I keep reading the argument that “Money can’t buy happiness.” It’s not that simple! Read on for the Epiphany of the Back Spasm.

The relationship between money and happiness is one of the most interesting, most complicated, and most sensitive questions in the study of happiness.

I’ve read a lot about the subject that strikes me as incomplete, and I feel like I need to get my own views down on (virtual) paper.

So…brace yourself for a long post.

Americans are loaded with indulgences like big-screen TVs and extra-virgin olive oil; at the same time, we struggle to be happy. A paradox? Nope. Despite worries like international conflict, climate change, and trans fats, we enjoy an extraordinary degree of affluence and security. This prosperity allows us to turn our attention to more transcendent matters—to yearn for lives not just of material comfort, but of meaning, balance, and joy.

This isn’t just true of the United States. As countries become richer, studies show, citizens become less focused on physical and economic security, and more concerned with goals like happiness and self-realization.

I wrote about money in my first book, Power Money Fame Sex: A User's Guide, so I’ve grappled with the mysterious element of money before.

Gertrude Stein’s observation frequently floats through my mind: “Everyone has to make up their mind if money is money or money isn’t money and sooner or later they always do decide that money is money.”

Money satisfies basic material needs. It’s a way to keep score, to win security, and to earn recognition. It symbolizes status and success. It can bring comfort and a sense of identity. It can be renounced, sacrificed, or dedicated. It’s a means and an end. It creates power in relationships and in the world. It can bring change. It often stands for the things that we feel are lacking—if only we had the money, we’d be adventurous, or thin, or cultured, or respected, or generous. It’s a symbol of everything we dream of earning.

I’ve been trying hard to clarify my thinking about money and happiness. I was skeptical of much of what I read.

In particular, I kept reading the argument, “Money can’t buy happiness,” but it certainly seems that, whatever any economist or social scientist might claim, people act pretty convinced about the significance of money. It’s not without its benefits, and the opposite case, though frequently made, has never proved widely persuasive.

I wanted to look carefully at these arguments being made about the irrelevance of money to happiness.

For example, I repeatedly encountered the assertion that, because in the last three decades, Americans’ average per capita income has more than doubled (accounting for inflation), and yet the level of happiness hasn’t budge much, therefore, money doesn’t buy happiness.

But drawing that conclusion from those statistics doesn’t make sense.

First, during that same time period, many aspects of American society changed—not just buying power. Research shows that Americans have a third fewer intimate friends than they had two decades ago; and a larger number of people can only confide in family members. Because having close relationships has been shown to be a key to happiness, that drop surely affected happiness.

Lots of other things changed, too. The health of millions of Americans was compromised, as the obesity rate skyrocketed. Across the board—in all age groups, all income and education levels, and male and female alike—the obesity rate has risen dramatically. Maybe that change affected happiness levels.

And over the last few decades, the rate of violent crime and property crime has dropped sharply, but without a corresponding rise in happiness levels. Should we conclude that people are no better off with less crime, because happiness levels didn’t budge?

That was one problem I saw with that argument. Also, if we want to compare periods of relative wealth, why make a comparison between thirty years ago and today—other than the convenience of data? Why not make the comparison to the Middle Ages? Or a century ago? The fact is, people aren’t made deliriously happy by the luxuries of salt and cinnamon, or electricity and running water, or cell phones or the Internet, because they come to accept these once-luxury goods as part of ordinary existence. People become accustomed to a rising standard of living, and that standard does not, in itself, act as an enormous source of happiness. As prosperity increases, longed-for luxuries turn into barely-noticed basics.

Furthermore, in fact, studies show that people in wealthier countries do report being happier than people in poorer countries, and within a given society, richer people, on average, are indeed happier than poorer people.

Within the United States, according to one study, 49% of people with an annual family income of more than $100,000 said they were “very happy,” in contrast to only 24% of those with an annual family income of less than $30,000. (Now, it’s also true that there may be some reverse correlation: happy people become earn more money because they’re more appealing to other people and because their happiness helps them succeed.)

People in richer countries are happier than people in poorer countries. Also, it turns out, while the absolute level of wealth matters to people, relative ranking also matters. And relative ranking isn’t affected when an entire society grows more prosperous.

People take the measure of their circumstances relative to the people around them and their own previous experiences.

For instance, one study shows that people measure themselves against their age-peers, and their wealth relative to their age-peers matters more than their absolute wealth. Along the same lines, research shows that people who live in neighborhoods with richer people tend to be less happy than those in neighborhoods where neighbors make about as much money as they do. A study of workers in different industries showed that their job satisfaction was less tied to their salaries than to how their salaries compared to their co-workers’ salaries. Absolute dollar figures do matter, but comparison matters a lot.

