or not it is easy to misinterpret research data. For example, if you skim through the World Happiness Report you might think it shows income is unrelated to how happy people are, because the U.S. is ranked 23rd for happiness level, below many poorer countries.
But money is just one factor, so even if it’s an important one, happiness levels can vary greatly by country due to other factors. A more relevant measure is whether people within a country (or common culture) are happier when they’re, say, middle class versus living in poverty.
Fortunately that kind of research has been done. One of the most notable studies comes from behavioral economists Daniel Kahneman and Angus Deaton. They published their results under the title, “High income improves evaluation of life but not emotional well-being.”
“Life evaluation” (how happy you are thinking about your whole life) was considered separately from emotional well-being (how happy you actually feel day-to-day). The “thinking about one’s life” scores kept going up with income.
As for the more relevant measure, the analysis determined that yes, higher income is directly correlated to higher levels of happiness (emotional well-being), but only to about $75,000 annual income (this research was done in the U.S. in 2010).
The title of the research paper suggests that money doesn’t increase happiness, but it really just shows that the authors don’t consider $75,000 per year to be “high income.”
The authors note that “Income and education are more closely related to life evaluation, but health, care giving, loneliness, and smoking are relatively stronger predictors of daily emotions.” Of course, used correctly, money.can help you get healthier, or even alleviate loneliness.
The bottom Line?
More Money = More Happiness, Up to a Point.
To some extent science is just confirming common sense. After all, who thinks that the stress (to body and mind) of extreme poverty is conducive to happiness? And it makes perfect sense that when our survival needs are fully met money has less ability to raise happiness levels.
Of course, it’s also common sense that how you use your money can determine how happy you are. Let’s see what science has to say about that.
How To Buy Happiness
By all means get rich if you enjoy the process, but remember that beyond a middle-class income money doesn’t add much to happiness. And, once you’re a step or two above poverty-level, how you spend your money is more important than how much you make.
So, how should you use your money if your goal is to be happier? Here are some tips based on the latest happiness research.
Stop Buying Too Much Stuff – Materialism researcher Tim Kasser says: “…what research has shown in literally dozens of studies is that the more that people prioritize materialistic values, the less-happy they are, the less satisfied they are with their lives, the less vital and energetic they feel, the less likely they are to experience pleasant emotions like happiness and contentment and joy…” So what should you prioritize?
Buy Experiences Instead Of Things – In four studies, Cornell University researcher Thomas Gilovich found that experiences make people happier than things. Feel-good memories from experiences persist long after we’re used to our things, and the anticipation of experiences creates more good feelings than the anticipation of buying things. So skip the new car and spend your money on a concert or…
Take a Trip – Trip Savvy reports that research shows travel causes new neuro-pathways to form in the brain, rewiring it in ways that make us happier. So you might want to plan that trip and buy that plane ticket!
Do Kind Things – One study on happiness found that doing five kind acts per week gave people a significant boost in their level of happiness. The acts suggested included visiting an elderly person and writing a thank-you letter. Spend a little money on postage and stationary, gas up the car for visits, and look for other ways to use your money for kind acts.
Buy Health – More than one study has been cited to claim health is more important than money when it comes to happiness. But money can be used to improve health, whether that means you buy an exercise machine, pay for the best healthcare, or…
Buy More Fruits and Vegetables – Live Science recently reported on a study from Australia showing that people are happier when they eat more fruits and vegetables. If you have the money you might also consider buying organic fruits and veggies (I find they taste better, and they might be healthier).
Be Frugal – A study published under the title, “If money doesn’t make you happy, then you probably aren’t spending it right,” includes the following three suggestions for consumers seeking greater happiness: “(1) buy many small pleasures rather than fewer large ones; (2) eschew extended warranties and other forms of overpriced insurance; (3) delay consumption…” It seems frugality can help you be happier.
Buy Meditation Recordings – Scientific American says the research shows “A Wandering Mind is an Unhappy One.” Being more “in the moment” makes for greater happiness, and meditation can help. Free? Maybe, but I find it’s much easier using brainwave-entrainment recordings, so money can help here too.
Buy Better Sleep – Psych Central reports that one of the things shown to increase happiness is higher-quality sleep. My meditation recordings also help with that. Buying a decent mattress is probably a good idea too.
Get Cultured – Live Science reports that, “Cultured Men Are Happier.” Art museums and going to the ballet are used as examples, but the research seems to show that any cultural activities add to one’s happiness.
Give Away Money – Live Science says, “New research reveals that when individuals dole out money for gifts for friends or charitable donations, they get a boost in happiness while those who spend on themselves get no such cheery lift.”
Move – Moving can be expensive, but according to author Dan Buettner (“The Blue Zones of Happiness”), “Where a person lives determines their level of happiness more than any other factor.” You could move to one of the happiest states. Also, the research shows that people are happier when living away from large city centers.
Get A Pet – The evidence shows pet owners are happier and healthier. The evidence doesn’t suggest that any particular breed is better, so if you get a dog you can opt for a smaller (cheaper) one if you’re on a tight budget.
Buy Stress Reduction – Research shows that stress can alter your brain in ways that make you less happy, or even depressed. This suggests you should use your money to diminish stress. That might mean paying off debts, paying for massages, or building a nice emergency fund so you have less to worry about.
A Few More Thoughts On Money And Happiness
There’s a simple pattern in the suggestions here: Identify actions or situations that make you happier, through science or personal experience, and then use your money to arrange things accordingly. Here are a few more thoughts on money and happiness.
Identify Where Your Money Goes – Are your true values expressed in how you spend your time and money? It’s hard to tell unless you know where your money goes. Write down every expenditure for a month or more, look at the results, and see if maybe you need to make a few changes for a happier life.
No Money Required – Here’s some good news for those of us on a tighter budget: Live Science lists five free things you can do to be happier, according the the research. Here they are (along with specific actions to consider):
- Be grateful for what you have (write letters of gratitude).
- Be optimistic about the future (imagine realistic, rosy scenarios).
- Count your blessings (list them in writing).
- Use your strengths (find new ways to use them).
- Commit acts of kindness (encourage people who are down).
Creating Happiness Beyond The Income Limit – Happiness may increase with income only up to a point — at least for you. But if your income is beyond that point you might make others happier with it. For example, thanks to money from Bill and Melinda Gates (through the Gates Foundation), polio has almost been eliminated, which probably makes some children and their parents a bit happier.
Don’t Try Too Hard – Some research suggests that while pursuing happiness might be useful, the stress of trying too hard can actually decrease happiness. So do what you can, but then relax and don’t worry too much.
If you find that how you use your money adds or subtracts from your happiness, please tell us about it below … and keep on frugaling!