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Sunday, August 25, 2013

Are you possessed? Part 1: Taking the pecuniary road to happiness, or does money really matter?

David Muir, Flickr



Note: The questions raised in this post mostly apply to people whose basic needs are met, like a roof over their head, enough food to eat, and access to reasonable health care, and who have a choice when it comes to money and work.


Time to answer the sempiternal question: does money bring happiness? Wouldn't it be nice to know, so we can decide once and for all if the rat race is worth it or not?

Once your basic needs are met... is it worth it to work hard and as much as possible, in order to keep making as much money as possible? Even if that means sacrificing other things?

Corollary questions: Do we all have to work full-time? Do we really need all those luxuries we take for granted, to be happy? What would happen if we worked less and lived with less? What would happen if we worked more and lived with more? 

Why do we keep hearing about successful CEOs who quit lucrative jobs to start a small handmade soap venture (that barely pays the bills)? Why do we read about professionals who decide to devote a good chunk of their work to pro bono (non paying) cases? Why do those people seem happier after than before?

Why, on the other hand, do so many of us keep making choices that favor money over other priorities? And why do we think we "have to"?







For you readers I have been combing through the data on that topic.

We've heard it time and again: money does not buy happiness. This hypothesis states that once you're past the poverty threshold (i.e. you don't have to worry about fulfilling your basic needs), and assuming you're not living beyond your means (debt is a big source of stress and an obstacle to happiness), an increase in income will NOT bring a significant improvement in your levels of happiness. Some studies indeed show that past a certain income ($75,000 for example, but some studies come up with a lower threshold), more money does not increase happiness levels (more details here).

I like this hypothesis, but what if it that discourse was more of a propaganda? What if that was a huge lie told to the masses in order to pacify them, just like the caste system of India provides a reason for the stark inequalities? After all, if money DID buy happiness, and if the less fortunate came to know it, we could probably expect a revolution! Interestingly, some studies tend to show that increases in income (even past the $75,000 point) continue to yield increases in happiness levels.

Who are we to believe?

Well, based on my readings, money is not a one-way ticket to happiness... but it's not to be demonized either. As you might have heard, money does not buy happiness... but it helps.

According to Happiness for Dummies, by W. Doyle Gentry, PhD, money does buy some things that help with happiness, like freedom ( freedom of choice, freedom from some stress - although wealth often comes with other types of stress) and support (e.g. a coach, a therapist, etc.) Some other things that money buys, like comfort, excitement and abundance, are in no way an absolute source of happiness. Why is that? Because of a number of characteristics of human nature. Namely:

  • The hedonic treadmill effect (it's the change - for the better - that makes us happy, not the absolute level of what we have);
  • Relative deprivation (we make comparisons with those who have more, which makes us unhappy no matter how much we have... because there will always be someone who has more);
  • Escalating needs (no matter how much we have, we keep needing more, and more, and more, to be satisfied).






Another book that provides useful (and empirical) data on the relationship between happiness and money is The Myths of Happiness, by Sonja Lyubomirsky, PhD. The entire book (and her other writings, for that matter) is fascinating, but for this topic I particularly recommend chapters 6 and 7. There is too much interesting information in those chapters for me to sum it up in one post, but what it boils down to is what we've said before: money is not a one-way ticket to happiness. In some ways it does help, but in others it does not make a difference, and sometimes it could even be a nuisance: "Because wealth allows people to experience the best that life has to offer, it can even reduce their capacity to savor life's small pleasures".

One of the most interesting conclusions Lyubomirsky comes to is that no matter how much money you have, you should spend it on "experiences rather than possessions".

My environmentally-friendly mind finds this idea appealing because consuming less things should mean putting less pressure on the planet. Even if you do have the money for something, should you really buy it if it's not a true need, knowing that every time you buy (with the exception of buying second-hand, maybe), you - indirectly - pollute?

When D and I bought our house, we chose one that was smaller than what the bank was willing to let us buy. First because we did not want to run the risk of becoming 
"house poor", but I also like to think that it has made our ecological footprint smaller. In the same vein, one of my friends was recently asked the following question by her daughter: "Mom, do we buy second hand because we're poor?" My friend aptly replied "No, we buy second hand because we're smart." (For the record, they are not poor.)