People understand quite well that relative money matters: a majority of people said they’d rather earn $50,000 where others earned $25,000, rather than earn $100,000 where others made $250,000.

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.

Now, I’m not arguing that people OUGHT to feel this way – that they should evaluate their own experience according to what other people have, or that they should be happier when they have more money. But the truth is, most people DO. And in the field of happiness, as in all endeavors, it’s important to understand the facts, even when you want to change them.

So am I arguing that “Money can buy happiness”?

The answer: absolutely not. Money, alone, can’t buy happiness.

But, as a follow-up, am I arguing that, “Can money help buy happiness”?

The answer: it depends.

I think the happiness experts make a big mistake when they assume that money affects everyone the same way, or that looking at statistical averages tells you a lot about each individual’s case.

One popular argument is that while happiness levels increase dramatically as poor countries become wealthier, once income levels reach a certain threshold in advanced industrial societies—I’ve seen the number $15,000 thrown out—there’s practically no relationship between a person’s happiness level and income level. This assertion seems preposterous to me.

That statistical average doesn’t mean that a particular individual in that country might not be made happier by more money—depending on that individual’s circumstances. And indeed, studies show that within any particular country, people with more money do tend to be happier than those with less.

After long consideration, I decided that three factors shape the significance of money to individuals:

* It depends on what kind of person you are. Money means different things to different people. You might love to collect modern art, or you might love to rent old movies. You might have six children and ailing, dependent parents, or you might have no children and robust parents.

* It depends on how you spend your money. Some purchases are more likely to contribute to your happiness than others. You might buy cocaine, or you might buy a dog. You might splurge on a new dining room table, or you might splurge on a personal trainer.

* It depends on how much money you have relative to the people around you, and relative to your own experience. One person’s fortune is another person’s misfortune.

Developing this three-factor test gave me pleasant memories of law school, and it was helpful, but it was complex. I was looking for a more cogent way to convey the relationship between money and happiness.

Then I had what I’ll call the Epiphany of the Back Spasm. One afternoon, I picked up the Little Girl the wrong way, and the next morning, I woke up in agony. I was beside myself with pain. I couldn’t sit for long, I had a hard time typing, I had trouble sleeping, and of course, I couldn’t stop picking up the Little Girl, so I kept re-aggravating the injury.

My father-in-law, who has long suffered from back problems, kept urging me to go to his physical therapist. I kept insisting, “I’m sure my back will improve on its own.”

Then, one night, as I struggled painfully to turn over in bed, I thought, “Remember my own Secret of Adulthood: It’s okay to ask for help! He says physical therapy works; why am I resisting?”

I made an appointment, and two days and two visits later, I was 100% better. It felt like a miracle. And one day after my pain was gone, I took my pain-free existence for granted again.

I realized an analogy: money doesn’t buy happiness the way good health doesn’t buy happiness.

When money or health is a problem, you think about it all the time; when it’s not a problem, you don’t think much about it. Both money and health contribute to happiness mostly in the negative; the lack of them brings much more unhappiness than possessing them brings happiness. One of the greatest luxuries that money and health provide is the freedom from having to think about them.

Being healthy doesn’t guarantee happiness. Lots of healthy people are very unhappy. Many of them squander their health, or use it in harmful ways. They take it for granted. They don’t spend any time thinking about it or feeling grateful for it. In fact, they might even be better off with some physical limitation that would prevent them from making destructive choices. Ditto, money.

I remember once, in law school, the Big Man and I went on vacation with some friends. One guy was the friend of a friend, whom we didn’t know well except to know that he was renowned for his wild, reckless antics. I was relieved when he broke his ankle the first morning (doing something stupid) and was stuck on crutches. I’m positive that this injury kept him from doing a lot of crazy, dangerous stunts that might have caused great unhappiness.

But just because good health doesn’t guarantee happiness doesn’t meant that good health doesn’t matter to happiness. Ditto, money.

The First Splendid Truth holds that to think about happiness, we must think about feeling good, feeling bad, and feeling right, in an atmosphere of growth.

Money is most important for happiness in the “feeling bad” category. People’s biggest worries include financial anxiety, health concerns, job insecurity, and having to do tiring and boring chores. Spent correctly, money can go a long way to solving these problems.

