What's the relationship between money and happiness? What matters more: dollar amount or relative amount?

A few kind friends emailed me the link to a recent Scientific American article on happiness -- just the kind of thoughtful gesture I'm trying to remember to do more often myself.

The article begins by quoting some research that has long interested me. One study asked people whether they'd prefer to earn $50,000 while other people made $25,000, or to earn $100,000 while others made $250,000.

A majority of the people chose the first option -- a result that's often characterized as "surprising."

The thing that surprises me is that people have such a clear grasp on the relationship between money and happiness.

Studies show that a key factor in this area is how much money you have relative to the people around you. Absolute dollar figures do matter, but comparison matters a lot.

A survey of 16,000 workers in a range of industries showed that people's reported job satisfaction was less tied to their salaries than it was to how their salaries compared to their co-workers' salaries.

My mother grew up feeling quite well-to-do in the little Nebraska town of North Platte, because her father had a highly coveted union job as an engineer on the Union Pacific Railroad. On the other hand, a friend told me he felt poor growing up in New York City, because he lived on Fifth Avenue above 96th Street.

Relativity figures into my ground-breaking formulation of the question: can money buy happiness?

The answer to that question is, of course, it depends.

It depends on what kind of person you are. (Money means different things to different people.)

It depends on how you spend your money. (There are good ways and bad ways to spend money.)

It depends on how much money you have relative to the people around you. (One person's fortune is another person's misfortune.)

The importance of relativity is one reason people didn't get a huge boost of happiness from the general rise in prosperity in the U.S. over the last few decades. If everyone is better off, people's relative positions don't change, people adapt to the changes in conditions, and no one feels "richer."

As Samuel Johnson explained, "Riches cannot be within the reach of great numbers, because to be rich is to possess more than is commonly placed in a single hand."

*
Today I discovered Jennifer Niesslein's fascinating blog, where she wrote, "To be honest, I was a little freaked out when I first heard about [The Happiness Project] because it's pretty much the exact same project I undertook: Taking self-help advice to become a better, happier person. But I have to say, I'm a little bit addicted to Rubin's blog now, and I'm especially struck by how different our takes are on the exact same project. Holy parallel universe!"

I emailed her immediately, because I'd had the same panicky reaction to her book when I read about it in a publishing newsletter. PRACTICALLY PERFECT IN EVERY WAY is about "her quest to self-help her way into a better, happier version of herself, applying the media's most popular advice on issues like clutter, marriage, diet, and spirituality." Sound a bit familiar?

PRACTICALLY PERFECT IN EVERY WAY is coming out in a few months, so she's far ahead of me. Fortunately for us both, our books are very different in approach, tone, and material used. Judging her blog, her book will be great; I haven't sold my proposal yet, however, so just have to hope that publishers decide that there's room in the world for two books in this vein.

Comments

[Yan Zhu]

hey!

good for you for writing a blog like this. Just a quote I like to share, it is from Bill O'Brien. He defines happiness as "the general sense that your life is headed in the right direction
and that you have the opportunity to make a difference."

That sounds about right to me!

Wish you the best

yan

[Laura]

It seems that for a lot of people, money and happiness are extremely entwined.

I find that it often brings out very ugly sides of people's personalities. For example, a group of people at a dinner party react very differently when the bill arrives. One person whips out his credit card, flaunting his money and offering to pay for the whole meal (even if he doesn't have the funds) while another hauls out the calculater, agonising over every cent even if she has heaps of money.

The cliche is so true- money can't buy happiness and I think it's important to keep in mind that you USE money and money shouldn't use you.

[Laura]

It seems that for a lot of people, money and happiness are extremely entwined.

I find that it often brings out very ugly sides of people's personalities. For example, a group of people at a dinner party react very differently when the bill arrives. One person whips out his credit card, flaunting his money and offering to pay for the whole meal (even if he doesn't have the funds) while another hauls out the calculater, agonising over every cent even if she has heaps of money.

The cliche is so true- money can't buy happiness and I think it's important to keep in mind that you USE money and money shouldn't use you.

[Tracy]

Well, I do hope your book gets picked up, Gretchen, because I, for one, would never even look at a book called "Practically Perfect in Every Way". I will go look at her site because you recommend it, but I would never have guessed in a million years that it was about happiness. Seeking perfection sounds to me like the formula for hell. . .

[adora]

Have you read Laura Rowley's "Money & Happiness" blog?
"Drawing from culture, psychology, philosophy, and everyday experience, Laura Rowley looks at how money can facilitate or sabotage happiness..."
http://finance.yahoo.com/expert/archive/moneyhappy/laura-rowley/1

[adora]

p.s. Just saw this cute strip from Mutts:
http://www.muttscomics.com/art/images/daily/021307.gif

[Michelle Potter]

For me having more money has made me less happy. Right now my husband makes about 3 times what we made when we started out. But it's been a real struggle to not adjust our spending accordingly, and sometimes it feels like were in exactly the same financial situation we were in when we had 1/3 as much money. That's just frustrating.

[marci alboher]

Bravo to you Gretchen for your reaction/response on hearing that another book is out there that sounds frighteningly familiar. Any author reading your post has had just that moment describe --- and when it's complicated by thinking the other book actually sounds good -- it's complicated indeed. The fact that you're both circling around the same subject definitely means there is enough interest for two (or more!) different perspectives on it. After all, do we ever tire of mob dramas or musicals where the underdog makes a remarkable come-back?