Another reason I like the idea of spending on experiences (doing activities, taking classes, etc.) rather than "stuff" is because it feeds you from the inside, not the outside. No matter what happens, you will always have the memories, and they will keep nourishing you (and your relationships, if you shared the experience with other people). 

Based on research on happiness triggers, Lyubomirsky also advises to spend money:

  • On need-satisfying activities (i.e. learning, improving, celebrating, helping, as opposed to "flaunting our looks, power and status");
  • On others, not yourself;
  • To give you time (e.g. "by reducing our work hours or paying others to perform time-consuming chores"). 

That last advice brings us back to actively choosing to work less/make less money. Have you ever considered making that choice?






Finally, Lyubomirsky recommends that we let ourselves linger. Anticipation might indeed be one of the best parts of a good thing. This is not something you experience when you are caught in an impulsive shopping frenzy!

In the end, working hard and a lot might be fine if you love what you do and don't feel you are sacrificing other, more important things. (Being rich, yes... but not at any cost!) Making a lot of dough might be fine as long as you know how to use said dough, and as long as your life doesn't revolve around it; more specifically, as long as you don't rely on it to make you happy.

No matter where you are financially, if you live above the poverty threshold and your basic needs are met, you ought to ask yourself the following questions:


  • What am I sacrificing for the sake of money?
  • Do I really need that much money?
  • Do I really need more money than what I have right now?
  • What would I need more money for?
  • Would that make me happier, really?
  • Why do I think more money is the solution, as opposed to other alternatives?
  • Am I willing to put the time and effort and the sacrifices it takes to significantly increase my wealth?
  • Once I get to my goal, will I really feel satisfied, once and for all?

Yes, money IS good, and its pursuit is legitimate... but it has to stay in its place: money is to be used as a means, not an end... and its pursuit should not replace other, more important endeavors!

Stay tuned! In the next post, we will go beyond money and discuss why, wealthy or not, living with less "stuffcould be good for you.




20 comments:

  1. I love the research you are doing! I left a high-stress job four years ago because I believed it was killing me. It probably was. I have been pairing down and lightening up ever since, and it has been a real struggle at times. I have friends and family who are so busy in their careers, that their lives are completely consumed. I become exhausted just listening to their schedules.

    I have my basic needs met, just. Sometimes I yearn for more material freedom, but then I realize it's not worth the price. I am making an art out of doing with less, and being as creative as I can. It brings me happiness.

    When I made lots of money, I spent lots of money. I needed to spend money to de-stress from the job. I wanted to accumulate STUFF (as the late great George Carlin said.) And the price I was willing to pay for it was my own well-being.

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    1. Thank you for your example, Tara!

      I know (very well) someone else who has left a fast-paced, very good pay job, for something more relaxed that pays less... and she once told me she would "never go back".

      When you have a "relaxed job", you find peace and happiness in every - free - moment of the day. You don't have to wait for vacation or for specific purchases to feel good.

      I also know people whose schedule sounds exhausting to me! Not surprisingly, those people are usually exhausted. I am worried for their health.

      The sad part is that many of us think we don't have any other choice but to work like crazy. I disagree. But of course, as you say so well, slowing down means living with less, and that is scary to many.

      Your last paragraph is very interesting. It reminds me something I read about a woman who had a "big job with big pay": she when she went on vacation it would take her many days to simply start to unwind.

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  2. We all think dual-income families should be the norm (with both parents working full-time) but we fail to acknowledge that it's possible to work less if you're willing to have less (that applies to middle class and onward). We have to be honest about the whole consumerist society !

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    1. You are so right! It's as if we don't want to acknowledge we have a choice. To make the choice of working more in order to have more is fine... but you have to remember that it's indeed a CHOICE.

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  3. Great post (and research topic!)!!
    We made the choice many years ago to be a 1 income family while our boys were little. Now, I have the flexibility to work or not which is nice and I feel fortunate to be able to choose!
    I've always been of the mindset that while money doesn't buy happiness (because we have to make the choice to be happy with what we have) - it is nice to be able to buy and do what we want to do. Growing up that was never an option so it is nice to have that choice now!

