Money can’t buy happiness: it’s a rarely questioned truism. It also tends to be most enthusiastically embraced by those who have never gone without it. “I’ve tried hard to care about money,” Chelsea Clinton once humble-bragged, “but I couldn’t.” No matter how attached we are to the idea that money can’t buy happiness, though, the research shows almost the complete opposite.
After community and social relationships, the association between income and wellbeing is one of the most robust in the happiness literature. And a new study demonstrates just how deep-seated that psychological link is, how intricately our financial circumstances weave their way into our psyches.
Money doesn’t just shield us from obvious daily stresses, this study tells us, but can actually buy us the most basic of our psychological needs – human connection. The higher our income, the less likely we are to experience loneliness.
This study builds on a wide body of research giving a similar message. Although money is clearly no guarantee of contentment, and there are anomalies in the data, as a general rule, the better off we are financially, the happier we are.
But yet we still restate our fridge-magnet mantra about the irrelevance of money to happiness over and over again, a cosy boast of our lack of materialism. And in recent years, with the advent of the highly influential “positive psychology” movement, this idea has been given a new academic respectability.
Can you make your own happiness?
Positive psychology – the study of happiness and how to improve it – is an academic discipline less than 20 years old, and one of the fastest growing and most newly influential in the US. Positive psychology professors have been contracted to advise everyone from corporate America to the British government, and the field has spawned an entire industry of self-help books, coaching, courses and consultancy.
Right from the start, the basic philosophical underpinning of most of the positive psychology movement has been that our circumstances (including our financial circumstances) are of minimal consequence to our happiness. Instead, what really matters is our attitude. In this worldview, with the right techniques and enough emotional elbow-grease we can “positive think” our way out of almost any adversity.
Often using small or methodologically flawed studies as evidence, positive psychologists restate over and over the claim that money is of minimal importance to wellbeing. “Increases in wealth have negligible effects on personal happiness” writes Professor Martin Seligman of the University of Pennsylvania in his seminal positive psychology book, Authentic Happiness.
Harvard psychologist Daniel Gilbert discussed a similar idea in his wildly popular TED talk, The Surprising Science of Happiness, now viewed over 12 million times. He quoted as evidence a methodological train-wreck of a study from the 1970s that suggested that a small group of lottery winners were no happier than a group of paraplegic accident victims. (Although Gilbert graciously later admitted that the study actually didn’t even really show that much.)
Five things companies can do to boost employee happiness
Positive psychology’s insistence that our circumstances matter little to our happiness, and relentless focus on individual effort has an ideological flavor – a kind of neoliberalism of the emotions. And perhaps this philosophical bent isn’t surprising, given the positive psychology’s history and its key financial backers.
A large part of positive psychology’s academic research has been bankrolled by an organization called the Templeton Foundation, a group that has provided millions of dollars in funding to most of the major positive psychology research centers in America. While the Foundation is ostensibly politically neutral, its founder and director until his death last year was Sir John Templeton Jr, a lavish rightwing political donor, who over his lifetime gave millions of dollars to the Republican party and various anti-government rightwing political causes.
From the start, the Templeton Foundation set the intellectual scope of positive psychology’s remit by overwhelmingly funding projects designed to demonstrate the importance of individual effort to happiness via optimism, gratitude exercises and the like, and all but ignoring the impact of social context.
The narrative of the irrelevance of money to happiness has, unsurprisingly been enthusiastically received by corporate America, some of the best customers of the positive psychology movement, who have eagerly replaced pay-rises with “workplace happiness training”, unionization with positive thinking.
But it’s a dangerous story. Money matters. And most of us have a lot less of it than we used to. For most workers, real income has barely shifted for decades, and more than a quarter of working Americans earn what are officially classified as “poverty-level wages”. Forty-six million people in the US live below the poverty line and even the middle class is in financial crisis. Nearly half of Americans would struggle to find $400 in an emergency. Money isn’t a fringe issue to our wellbeing. It’s at the very heart and soul of it.
And instead of being embarrassed to admit that, we should be shouting it from the rooftops, printing it on our fridge magnets and using it as a rallying cry for social action. Money makes us happy! Suggesting otherwise doesn’t make us spiritually enlightened or morally superior. It makes us clueless.
Ruth Whippman will be speaking at a Guardian Live/Somerset House event How to be Happy on 1 September.
Why is it that we all desire to have more money?
Money can provide opportunities for us like never before. However, when we do end up with a higher income, why is it then that happiness is not necessarily a result?
