Money Doesn't Make People Happy
Money Doesn't Make People Happy
By Tim Harford
"The hippies," claimed economist Andrew Oswald recently, "are having their quiet revenge." Oswald, a professor at Warwick University in England, is one of a growing number of economists fascinated by the question of what makes us happy. In a recent public lecture he announced, "Once a country has filled its larders, there is no point in that nation becoming richer."
That, at least, should bring a smile to a few faces. Economists have suddenly realized that money can't buy you happiness? This is like the squarest kid at school suddenly discovering beer, girls and music in his 30s. The rest of the world had worked it out already.
One of the things that excites economists like Oswald is the ability to compare data on wealth, education and marital status with the results of happiness surveys. In these surveys, people are asked such questions as "Taking all things together, would you say you are very happy, quite happy, not very happy, not at all happy?" Economists have been trying to make sense of the results across individuals, across countries and across the years. The headline: Once a country gets fairly rich (though much poorer than the United States), further economic growth does not seem to make its citizens any happier.
So, money does not buy happiness. Or does it? "In every society, at any point in time, richer people are happier," points out Will Wilkinson, a policy analyst at the Cato Institute in Washington D.C., who runs a blog on happiness research and public policy. "But that in itself doesn't tell you much about the relationship between money and happiness."
Richer people, after all, tend to have high-status jobs. They tend to have more control over their lives at work--why pay someone six figures if you're not going to ask her to use her own judgment? They also have higher expectations and will be comparing themselves to wealthier people. It's hard to say what is really driving the results: money, status or expectations.
Perhaps each society's richer people are also happier because happiness comes not from absolute wealth but from relative wealth--recall H.L. Mencken's quip that "a wealthy man is one who earns $100 a year more than his wife's sister's husband." A more skeptical view is that while it means something to compare my happiness with that of the guy asking me for change on the street, it means nothing to compare my feelings today to those of my grandfather in 1950--or those of a Portuguese shopkeeper or a Japanese salaryman.
Wilkinson and economists like Oswald and his compatriot Lord Layard are thinking about the policy implications of happiness research. My own interest is a little different: Can the new breed of happiness economists offer us any tips for happier living?
Much of the advice is pretty slippery. For instance, married people are much happier than single people. So perhaps you should get married? (Even better if your fiancée's sister's husband is unemployed.) Not so fast. More sophisticated surveys show that the causation runs both ways: Happy people tend to find spouses, while those suffering from depression don't find it so easy. And--not surprisingly--some people do brilliantly out of marriage, and others are utterly miserable. As an economist, I'm afraid I have no idea whether you should propose to that cute girl you've been seeing. (You may or may not take comfort in Oswald's finding that you can always get out of marriage: People are happier immediately after a divorce than immediately before.)
Oswald also suggests self-employment, if you can pull it off without losing out financially. "Everything associated with self-employment--independence, autonomy--is also associated with being happy."
Both Oswald and Richard Layard argue that relationships are more important than money--and that includes professional relationships. "I've come to believe in the old-fashioned view that one should be tender in one's dealings with colleagues," Lord Layard told me in an interview. And what else? "Think about what you have rather than what you don't have, both materially and in your relationships and your personal strengths. To use the language of economics, don't try to rectify things that aren't your comparative advantage."
This is spiritual thinking from an economist, but Oswald goes one better. If you're depressed, why not just wait? "There's a kind of J-curve describing happiness over time. Your late 30s are the most unhappy period of your life, but then the older you get the happier you are. Life really does begin again at 40."
I think the most useful research, though, is by an honorary economist: Danny Kahneman, the only psychologist ever to win the Nobel Prize in economics. He asked nearly 1,000 working women in Texas to reflect on their previous day, list the different episodes in it, what they were doing and how they were feeling.
Some results are predictable enough: Work is miserable, and commuting is worse. Others are not so obvious. For instance, praying is fun, but looking after the kids is not. Spending time with your friends is one of the most enjoyable things you can do, but spending time with your spouse is merely OK. In fact, parents or other relatives turn out to make more enjoyable company than the supposed love of your life.
What is perfectly clear, though, is that socializing with anyone except your boss makes you feel good. Sex is best of all. This is handy advice at last. But what if you are having sex with your boss? Whereof economists cannot speak, we must remain silent.
Tim Harford, a Financial Times columnist, is the author of The Undercover Economist.
Go to Forbes.com to see the slideshow
Back to Your Money: Money, Happiness, the Opposite Sex
the chicken or the egg?
Well said, Oliver
In a sociology course I took in college, studies on the effects of wealth were cited. No study I know of showed that wealthy people were happier. But, the richest people in a society were shown to be less likely to suffer from depression and other forms of mental illness.
The question no one seems to consider is whether being rich makes people healthy and well adjusted, or being healthy and well adjusted makes it easier for people to achieve great wealth and status.
To anyone who claims money can't buy happiness my reply is OK please send me all your money - if it isn't succeeding in bringing you happiness it will succeed with me - if you're happy it's better to have money and if you're freakin unhappy it's still better to have money
The Bengal Tyger Charitable Trust
JC, you've given me an idea. I'm going to start a charitable fund. I'll be the beneficiary.
I know what you're thinking. I'm greedy. But hell, I'm needy. I've got psychological problems that no shrink can help me with. Only SPs can provide the professional help that I need. Sadly, it's expensive. My insurance won't cover it, either.