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    1. I love that research topic! This is why I will write another post about it! :-)

      The flexibility to work or not, or to work full-time or part-time, has a lot of weight in the quality of life equation. More than money, I think.

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  4. Money is such a driving force for so many people. For us, we are a one income family with a lot of kids so we budget carefully and limit excess spending. I'm grateful for what we have.

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    1. You are proof that it can be done! Thank you for commenting, Diane.

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  5. I see money for what it is. Like government, a necessary evil.

    I have found the best way to combat the (potential) destructive nature of money, is to have low expectations, a supreme work ethic, and one must strive to find the good in all things. This has, and continues to work well for me.

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    1. I like the analogy with government. :-)

      Those are good pieces of advice, Roy!

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  6. Last year, I made more money. This year I was short of money, but life felt a lot happier. The work cases in which I made more money last year really took their toll on me. I felt like I had aged years in a single year. So yes, having more money is not necessarily happier. But not enough is very problematic too. :D

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    1. Not enough money is problematic for sure, and that's why I wrote that note at the top of my post. :-)

      You add to the number of people who do not equate money with happiness!

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  7. I've lived simply and was fortunate to work in an area that I love. Because of that, even when I lived in the student ghetto with very little money I've always had enough. Over time, I received more money than I needed so I was able to do tens of thousands of dollars of free surgery yearly as pay-back.

    I had a friend in high school who was in a very poor family. He once told me,(not knowing that it was already a saying) that the best things in life are free!

    I've looked at what I call a "materialistic hook" get people to where they are never satisfied no matter how much they have. Luckily, I have never been hooked :-)


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    1. You fall in the "pro bono specialist" category then, and that says a lot about you. :-)

      I've not worked pro bono much, but I have a reduced rate for non profit organizations. It makes me feel happy! :-)

      A lot of people would be happier if they acknowledged that they make enough or more than they really need. Your example shows that it would also benefit others, who have less.

      Apart from the occasional luxury, I have to say living simply keeps me very content.

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    2. I wish I could always just give it away, but the problem with what I do is that with the cost of malpractice insurance in the US I have to work enough to pay that expense or giving it away would break me financially. It's too bad because there are many retired docs with plenty of skills who would be happy to volunteer their time except for that one "slight" problem.

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  8. You raise a lot of interesting questions here. I'm a SAHM with a part-time job (I teach three fitness classes a week) so I feel like I have the best of both worlds. However, my hubs works his butt off managing his own company and it can definitely interfere with our overall "happiness." Finding a balance that works for your particular needs is the key! And if you have a job you love, it mostly doesn't seem like work.

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    1. It surely makes a difference in the equation if one partner works super hard. I imagine your husband brings back money that you can all benefit from. :-) But you are right, the balance is hard to find. Many of my friends work (or wish they worked) 4 days instead of 5. It seems to be a good recipe.

      Many of the hours I work each week don't feel like work. :-)

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  9. Great stuff here!

    I think money CAN buy happiness... for example, we LOVE our big-ass high def tv. But on the other hand, extra time, flexibility and lack of stress lead to happiness too, and often one has to sacrifice $$ to get those.

    In my mind, it's about having a mindset that allows you appreciate whatever gifts come your way, and to be strategic and mindful of tradeoffs, and to be truly conscious of your own values, enthusiasms and priorities and not just be a slave to marketing and cultural expectations.

    My wife and I (still sounds funny to say that but I'm going to keep doing it until it sounds normal) have made financial and lifestyle decisions that might seem majorly bizarre to others, but they make us really, really, really happy.

    Great thought-provoking post!

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    1. You show very well how balance has to be found in those matters.

      And how important it is to spend money in ways that make YOU happy, not in ways that others think will make you happy. :-)

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  10. "we buy second hand because we're smart" - That is an awesome reply!

    Very thought provoking piece! I've never chased money...even when I wanted to I just could not bring myself to do it. And while I am not adverse to having a lot of money, if that ever became the case, I am fully aware that I can definitely do without it and still be happy...although my landlord might have a different perspective :)

    Lyle

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