Can Money Buy Happiness?
Can money buy happiness? You will find this question being asked quite often. And you will get just as much people trying to answer that question as those who are asking it.
The answer to that question is clearly yes and no.
If one is living at poverty level, of course money will buy happiness. In this case, extra money will buy healthy food and health insurance so the person can be healthy and have quality of life. And one will not have to work two minimum wage jobs in order to make ends meet. This would give them more free time for leisure which contributes to happiness.
However, when one has to enough money, then extra money will not buy happiness (as some studies show).
After Enough, Extra Money Doesn't Help
The question now is what is enough? That depends on the individual.
If a family of four is making $22,000 in the United States, then perhaps it is not enough. That is the poverty level according to 2011 report from HHS.
Now what if they're making twice as much ($44,000), is that enough? Okay perhaps not, because that is still below the median income in the United States.
Okay now suppose they're making twice as much as that ($88,000). Is that enough? I'm sure there are people that are making that much and they would say that that's still not enough.
And if they make twice that ($176,000), some would still probably say it's still not enough. And so on.
That is because we've get acclimated to our current situation. When we were making X, it was not enough. But when we were making more, say Y, then it was sort of enough for a while. Until we got used to that. And then it's no longer enough. There is known as hedonic adaptation.
New York Times article says ...
"People in poor countries, not surprisingly, did become happier once they could afford basic necessities. But beyond that, further gains simply seemed to reset the bar."
"Paradox of Choice"
For the purpose of this discussion, let's just say enough would be above subsistence.
Barry Schwartz once said ...
"People are not happy in stinking hell-holes of abject poverty. What is true is that once you cross subsistence, whatever subsistence is in your society, additional increases in wealth have virtually no effect on well-being. ... It is worth knowing, in case you have a choice between choosing x and making more money, almost certainly choosing x is what you should choose." [45 minutes into this YouTube video]
Schwartz writes in his book Paradox of Choice ...
"Once a society's level of per capital wealth crosses a threshold from poverty to adequate subsistence, further increase in national wealth have almost no effect on happiness." [page 106]
"Stumbling on Happiness"
Daniel Gilbert agrees. He writes ...
"that wealth increases human happiness when it lifts people out of abject poverty and into the middle class but that it does little to increase happiness thereafter." [page 239 ofStumbling on Happiness]
What does the book Happier say? It says ...
".. very low correlation between material wealth and happiness, except in cases of extreme poverty where people's basic needs were not being met." [page 56]
Peter Lawrence writes in his book The Happy Minimalist ...
"The happier people are those who do what they enjoy to earn money and use the money wisely to procure only the things they need. Others compromise their principles and health in their pursuit of money and consequently negate the happiness they were after."
Science article says that ...
"The belief that high income is associated with good mood is widespread but mostly illusory."
The Economic Naturalist's Field Guide says ...
"A widely reported finding from happiness literature is that measured happiness levels changes very little as incomes grow over time." [page 57]
The book also gives us a clue as to what the influential economist John Maynard Keynes thought:
"Keynes thought income matters for happiness, but only to the extent that pressing material needs remain unmet." [page 54]
As an example, the book "Doctored: The Disillusionment of an American Physician" tells of a real life story of an cardiologist who lives in an one-bedroom apartment with wife and child. He writes that besides working at the hospital, he has to moonlight at a private doctor's office due to urging of his wife for a better financial future. He doesn't sound happy. More like depressed and disillusioned.
Depends on How You Spend It
Maybe it depends on how you spend that extra money. If you spend that money buying a better TV or a better car, maybe it will not make you as happy as if you spend that money buying vacations, or using it to increase your freedom, or giving you extra leisure time.
A science blog writes that buying things don't buy us as much happiness as buying memories because we get habituated to things. Boston Globe article says perhaps people are just using their money wrongly.