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Wednesday, 23 May 2007

Can Money Buy Happiness?

Have you ever wondered whether money can really buy happiness? You might have some sense of the answer, but nobody to confirm your suspicions…now the article below will assist you on this :)

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Money Can’t Buy Happiness?
This Blogger Begs to Differ

By Gretchen Rubin

Money can’t make people stay in love, connect with friends or enjoy a hike in the woods. But money, spent wisely, can contribute greatly to happiness.

Recent articles in the news media tackle the money-happiness connection. A study this summer in Science magazine showed that when participants were asked to record the previous day’s activities and describe their moods, being wealthier didn’t have great impact on their moment-to-moment experience.

A different sort of study presents another picture. According to a Pew Research Center 2006 report, the percentage of people who declare themselves “very happy” goes up as family income rises. People were asked: “Taken all together, how would you say things are these days, would you say that you are very happy, pretty happy, or not too happy?” Twenty five percent of people with incomes of $30,000 or less said they’re “very happy.” That compared with 50% of people with incomes of $150,000 or more.

What might explain the fact that wealthier people say they’re happier — even though their days don’t seem to be that much more fun? There are different theories, but one conclusion is that money does, in fact, help promote people’s general satisfaction with their life.

Economist Richard Layard identifies the “big seven” of happiness as family relationships, financial situation, work, community and friends, health, personal freedom, and personal values. While a person’s financial situation is just one element among the seven, a look at the other big six shows that money matters with them as well, too.

Top doctors and fresh vegetables help you keep healthy, and they cost money. Hiring a house-cleaner leaves means less fighting with your spouse, and household help costs money. A ski trip with your college friends strengthens those bonds, and it costs money. Giving to charity feels good, and it costs money.

Also, the idea that money can’t buy happiness may overlook one of the most precious luxuries money does buy: not having to worry about money. Having money means you don’t have to worry about paying for the intensive speech therapy for your child. Or about paying retail for a new digital camera when your old camera breaks right before your vacation. Or about buying a bottle of water on your way to the gym.

Having money provides a margin of comfort. Once you have money, it’s easy to take this freedom from worry for granted — yet it may help explain the greater overall contentment enjoyed by richer people.

Commentators who maintain that money doesn’t buy happiness often point out that between 1972 and 2005, Americans’ buying power rose dramatically, yet their level of happiness didn’t budge much. Therefore, the reasoning goes, money doesn’t buy happiness.

But people generally measure the benefits of wealth on a relative scale rather than an absolute scale. For example, a 2005 study by researchers Glenn Firebaugh and Laura Tach showed that for happiness, wealth relative to peers of the same age matters more than absolute wealth; that is, the dollar amount of your income matters less to your happiness than whether your income is larger or smaller than that of your age-peers. Therefore, a society-wide rise in the absolute level of wealth wouldn’t boost your happiness as much as relative gains.

Also, a common obstacle to happiness is what’s called the “hedonic treadmill.” People are highly adaptable, and soon take for granted their possessions and comforts. A new car or a set of golf clubs gives a brief rush of happiness, but that high may fade quickly. For an even more acute example, think about kids’ short-lived reaction to new toys. When everyone can afford air-conditioning, a color TV and a cell phone, those benefits shift in perception from longed-for luxuries to barely-noticed basics.

So how should you think about money and happiness in the context of your own life? It’s easy to say “choose time over money” and that cutting back hours at work will likely leave you happier. But there’s a limit to that theory. Having a lot of leisure is not relaxing if you spend the time worrying about how you’re going to pay to get the car fixed. Socializing over a great meal with friends brings more happiness than a flashy watch. But great meals cost money. It’s more fun to fly fish when you have money to travel to a river you’ve never fished before.

The secret is to be smart about how you splurge. Spend money toward things that promote the components of happiness. The hedonic treadmill means that loading up on stuff, though gratifying for a moment, isn’t a lasting source of happiness. Instead, spend money on your relationships, your health, and your experiences.

It isn’t really surprising that money, spent the right way, helps buy happiness. As economist John Kenneth Galbraith noted, “Wealth is not without its advantages, and the case to the contrary, although it has often been made, has never proved widely persuasive.”

– Gretchen Rubin is the author of Forty Ways to Look at Winston Churchill, Forty Ways to Look at JFK, and Power Money Fame Sex: A User’s Guide. She is working on a book on happiness and is author of a blog, http://www.happiness-project.com/.

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3 comments:

Funny Guy said...

Great article! Financial freedom is always attractive. I'd like to be rich and happy. Therefore I use my money and credit cards properly to avoids additional payments (high rates and fees) and not spend them without reason.

Humanus said...

You have told the answer right at the beginning of your articel: everybody has his or her own way of happiness.
So - we can buy different thingsand services, and possibilities.
But - as soon as we get something - we want more.

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