Indeed, it’s still one of the most interesting questions in Finance, and in Life for that matter. DOES MONEY BUY YOU HAPPINESS?
For those that respond YES, does that make them superficial? Does it make YOU any more kindhearted and down to earth if you don’t think money buys you happiness? Should you pass negative judgement on those who do feel money buys them happiness?
What Do The Studies Say?
(2013)Subjective Well‐Being and Income: Is There Any Evidence of Satiation? By Betsey Stevenson and Justin Wolfers. According to this study, there is no satiation point for how levels of happiness rise as income rises. Apparently you just keep on becoming happier the more money you make! This study contrasts with several older studies claiming that there IS a point (the amount of money you make) where your level of happiness doesn’t increase as your income increases.
Studies by Diener and Seligman(2004), Clark, Frijters and Shields(2008), and Di Tella and MacCulloch(2008) all share a common theme that there is a point where more money doesn’t add to happiness or adds very little.
(1974)The Easterlin Paradox by Richard Easterlin. Professor Easterlin agreed that within a PARTICULAR country, richer people were happier than poor people. However, he states that there was no evidence to say that the people in a rich country are happier than those in a poor country. The 2013 study by Stevenson and Wolfers refuted the latter statement, claiming that those in richer countries are in fact happier than those in poor countries. Beyond that, they claimed that the richer people became, the happier they become – with no leveling off.
There is a number that I’ve heard of more than once. That number is $75,000. This is the number where Nobel prize-winning psychologist Daniel Kahneman and economist Angus Deaton suggested happiness levels off at incomes of around $75,000 a year.
On The Flip Side…
What we gather about those folks who have money and aren’t happier comes a lot from what we see on television. Who doesn’t have problems though, right? I mean the Kardashians sure had their share. But remember, they made more money off having problems. Ha!
Robert Kenny, EdD. of Boston College, is leading a study on the personal dilemmas of people worth $25 million or more. Apparently when you ask rich people(who don’t have a T.V. show) serious questions about life and money, you get a different view of things. They found a common concern about how their kids would grow up in such an environment. The worries come from how their kids would be viewed in the community, how genuine their developed friendships would be, and most importantly, how they would lead meaningful lives. A big concern was how their kids would find the motivation to work towards positively impacting their community.
First World Problems, right?
Simple And Makes Sense…
Here’s how to buy happiness with your money…
According to Harvard professors Michael Norton and Elizabeth Dunn, it’s all about what you buy with your money that translates to happiness. Buying experiences, rather than buying material things, ultimately will provide you with more happiness. New car, gadgets, and designer apparel will give you satisfaction for the moment, but all of that depreciates. Dinners and vacations produce memories that offer a lifetime of happiness, increasingly so as more time passes on.
I like that. That makes me feel good inside. I think I know what to buy next. 🙂