We all know that money can’t buy you
happiness, right? As it turns out, this
is not exactly true.
A recent study by University of
Michigan economists Betsey Stevenson and Justin Wolfers, examining data from
more than 150 countries using World Bank data, has shed new light on the
interaction between happiness and the size of your bank account. Their first conclusion: the more money you
have, the happier you tend to be, regardless of where you are on the income
spectrum. They concluded that
multi-millionaires don’t think of themselves as “rich.”
However, there do seem to be income
levels where a person’s happiness can be increased faster than others. Princeton University economist Angus Deaton
has found that peoples’ day-to-day happiness level rises until they reach about
$75,000 in income—a point where a person can comfortably afford the basic
necessities of life without worrying where his or her next meal is going to
come from. After that, this type of
happiness levels off.
In fact, a report in Psychological
Science magazine found that the wealthier people were, the less likely they
were to savor positive experiences in their lives. Another study found that lottery winners
tended to be less impressed by life’s simple pleasures than people who
experienced no windfall. Once you’ve had
a chance to drink the finest French wines, fly in a private jet and watch the
Super Bowl from a box seat, then a sunny day after a week of rain doesn’t
produce quite the same jolt of happiness it used to. The additional money tended to have a
cancelling effect on day-to-day happiness.
It’s another kind of happiness, which
focuses on something the researchers call “life assessment,” that continues to
rise at all levels of wealth. The more
money people have, the more they feel like they have a better life, possibly
(Deaton hypothesizes) because they feel like they’re outcompeting their
peers.
Is there any way to more efficiently
buy happiness with money? A study by the
Chicago Booth School of Business found that people experienced more happiness
if they spent money on others than when the money was spent on themselves. Treating someone else—or, more broadly,
charitable activities—are among the most powerful financial enhancements to personal
happiness.
Other research has shown that you get
more happiness for your buck if you buy experiences rather than things. An epic trip to Paris, or a weekend at a bead
and breakfast near the cost, can be more enduringly pleasure-inducing than buying
a new watch or necklace. The watch of
necklace quickly become a routine part of your environment, contributing
nothing to happiness. But your travel
experience can be shared with others and reminisced about.
Finally, you can buy time with money—decreasing
your daily commute by moving closer to work, hiring somebody to help around the
house, hiring an assistant to clear your desk—all giving you more leisure time
to pursue your interests. With the free
time, take music lessons or learn to dance—and you’ll be happier than somebody
with millions more than you have.