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April 23, 2014



Can Money Really Not Buy Happiness?

‘Money can’t buy happiness’ – Leo Rosten

You’ve probably heard this quotation tossed around at some point in your life.  Usually, it’s trotted out when you are complaining about not getting a big enough raise, or not getting much money in your Christmas cards when you were a kid, or simply struggled to make ends meet.  Then, someone you loved, a parent, sibling, or romantic partner trotted out this old chestnut to try to cheer you up, reminding you that money isn’t everything.

Of course, as with many things in life, that’s far from the whole truth.  As the Financial Samurai notes, only those who have all the money in world really believe that more money can’t bring increased happiness; for those of us who aren’t rubbing elbows with the Hiltons and Buffets of the world, the amount of money we make has a big impact on how happy we are.  Even Leo Rosten would likely agree; the whole quotation, what he actually said, was:

Money can’t buy happiness, but neither can poverty. – Leo Rosten

Where did this notion of money being unlinked to happiness come from, then?  Well, there are studies showing that happiness and money aren’t linked (or are less strongly linked than we might assume from casual existence), like this one from Princeton or the ones cited by Barbara Rose.  But is that the whole story?

The Truth about Money and Happiness

It’s worth remembering that money is, at its core, simply a method of simplifying the exchange of goods and services.  You have extra goats and want a cow; rather than search the land for someone who is willing to swap a goat or two for a cow, you sell the goats, get money, and exchange the money for a cow.  That’s it in a nutshell; money is not good nor evil, neither magical nor supernatural, it’s simply a medium of exchange.

Money buys puppies, and puppies bring happiness.  Therefore, money CAN buy happiness!

Money buys puppies, and puppies bring happiness. Therefore, money CAN buy happiness!

More money, then, allows you to get more stuff (or have more services provided).  It gives you more options, allows you to do more of whatever it is that you want to do.  Someone with one million dollars can do much more than someone with one thousand dollars; the former could take deluxe vacations, buy impressive cars, or invest it, live off the interest generated, and retire early to spend the rest of her life on a tropical beach, while the latter has none of these options at their disposal.

As Gretchen Rubin of the Happiness Project notes, ‘money can’t buy happiness, but it sure can buy lots of things that contribute mightily to happiness.’  That’s similar to the conclusions of other researchers, like Gardner and Oswald and San Francisco State University (although, the latter carries the caveat that money makes people happier, if they spend it on life experiences).

The Source of the Myth

Why is the idea that money can’t buy happiness so embedded into our culture?  Well, as mention in the San Francisco State study (and by Financial Samurai), that idea has been a major driving force behind much research over the past few decades, and we humans have a tendency to remember what we hear repeated often enough.  There’s also anecdotal evidence to back up the belief, from poor but happy monks who practice the simple life to millionaires who have immense unhappiness and give away all their money.  (Let’s not forget the tabloids that bring us weekly stories of the rich and famous, all of whom seem to have more problems than the average poor families combined.)

But there’s another reason, namely the main source of money for most of us: work.  As Richard Easterlin notes (first paragraph on the seventh page), ‘most individuals spend a disproportionate amount of their lives working to make money, and sacrifice family life and health’.  In other words, it’s not that money doesn’t make happy, it’s that the need to work for money saps away more happiness than the increased money can provide.

So, what have we learned today?  Money may not be able to buy happiness, but it can buy things that help to make us happy.  More important, though, is to have a balance in your life, pursuing what will make you happy (money, family, health, and whatever else brings a smile to your face).  Keep that in mind, and you should end up quite happy when all is said and done.

Comments

  1. I really think there’s an important point people are missing… money buys a lot of happiness because you can use your extra money in helping others. It’s important to look BEYOND yourself and your condition and think about others.
    .-= Financial Samurai´s last blog ..East Coast Living – Is It Really That Bad? =-.

  2. “Money may not be able to buy happiness, but it can buy things that help to make us happy.”

    I agree with this, but take a bit more comical approach from an old Rodney Dangerfield film “Easy Money”…

    Money can’t buy happiness, but at least you can choose your own misery.
    .-= Matt SF´s last blog ..A Faster Way to Review Lending Club Notes =-.

  3. So now we just need a study which shows how much people actually like their work. I know people usually say they like or even love their work, but saying the opposite is probably a bad career move. Here it suggests that people actually don’t like work beyond a certain point.
    .-= Early Retirement Extreme´s last blog ..Early Retirement Extreme – My story =-.

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