I’ve written before about how money, SPENT WISELY, can help buy happiness in the “feeling good,” “feeling right,” and “atmosphere of growth” categories – because it can help support the aspects of life that build happiness: social bonds, energy, having fun, doing good.

I welcome any responses to this. I’m still thinking through the issue.

*
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Comments

[Mark Warburton]

Great article! Your comparison between financial and health effects on happiness is enlightening and (I believe) spot on.

You wrote, "Both money and health contribute to happiness mostly in the negative; the lack of them brings much more unhappiness than possessing them brings happiness."

This phenomenon is what economists call "loss aversion" and it is describe fairly well here: http://en.wikipedia.org/wiki/Loss_aversion

Thanks for the great work! :)

[Charles Scalfani]

Money is necessary but not sufficient for happiness.

[PNWGal]

I saw this quote the other day and thought about your blog--as it addresses the intangibles that make people happy. After reading today's post, I have to send it:

For money you can have everything it is said. No that is not true. You can buy food, but not appetite; medicine, but not health; soft beds, but not sleep; knowledge but not intelligence; glitter, but not comfort; fun, but not pleasure; acquaintances, but not friendship; servants, but not faithfulness; grey hair, but not honor; quiet days, but not peace. The shell of all things you can get for money. But not the kernel. That cannot be had for money. -Arne Garborg, writer (1851-1924)

[Bill Reid]

It's obvious that money can't buy happiness - look at any number of mega-wealthy celebrities who crash and burn.

What I think is that money can buy is the perception of freedom. Freedom to live your life free from worry and want and freedom to pursue your desires without constantly taking time out to seek to support yourself and your family.

While you could achieve this kind of freedom by simplifying your life, most people will balk at what they consider a substandard lifestyle, so they don't even approach that vector.

The mega-wealthy sometimes miss this because they continue to raise what they consider the minimum standard of life, or because they find that freedom and don't know what pursuits will make them happy, so they go on pleasure benders.

But for a level headed person with an idea of what they want to do in life, money can mean the freedom to chuck the mundane worries they clutter their lives with and get about the business of what brings them joy.

That's my take.

[adora]

Money can buy things and services that contribute to happiness. I started to appreciate "buying time". Like paying someone to do chores or buy more expensive cut fruits or ready meals. The little extra money add up to precious time saved which I can enjoy doing things that matter.

A friend of mine didn't take any photographs until she was 7 because her parents were poor. It was not that they couldn't afford a camera, but they didn't have nice clothes, nice home or money to go to places that deserve to take pictures. It made her very unhappy, felt like part of her life was missing.
I learned not to wait until things get better to do stuff. The time is now! Her parents should have just enjoy the moment and take pictures even when they didn't have nice clothes.

[Juhli]

Very thoughtful discussion of the link between money and happiness. I do think however, that researchers mean that the acquisition and spending of money doesn't ensure happiness. Of course as you point out, some expenditures do bring happiness but most consumerism is about the acquisition of stuff and that has been shown to have a very short happiness surge which sometimes dissipates before the buyer even reaches their car.

[Mohammed (UK)]

Sounds a bit like Maslow's Heirarchy of Needs here... Only the lower (lowest?) levels of MHN can be satisfied with money. The higher up you go (i.e., when the lower needs are satisfied) the more difficult it is to achieve happiness through money. The Will Smith movie about "Happyness" (sic) was badly named.

[phquaryn]

C'mon, y'all, haven't you ever felt the pleasure of getting that paycheck and going straight out to dinner after work?

A relative of mine is strapped for cash. She's in a situation I was in not too long ago, just out of college, making just barely enough to pay the bills. I'm so happy to be at a place in life where I can send her a gift card every now and then, so she can go out and do something for *fun* once and a while. That's what I wish someone would have done for me when I was in her situation. When you are broke, a little money can provide a lot of happiness.

[Alix D]

Very good post, and congrats for being willing to talk about money and happiness.

One quibble, however:

"Lots of other things changed, too. The health of millions of Americans was compromised, as the obesity rate skyrocketed."

I have to point out two problems with this statement. The first is the myth of the obesity epidemic. Obesity rates have not significiantly risen since 1997, when 31 million people "became" overweight due to a change in definition -- see http://junkfoodscience.blogspot.com/2007/11/cdc-admits-there-is-no-obesity-epidemic.html, http://junkfoodscience.blogspot.com/2007/04/wheres-crisis.html, and http://www.utne.com/2008-01-01/Politics/Shame-on-US.aspx

The second is that being overweight doesn't significantly compromise health. For this I point you to http://kateharding.net/but-dont-you-realize-fat-is-unhealthy/ , to whom I believe you've linked before, and her excellent post.

