It’s said that money can’t buy you happiness. But is that actually true? It’s a question we might well ask as we set our priorities for the new year.
A Princeton University study published in 2010 suggested that in fact money could buy you happiness – up to a point.
The researchers found happiness increased in line with income up to $US75,000 in earnings a year (about £50,000, or double the average income, at the time of the research). Above that, people didn’t report any greater day-to-day happiness, economist Angus Deaton and psychologist Daniel Kahneman found.
Sense of accomplishment
But wait. As well as their day-to-day emotional state, the researchers asked the 450,000 people in their study how “satisfied” they felt with life overall. Now they found that the more people made above $75,000, the more they felt a sense of accomplishment, that their life was working out.
Interestingly, investment guru Warren Buffett, one of the richest people on earth, once said he could live on far less than he earns and still be content. He told an interviewer: “I’m already happy... certainly with $100,000 a year I could be very happy.”
At the time he was living in the same house he bought for just $US31,500 (£24,000) in 1958. He said he would be prepared to spend $100 million on a house if it would make him a lot happier. But his five-bedroom, long-term home was the happiest house in the world “because it’s got memories”.
Absolute versus relative wealth
Other research on money and happiness has shown it's not absolute wealth that determines happiness but relative wealth or status — how you compare with your friends, colleagues or neighbours.
Think about it. You might have been perfectly happy in your younger days, when you used discarded bricks and wood offcuts to construct bookshelves in your first home, because your friends were also starting out and making do. Now you have a good car and live in a comfortable house but you’re not quite as happy — or satisfied — because many of your friends have two cars and bigger houses in “nicer” suburbs.
Another recent study measured the effect of major life events on wellbeing and found that financial gains, along with marriage, retirement and childbirth, all temporarily improve overall life satisfaction.
But they also found that losses — with financial loss among the worst, along with a death in the family, and illness and injury — had a more longer-lasting impact than the happiness of financial gains.
The good news
But the good news is that even after very bad events most people seem to eventually return to what they call their “set-point” wellbeing level. “Even after an extremely bad event… people’s wellbeing generally recovers in two to three years. This doesn’t mean they don’t carry pain from the experience, but it does mean they can feel happy again.”
Perhaps comedian Spike Milligan got it right when he said: “Although money can't buy happiness, it will get you the kind of misery with which you can live comfortably.”
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