Sunday, August 24, 2008

Does money buy happiness? In short, yes

There's some questions that never fail to inspire heated discussion as they pass down through the ages. Does money buy happiness? What is the meaning of life? Why does Sinead O'Connor own a blow dryer? (Name that reference!) We may never know the answers to the latter two inquiries, but the first always elicits one of two responses: either a "yes" or "no." It seems like many are on the "no" boat, especially those of us who don't have a lot of money to begin with. It's as if by answering "no," we somehow feel emotionally richer, and above someone who would even think to answer "yes." There's solace in at least feeling "rich" in that way.

But the problem with the "no" response is that it's usually anchored to some strange belief that happiness can be found in the material possessions in our lives. Why have we been so conditioned to believe that a new car, a Gucci handbag, or 62-inch flat screen TV will somehow magically make us happier? Or, for that matter, when did we begin attributing inherent "happiness" to the more expensive, out-of-reach items in the marketplace? Is it simply because we can't have them, or is it that we covet the distraction that comes with them? One of my best friends believes that money doesn't buy happiness, but it buys distraction. According to him, "you can distract yourself from your unhappiness with 'toys' that keep you numb. Happiness is internal, not external."

But when I'm asked this ever-pervading question within the finance world, I respond with a confident "yes!" I do believe money buys happiness, but happiness to me is not the material possessions in my life, it's the time my money buys (also known as my personal freedom). For example, take one of my favorite hobbies: traveling. Happiness is not the airplane ticket itself, it's the days, weeks, or months my money affords me to use traveling in the first place.

Happiness in a handbag, for instance, is fleeting ... it's a distraction that doesn't sustain itself. Sure, it's fun and exciting to buy nice things for yourself, but I would say that the happiness people affix to these and other big purchases, such as Porsches and iPhones, isn't so much happiness as it is the distracting excitement of attaining something elite and exclusive. Better known as the "rush," this feeling quickly subsides the longer you've owned the item.

A recent article I read in the September 2008 issue of SmartMoney (the financial magazine owned by The Wall Street Journal) reaffirmed my belief that money does buy happiness. According to the magazine, "the rich really are different." Harrison Group vice chairman Jim Taylor said "there's no group in America that's happier than the wealthy," and, said the magazine, about 70% of millionaires say that money has "created" more happiness for them. A new Wharton School of Business study quoted that a higher income correlates with higher ratings in life satisfaction. But, the magazine said, "it's not necessarily the Bentley or Manolo Blahniks that lead to bliss."

"It's the freedom that money buys," said one coauthor of the study, which also found that rates of depression are lower among the wealthy. And, Rand Corporation senior labor economist James Smith also said that the rich tend to be healthier than the rest of the population -- health and happiness, he said, are as closely correlated as wealth and happiness.

With that said, there are many wealthy people who have many fun toys, but is it the toys that bring them happiness, or is it the time they've earned to play with said toys? To answer the over-arching question, you have to ask yourself what happiness means to you. Is it lavish wardrobes, the newest iPod, or anything else you can hand over your credit card for? Or is it spending your time and life the way you see fit, i.e., hanging out with your family, traveling, and perhaps listening to music via your wonderful iPod?

I'd love to own as many shoes as Imelda Marcos, but what's the point of owning excessive amounts of footwear if I never have the time to enjoy them, especially with the people I care about?

Do you think money buys happiness? More specifically, what is happiness to you?


Anonymous said...

well, I just spent all day today thinking about some of this... it's on my post tomorrow (Aug 26) if you want to see what I think!:)

Yeah, I agree that for certain levels of wealth (like for those already living lower-class), money DOES buy happiness. After it's covered your basics, though, maybe not so much...

Anonymous said...

In my experience, I have seen few cases where money bought happiness. Maybe it's safer to say that a certain amount of money can minimize certain kinds of unhappiness. After that ... it's up to you.

Crystal said...

I see what you are both saying, especially about money minimizing certain kinds of unhappiness. I guess it really depends on what makes you happy.

Anonymous said...

Morgan Spurlock did one of those 30-day episodes where he tried to live on minimum wage. That might be an extreme compared to an average income compared to wealth. But it highlighted the real difficulties 'low wealth' can have. Number one on that list is health care and general health.

Take something like (and now a new hot button health issue) dental care. A young boy died recently due to an infected tooth (!) because the family didn't have dental insurance and the grandmother didn't know what to do (in Washington, DC). Dental insurance is a real luxury for those that can't afford or don't receive even basic health insurance. But all of it is damn important to happiness.

The bottom line is that 'wealth' or 'money' is merely a means to an end. If your end is purchasing 'things' then likely it will not turn out well for you, as the excitement fades and the pursuit becomes hollow.

But if your end is using that money to create a more fulfilling lifestyle it will likely work out well. Money greases gears that gets things done. It facilitates. Of course, the short term satisfaction of purchases are what most seem to concentrate on when trotting out this old trope. But it's the facilitation that really brings some degree of happiness. I suppose inherent in that is there is intelligence necessary to recognize this fact. Money does facilitate freedom and it requires intelligence to know how best to handle such liberty.

Anonymous said...

I think that the people who answer "NO" to the question are answering a different question. They are answering the question "does money buy ABSOLUTE happiness?" The answer to that question is definitely no. If you ask them "If you had an extra $100,000 would you be happier?" they would answer yes. From that you should be able to agree that the $100,000 did buy some incremental amount of happiness. Now all of the decisions that they make with that extra money may be poor decisions and wipe out any extra happiness that the money brought, but in that case it is the decisions that they make with their money that made them unhappy, not the money itself.

I agree, money will buy some degree of happiness because it will give you more freedom to buy something you like, pay off bills, or just relax and enjoy some time.

Anonymous said...

You make a compelling argument. As the old saying goes "Time is money" and in a sense this backs up your argument.

The more money you have the more time you can 'create' for you to pursue what really makes you happy.

Someone once said that 'for what money can do there is nothing better that will do the same' in other words if something costs then money is the one thing that make it happen.

I think the problem with money arises when people pursue it blindly with no real understanding of the reason why they are pursuing it.

Anonymous said...

When I first saw the title of your post I initially though "yeah, whatever", because after I got out of debt and started investing my money "on its own" have been a burden and cause of stress to me many times.

But you are absolutely right. What has brought me happiness is freedom.

And being a good steward of my money has allowed me to have A LOT more freedom.

Money on its own is meaningless. It's the freedom that having money brings you that can bring you happiness - as long as you use that freedom constructively.

Very good article!

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