I like your blog. I read it faithfully. I like you too much to ignore misinformation :)

[Hayden Tompkins]

Research has also indicated that when people are faced with excessive choice, they are more unhappy. People need choice to be happy, to take ownership of themselves and consequences, but if the number of options gets too high (more than five) than our unhappiness actually increases.

And America is, if anything, a land of choices.

[sylrayj]

As I read this, I thought about 'having money' in the context of an online game, Runescape. I'm not as concerned about how much gold I have as I am about my skill ranking and quest points. I've noticed too that when people who have a higher combat level than I do notice that I am ranked in the high scores (must have a score over 30 in the skill and must be in the top million players out of one hundred million or so in that skill), they get unhappy. They were quite pleased to be 'better than me' until they saw that in my own way, I'm better than they are.

This tells me three things. The comparison with one's peers really is important. If you don't know you're lacking in some areas, you can be happy enough. And as in my case, some people are happy knowing they are making slow but steady progress, even if they're lower in ranking than most others.

That last one might explain the minimum-money notion - if you don't have enough resources to be able to start improving your situation, you can't have the pleasure of doing so.

[Cara]

"money doesn’t buy happiness the way good health doesn’t buy happiness." -- so, so true.

Here's a post I found that made me appreciate the degree to which my money DOES buy me happiness. I never take money for granted. It's so hard to earn.

http://www.scalzi.com/whatever/003704.html

[Sara Brumfield]

I'm wondering about when money becomes a trap -- when you are so tied to the security a good job brings, money-wise, that you aren't willing to take the risks that might make you substantially happier. In that case, mightn't money contribute negatively to happiness? (And what about all these books where people give it all up to go work with the poor in Africa/India/the inner city?)

[EAC]

I loved this article from the Brazen Careerist site on the issues of money and happiness:

http://blog.penelopetrunk.com/2006/08/03/how-much-money-do-you-need-to-be-happy-hint-your-sex-life-matters-more/

It struck me so because it was my exact experience: the first time I out of school, supporting myself, and making about $40,000 I felt like a sultan! Now my family income is loads more than that, but I don't *feel* richer - I just feel like I'm keeping up with the Joneses. Back then, being able to buy a pair of boots or a new lotion or go out to eat with friends without worrying about anything - I didn't take it for granted like I do now. It was pure joy!

As others have mentioned, perspective matters so much. Is there any way to force yourself to have a different money perspective? Gratitude goes a long way, I think...

[Molly]

I've had times with not a lot of money and times with lots of it.. The more money I had in my bank account and the bigger house I got, the more pressure I felt to KEEP all that STUFF.. and it is STUFF. Humanoids can be a greedy bunch (i know i used to be).. My feeling lately is that Money alone DOES NOT buy happiness. There is something about cultivating gratitude though that CHANGES EVERYTHING.

[Drew Kime]

When you said that affluence and security lead us to search for meaning, balance and joy, I thought of a line I'd heard years before and could never remember where I saw it. Just like the quote you went looking for in your prior post, I went looking and found it:

"I must study politics and war that my sons may have liberty to study mathematics and philosophy. My sons ought to study mathematics and philosophy, geography, natural history, naval architecture, navigation, commerce and agriculture in order to give their children a right to study painting, poetry, music, architecture, statuary, tapestry, and porcelain.
-- John Adams 1735-1826"

It looks like Adams defined the Hierarchy of Needs about a century-and-a-half before Maslow.

[Tung]

Long-time reader. First-time comment. Loved this article. Thanks for collecting and sharing your thoughts on this topic. :-)

[Christy]

Great article. I think the problem that people encounter with the money/happiness connection, just like the health/happiness connection, is that they are looking for external sources to provide happiness. You can get temporarily happy from wealth and health. It can give you temporary happiness through peak experiences - like taking a great vacation, going on a shopping spree, or realizing that you look awesome in a bikini. But true, deep happiness comes from within, and it can be cultivated over time through mindfulness practices.

This ties in with the idea of attachment that you have started to consider. Buddhist psychology talks about attachment as a source of suffering because you are pulling yourself out of the present - yearning for the past or worrying about the future. If you live in the present moment - you are aware of your actions as you take them - you can experience the beauty and happiness that comes from just being. Then you don't have worries about tomorrow or cravings for yesterday - yesterday is gone, tomorrow doesn't exist. But you are always in the present. If you can realize that all of the time (and it's hard - that's why you "practice" meditation) then you can have happiness all of the time, no matter your wealth or health situation.

