Money -- most of us have less of it than we once had, but how does this affect our happiness?
Money -- most of us have less of it than we once had, but how does this affect our happiness? The old idea that money can't buy happiness makes sense to me -- life couldn't possibly be that simple -- but to what extent is there a connection between the two?
In 1974, a famous study showed that rich people tend to be happier than poor people, but also that rich societies are not happier than poor societies, and that as countries get richer they do not get happier. A strange set of results, known as the Easterlin Paradox.
This has been explained by the idea that, above a certain very low threshold, relative wealth is more important than absolute wealth -- we're happy to drive a Ford Focus until all our neighbours get Mondeos. Another explanation is the 'hedonic treadmill', the theory that we become accustomed to whatever we've got, so we have to keep chasing the short-lived thrill of something even better.
Well, according to two professors at Wharton School of Business, we can pretty much forget all of that. Research by Betsey Stevenson and Justin Wolfers, using a much larger set of data, shows that there is no paradox at all: The rich are happier than the poor, rich countries are happier than poor countries, and as countries get richer they get happier.
There's a rather cool graph illustrating the point here. So all nice and consistent, and no comfort to people whose wealth has gone in the wrong direction.
But there are non-financial steps we can take to improve our happiness, according to the New Economics Foundation. Their solution is to incorporate the following five steps into your life every day:
- Connect with people around you, and build relationships;
- Be active: take exercise;
- Take notice: be curious and savour the moment;
- Keep learning: try something new, challenge yourself; and
- Give: do something nice for someone, contribute to society.
All of which I agree with, and try to apply, although I can't help thinking that more wealth helps to facilitate all of these activities too. Which could be one, non-consumerist, reason why money makes us happier.
Our Motley Fool discussion boards can help you achieve some of these five-a-day objectives:
“Money can't buy you happiness, but it does bring you a more pleasant form of misery”, Spike Milligan.
