When I was I my teens one of my favorite movies was “Can’t buy me love” (1987) with a very young Patrick Dempsey. It is about a dorky boy paying one of the popular girls to be his girlfriend for a month and in that manner becoming one of the cool ones as well. Does money really buy him happiness? Yes and mostly no, but he does get the girl in the end 🙂
So the big question is: does money bring us happiness? Some say yes and some say no and I guess there isn’t one simple answer. Here is my side of the story:
For the last half a year we have been living in a very frugal way, trying to get by with minimum consumption, almost no shopping and just the most necessary things. Am I more or less happy? I would say more! Not because that I am buying less but because I am spending less money in order to have the means do the things that make me the most happy: spending more time with my family and working with something that I love. On the other hand, I still live in a nice house, have a car, eat well and have the material things that I want and need and that brings me to the more scientific part of this article:
It has been claimed that if a person’s basic needs are met, additional income does not raise the feeling of satisfaction significantly and at Princeton University research made by Alan B. Krueger and Daniel Kahneman together with collogues, showed that the correlation between a high income and the feeling of satisfaction is not as high as it was previously thought. It was found that in those who earn less than $20,000 a year only spent 12% more of the time in a bad mood than those earning more than $100,000. Those who earn more have an overall higher feeling of life satisfaction but a lower feeling in satisfaction in moment to moment happiness as it was found that money had very little influence on this type of happiness. It was found in the research that people with higher incomes spent more time on obligatory activities (work, chores, etc.) and less on passive leisure (socializing, reading, watching tv, etc) plus had a more feelings of stress and tension.
The ironic part is that while most of us are very motivated to raise our incomes, this often lead to a mis-allocation of time as in the pursuit for more money we will use more time for work and commutes, all things that take away the time from family, friends and leisure time.
Another Social scientist is Michael Norton from Harvard Business School that claims that money can bring happiness if it is spent right. He and a team of researchers found that money spent on others or who are spent to buy experiences are those who bring us happiness. He further claims that being a consumer has a drug like effect as each purchase giving a quick feeling of satisfaction but doesn’t last long and wears off quickly. Here he is talking on Ted and being interviewed in Salon.
So what did I conclude from all this? That being rich does not necessarily make you happy but being really poor is no fun either. I guess the happy place is somewhere in between. In my personal opinion, I think that we could all be happy with much less than what we consume today and instead focus more on spending our time, money and energy on the things that makes us truly happy.