[JimB]

Great post - I can very much relate to the idea that money is a very relative contributor to happiness and in some ways we self select around a peer group.

When I'm around my peers and close friends who are mainly in the same financial state as me I feel relatively happy and my finances are an irrelevance. My wife has a lot of very wealthy friends so when I'm around them I am acutely aware of my relative financial status. I don't necessarily avoid her friends but I am realistic about how this relative difference in material success can impact my happiness.

In absolute terms I also agree that it is naive to claim that money does not, to a certain degree buy happiness. It buys economic options, and options or choices can create happiness, particularly around health and basic needs. Its nice to know that I can afford to get a back spasm checked, and its very stressful if I can't afford to get it checked.

[amma]

I'd say money definitely buys peace of mind, which makes me happy. Things are not so esoteric when you have a sick child and are under-insured because of a job loss. For me, money means being able to make decisions based on having choices. Having a ton of money may not ensure I become a self-actualized individual, but it certainly means I'm not spending time worrying about how to pay my rent.

[Kathy]

I love this post, so timely. I think money allows a person to buy things like organic groceries,have a gym membership, etc compared to say eating bologne, mac n cheese, and ramen noodles. With money, one has the opportunity to be a healthier person. Poor people typically do not get proper nutrition, consequently they are unhealthier than people who do have money. As you stated unhealthy people are unhappy. Money can buy you choices of Dr's.,dentists,daycare, legal services and so on. Welfare or minimum wage doesn't do that, you take what you can get.

[Surprised that I Disagree]

Long time reader, first time commenting--this is the first time I've disagreed with a basic concept in one of your posts. I generally agree that money doesn't buy happiness, but I think there is an important exception to the rule: Money does buy happiness if you are very, very poor. Though I'm financially comfortable now, there was a period in my life where I was utterly destitute, homeless, and often had only one meal a day. I can wholeheartedly say that for me, having the money to feed myself and put a roof over my head made me ECSTATIC!

[KCCC]

I definitely think this is a "threshold level" question. Below a certain level, money DOES buy happiness, because "lack of money" is a source of unhappiness, or at least stress. (BTDT.)

Once a level of relative security is reached, where the stress diminishes, then other life factors weigh more heavily. However, money can help address other life goals. My upcoming art lessons are a case in point. :)

But as a goal in itself....nah. In my experience, people who go that route are rarely happy.

[HP van Duuren]

Recently I listened to an Interview with writer Marci Shimoff author of the Book titled: 'Happy for No Reason'

In the Interview is talked about Happiness as something that's comming from within, and that success isn't going to bring you Happiness, that it's the other way arround that Happiness will bring Success.

Infact I think that they are right that you can become so 'Attractive' for Success that way that Success actually will come looking for you!!!

If you want to listen
to this Interview?

On my site you can find a link to this interview. So feel free to have a visit and you are alway's welcome to come back again or post your comments.

All the Best,
HP

[Charles]

Interesting assessment, I think there is a deeper root to happiness and that is the sense of control. If one FEELS in control one tends to be happier, when one feels one has a lack of control one tends to be less happy, or at least more anxious. now one doesn't feel in control all the time, even "successful" people often realize they cannot control things.

many of our money insecurities in my opinion come from that we are sold on buying something as an act of control. I.e. I take an action that I decide, but then having to pay for the item (as often done on credit) is a loss of control since you have to work, and maybe you have a boss who is random, or your industry is stuggling, and that's a big feeling of loss of control.

Money can help give you a sense of control, but there are things that money can't control like health. so I agree money won't buy you happiness, but it can over some sense of control over parts of your life that can lead to happiness.

[Rob Wantling]

Happiness is; dependent upon your place in Maslows hierarchy, whether you can train yourself to be always optimistic, daily reflect upon the your status according to Maslow’s Hierarchy, hold true the fact that one day you will die, worrying is as effective as trying to solve an algebra equation by chewing bubble gum, learn from your mistakes, treat others as you wish yourself to be treated, give blood, smile at everyone always, praise when ever you can, recognise that pain is a human emotion and embrace it; then smile knowing you have felt an emotion and lucky enough to be able to feel it – and with a good dose of projection and distraction, leave it behind. To dream is a good thing and to have desires beyond your grasp an expectation. To store memories and moments into internal jars for when the need is most. Know yourself to be all you want to be; in being true to yourself, what ever that is.

[Randy Man]

Provided that one has reasonable health, money should bring happiness cause otherwise, that person has unconscious issues which the 'lack of money' was hiding.