And, let's face it, I have a kid, and responsiblities...so please, any of you who can, please give kindly to my charitable fund. I'll call it the Bengal Tyger fund. Anyone interested, send me a PM, and I'll give you my PO Box.
Happiness is free
Ok, now its my turn to weigh in. I got a lot of predictable replies, basically stating that a lot of people equate money with happiness. This does not surprise me so I will not judge. But what if you were diagnosed with a serious life threatening illness? Would you still think as much about money? Probably not. You would be a lot more concerned with your health and ask yourself what really matters in life.
Everybody needs money but I can tell you that I personally know many disgustingly rich people in my line of work that are miserable. Why? because being happy comes from within, not from external goods and services. One of my favorite philosophers, Bertrand Russell, wrote a great book on happiness. He concludes that we can only achieve true happiness when we stop worrying about ourselves and start helping other people.
I know, this is counterintuitive, but if you think hard about it, it makes perfect sense. Finally, absolute wealth is meaningless, it is relative wealth that ultimately matters in society. If you have enough to feed yourself, clothe yourself and have a roof over your head, you're very lucky.
Of course, we always want more money, bigger breasts, longer penises, face lifts, etc., but this is a sure way down misery lane.
Hey GG, I think you're absolutely right. In fact, you don't need all of your money. Just send me whatever extra you have.
Actually, I think the point I originally brought up might be right. People don't change their personality or find happiness as a result of money. Rather, people make money because of their personality. The rich people you know may be megalomaniacs who were driven to great finanical success because they are never satisfied.
As for suffering from a terminal illness, money would still matter. Or at least life insurance. Wouldn't you want to leave those you care about in a good position?
Moiney doesn't necessarely means happiness but it can sure make a date with your favorite SP quite long
Originally Posted by btyger
What I was trying to say was that we take the most precious things in life for granted. You cannot put a price on your health. Of course you would want to be able to take care of your loved ones in case of a serious illness but this has nothing to do with dying happy.
We are a society that glorifies money and people that have lots of it. I was talking to a friend of mine about how noble it is for Bill Gates to donate millions to prevent curable diseases in Africa. My friend scoffed: "Well, if I was that rich.....and it's a tax write-off for him....and...."
The fact is that there are many other billionaires that are that super rich and do nothing to alleviate suffering around the world. Warren Buffet said he will donate his wealth once he dies. What is he waiting for? At least he will do something good with his fortune. Larry Ellison, Paul Allen and countless others seem to squander it away.
You might be able to spend many hours with an SP but don't fool yourself: you cannot buy her true love. That, by the way, is free for the right man.
Originally Posted by General Gonad
But for a temporarely fling, it's nice to be in great company.
btw...your right about Bill Gates...he's easy to bash since he's the richest.
I think money is proportional to health. You can take much better care of yourself with money. If you have a terminal illness I will virtually guarantee that you will either survive longer with more money or be able to afford much better conditions for yourself. And think about it, if you were diagnosed with HIV wouldn't you want to at least travel around the world?
From my own experience I know that I became 25 times happier after I could afford to move out from my family (no offence to my dad). I also take great joy in buying any food I like in the supermarket without worrying about the price.
I think it is all about your preferences. If you can spend on things that make you happy than it is great, but if in the process of making money you have to sacrifice your health and time then you have to put it into the equation.
Apparently Englishmen (along with Frenchmen) are popular for spending more time enjoying life than making money (as opposed to North Americans).
Conclusion: the happiest of all are people who don't have to work for their money.
Carla the Idealistic Capitalist
Carla, you idealistic capitalist,
Originally Posted by Carla
That sums it all up! I can tell you that I have met SPs that work to pay off debts but are miserable despite the fact that they make lots of money. They typically burn out quickly. The same goes for all of us: if you hate your job, no matter how much you make, you'll burn out.
As for myself, the best moments in my life were when I was a poor student working odd jobs to travel with my buds. I did not save a penny but all the money in the world could not replace those great memories!!!
It is great when you don't have to work or worry about money, provided that your source doesnt have many strings attached(family $ and their conditions ) otherwise I'd rather work 2 jobs to have freedom to do as I please . Its funny when you're used to having everything served to you on a silver plater then one day you throw the plater back and are like wtf no more of this ! I am close to my family now though. Something strange about me is that my happiest times always seem to be when I was broke . I agree with Carla though on the health issues , thats also where we're lucky(for now) to be in Canada.
True love-that's a laugh
Of course you're right, but you leave one thing out. True love is just a chemical reaction in the brain. Read the February edition of National Geographic. There's a great article on the chemical reaction of love. Hell, I'll mail it to you if you want.
Originally Posted by General Gonad
I had true love. She was beautiful, kind, etc. Problem was I didn't really love her. Or maybe it just wore off, I don't know. Or maybe I'm just a four star asshole. In any case, true love is highly overrated when compared to things like commitment. True love is just chance, a set of circumstances that no one can really predict. Chemically, it's effects are similar to mental illness.
And no, I don't fool myself into thinking an SP really feels for me. This is just a fantasy that makes you feel good.
Kämpferrand, what does your name mean? My German is not that great,
Kämpfer = fighter
Kämpferrand = ??