Can Money Buy Happiness?
Can money buy happiness? It’s one of the most heavily disputed and researched questions of all time. Countless studies have been done, with each seemingly confirming the inconclusiveness of the last. Most recently, a 2021 study from the Proceedings of the National Academy of the Sciences sampled reports from 33,000 U.S. adults found that there was no “peak happiness” at an income of $75,000 as was previously found in an older study. Experienced well-being rises linearly with income, with an equally steep slope above $80,000 as below it, suggesting that higher incomes may still have potential to improve people’s day-to-day well-being, rather than having already reached a plateau for many people in wealthy countries.
I’ve researched a handful of these studies over the years, and while there may be some statistically significant quantitative findings from the studies, I have concluded that there are 5 main qualitative ‘happiness influencing factors‘ of money. Depending on the person, these factors may or may not have an impact on your happiness levels.
One quantitative finding does seem fairly conclusive across studies: financial poverty does result in lower happiness levels. For those above poverty levels, mindset plays an important role.
Many of these studies contradict each other on conclusions surrounding these 5 factors (perhaps due to their study group). Let’s take a look at the arguments on both sides and then do a poll to see why you are pursuing more money. In today’s economic climate with layoffs and uncertainty about our financial futures, some introspection regarding this question is sorely needed.
The 5 Influencing Factors Money has on Happiness
1. The Money and Time Argument:
Yes: money allows you more time, and we all seek more time. This could come from having caretakers for kids, an assistant, a personal chef, etc. This control over your time leads to happiness.
No: without our busy lives comes the satisfaction of getting stuff done for ourselves. Take that away and dissatisfaction sets in. You start to lose touch with reality and become unhappy.
2. The Money and Freedom Argument
Yes: Having money allows you to essentially free yourself from the pursuit of more of it. Getting out of the game makes you happy.
No: Having a lot of money only encourages the pursuit of more of it. It’s a never-ending cycle of feeling like you’re just about to make it and then never getting there. Also, if you love your job, money can take away the satisfaction that you get from it. You start to question ‘why do I need to even work?’. As a result, you’re never happy.
3. The Money and Stuff Argument
Yes: Money allows you buy things that bring people closer together (think a backyard patio, grill, rec room). These social interactions lead to happiness. Also, some people get a lot of satisfaction from the pursuit and purchase of ‘stuff’ for themselves or others. Having the money to buy more stuff makes them happier.
No: Do you really need expensive stuff to bring people together or make you happy? And does that stuff create a mirage of friendship with others that only leaves you dissatisfied because you didn’t have the interactions before you had the money?
4. The Money and Experiences Argument
Yes: Money allows you the ability to travel, go to sporting and arts events, and experience fine dining. These things lead to positive memories, which influence happiness.
No: The experiences and the satisfaction that they produce are very short lived and don’t add any long-term value and happiness in your life.
5. The Money and Stress Argument
Yes: Having money frees you from the stress of not having money and wondering how you will pay things in the past (if you have debt), present, and future. Being free of this worry can add to your happiness.
No: Money only relieves stress up to the level of covering your basic needs. Once basic needs are covered, no further happiness is gained. Additionally, having a lot of money can actually lead to further stress because you become worried about how to manage, preserve, and grow the money.
Money and Happiness Discussion:
- Do you think money can buy happiness? Why or why not?
- Is your pursuit of more money for the purpose of gaining happiness from it?
- You’re on a personal finance site. Why are you pursuing more money?