The fact that we know that money can’t buy happiness doesn’t seem to help. Most people continue to have the desire to create a higher income.
I wanted to flip the notion that money doesn’t buy happiness on its head, and show you how happiness can lead to more cash in your hand.
And it’s really quite simple… let’s take a look.
Money CAN Buy You Happiness
Money can lead to happiness.
With money, you have more options. You have more choice in what you can do with your time and energy. When you are out for dinner, you can decide to go to the super-expensive restaurant and pick the most expensive meal without feeling guilty. When you are buying a new car, you are able to get the one that you have always dreamed of – brand new, in black and with all the bells and whistles you have ever dreamed of. When you need a break, why not go on that holiday to Fiji that you have always been dreaming? You have the money.
Spending money on more expensive items now is simply a form of short-term, instant gratification. Longer-term, delayed gratification can result in greater happiness.
Although I am 28 and do not have any children yet, I prefer not to spend my days blowing my cash, having expensive nights out and going on exhaustive long holidays as many others my age like to do. You’re probably asking ‘why’ as normally I talk about doing what you love and doing it more often. That is true, however I also talk a lot about having a plan in place and delaying gratification to create sustained happiness.
What makes me happy is actually knowing that I am building a life where I can support my wife and my children in the future. What makes me happy is knowing that I will be able to retire, financially sound so I can spend my old-age worry-free and enjoying the experience of watching my grandchildren grow.
It’s perceived by many that more money can help in creating this life. However, there is interesting research that has showed otherwise.
The Evidence that More Money Does NOT Lead to Increased Happiness.
Known as the world’s most influential living psychologist, Daniel Kahneman during his TED talk in 2010 makes note of studies that have shown that earning less than $60,000USD per year can have a significant effect on your happiness levels. Simply put (and apologies if this offends anyone), the less you earn under this, the more unhappy you will be. However, when it comes to earning more than $60,000USD per year, Daniel Kahneman notes that it is the flattest line he has ever seen. There is absolutely no correlation between more income and more happiness.
Here’s a little graph to show you a rough guide to what this would look like.
This is obviously a very generalised example, but it helps to convey the message. I highly recommend that you watch Daniel Kahneman’s TED talk. It has been viewed 1.3 million times at the time of writing this and explains some amazing concepts around experiences versus memories and its effect on our happiness.
Simply put, money can’t buy happiness. So why do we all strive for higher incomes when psychological studies have proven that income has little effect on happiness levels? We all have that perception that ‘I will be happier if I just had that little bit more’.
Let’s flip this concept around on its head.
How Happiness Can Help You Generate More Money
Money can’t buy you happiness… but happiness can get you more money!
A few months ago I shared with you the Happiness Model.
Quite simply, happiness leads to greater performance which can eventuate it greater rewards. Let’s refresh what the Happiness Model looks like.
The Happiness Model
Psychological studies have shown that greater happiness, wellbeing and positivity can lead to greater performance. This is through having a more optimistic and positive outlook as well as thinking with ‘clarity’.
In whatever activity you are undertaking, you are more likely to be successful when you are in this state of happiness and performing at a higher level. What does this bring? This then brings the rewards that you are after. This can be both monetary and non-monetary. Perhaps it is simple recognition from your manager at work and getting a pat on the back. Alternatively, it might lead to hitting your sales targets and achieving your bonus, or a greater prospect of getting a promotion.
The more sustained and consistent your happiness and positive outlook the greater performance and the more successful you will be in your pursuits.
In my role, I am responsible for the processes of developing and motivating the talent (people) in our workforce to ensure greater performance, productivity and overall bottom-line results. This is done through a number of methods such as:
- Providing a competitive salary
- Providing stretch targets linked to a bonus
- Creating a supportive and positive culture
- Providing a suite of benefits that cater to the individual needs of different employees
- But most importantly, providing meaningful work
If you’re coming to work engaged and excited each day then you’re going to be more productive and more successful in what it is that you’re doing.
This is no different in your personal life.
What do you spend your time doing? What are your hobbies and your interests? What excites you?
More often thvan not, the things that interest and excite you are the things that you are generally better at. This is not by chance. This is due to the fact that you’re in a more positive state of mind when you’re undertaking these activities.
To summarise the points above, if you do what you love, you will generally perform better and you will reap the rewards. Not only will you be more wealthy both in monetary and non-monetary forms, you will also be living a more fulfilling and happy life.
You have to love what you do.
Get out into the world and enjoy what’s around… there is a world of opportunity!