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What About Money and Happiness?

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Are money and happiness related? Does money buy happiness? It seems very easy for some people to say yes, and even easier for most to say no. But I think the the truth is not so simple.

The research is interesting and mixed. Actually, the results of the research mostly agree from one study to another, but the interpretation of those results is where the arguments start. For example, one worldwide survey of happiness levels found that as incomes rose from poverty levels towards the average for that nation (or a little higher), people reported higher levels of happiness. Beyond a certain point there was no gain.

This seems like common sense if we believe that worldly conditions have anything to do with happiness at all. Peace of mind and some level of happiness that we might call joy has much more to do with one's mind or spirituality, but extreme poverty is stressful to body and brain and of course it can interfere with worldly happiness. It also makes sense that as we meet our true physical needs money has less ability to raise our level of happiness, because other factors become more important.

Studies like this are commonly touted in the press as "proof" that money and happiness are unrelated. It may seem that way to those in the United States who are making an annual household income of more than $50,000 or $70,000 annual household income, since they might notice only the part about no further gains after that income level is passed. But what about the tens of millions of people who are not making that much? They might be more interested in the first conclusion of the studies, which is essentially that it does make a difference when you can pay the dentist, rent a decent place to live and eat healthy food.

(For a good summary of the science of "happiness economics," see the following entry on Wikipedia: http://en.wikipedia.org/wiki/Happiness_economics.)

Others have looked at the studies on a country-by-country basis and decided that since the United States is number twenty-three or so on the list of happiest nations, that proves no link to income. Again, though, it's a matter of interpretation and looking at the whole picture. If we are not as happy as those living in Bangladesh or Columbia it can certainly be for reasons unrelated to money. The more important statistics are the ones showing that Colombians and Bangladeshies who make more money are even happier than the residents there who live in poverty.

Imagine if we studied whether vegetables were good for people by comparing healthy people who ate few vegetables to obese cancer patients who ate many more. It would appear that vegetables were bad for people! The proper comparison would be cancer patients who ate many veggies with cancer patients who didn't, or just a broad cross section of people to rule out other factors. Looked at properly we find that eating more vegetables is conducive to health when starting with a vegetable-deficient diet, as making more money is to happiness when starting out in poverty.

Now, obviously there is no way that money can directly buy happiness. But it seems clear that it can buy the conditions conducive to a happier life. Take two groups of poor people, where one group is happier than the other on average. Give the unhappy group more income and they may still be less happy than the others, but measured against their prior state we are likely to find that money helped a bit.

Money and Happiness - Part Two

Although this will confuse the issue a bit, I think it is worth adding that perhaps money can buy unhappiness. It is all about how it is gained and how it is used. Certainly we can see that the pursuit of money for its own sake, or for the sake of some dream that a person imagines will bring happiness, can backfire. How happy can you be chasing after money in ways that destroy your true values or at least bring more stress into your life?

More than that, just coming into money can be disastrous for those who don't have the wisdom to use it properly. I personally know people who have suffered from sudden "windfall profits." For example, a friend received eight thousand dollars in cash one day, and was left with nothing but debt as a result. That amount of money should improve the life of a person who normally make only twice that much annually. But it doesn't work that way when it is used to get rent-to-own furniture and to make a down payment on a new car. Suddenly the money is gone and the debt and resulting stresses are greater than ever.

There are two important points here:

1. To the extent that there is anything we can call happiness is based on circumstances outside our own minds or souls, money obviously can help.

2. The degree to which money and happiness are related depends on how money is used.

The latter point is one that should be expanded on in another article. Perhaps with wiser use of money one's happiness level can continue to rise even when one is further up the income ladder. We might get happier all the way up to say $100,000 annual income. On the other hand, with wisdom perhaps the level of income becomes even less relevant to happiness. We may find what we need without so much money, after all.

Finally, there is one more thing worth noting here. When we ask about money and happiness we assume that the question is about how happy the owner of the wealth is. But consider for a moment the billions that people like Bill gates and others use to fight disease and poverty and illiteracy around the world through their foundations. Again, if medical care and healthy food and freedom from ignorance can bring any little bit of happiness, money is the means in those cases, even when it is not directly in the hands of the people it helps.


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