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Can money buy happiness?

According to a popular credit card company, there are some things money can't buy. The Beatles would put love on that list. Other people might add intelligence or talent. But surely happiness could be had for a cool one or two million dollars. After all, what person doesn't feel a surge of positive emotions upon finding a $20 bill on the sidewalk or at the thought of winning the lottery? If only you had a bit of extra cash to throw around, you could quit your job, buy an island in the Caymans and relax on the beach for the rest of your days.

But psychologists and economists who have studied the relationship between money and happiness paint a different picture. According to them, you'd likely grow tired of your cabana in a matter of years. You see, people have an astonishing ability to adapt to all sorts of situations, and while that can be a good thing if you get locked out of your house during a drenching rain, it also means you'd quickly grow accustomed to a life of affluence. A shiny red Jag and new house in the Hamptons would be great for a while, but after a few days or weeks, their newness would wear off, and you'd go in search of the next best thing. Even surveys of lottery winners indicate that their initial joy at hitting the jackpot wears off in just a few months [source: Brooks].

The one place that money and happiness are significantly linked is when a person is unable to afford to meet their basic needs. There is an appreciable difference in levels of happiness between those below the poverty level and those above it. Homeless people in Calcutta, for instance, score a mere 2.9 on a 7-point scale of happiness, while multimillionaires in the United States rank themselves a cheery 5.8. Once people pass that poverty threshold, though, the money boost tapers off; Inuits in Greenland and Masai ranchers living in Kenyan dung huts are just as happy as the high-society Americans [source: Begley]. So while the Warren Buffetts of the world are indeed more content than beggars on the street, they're not a whole lot happier than people who herd cattle for a living.

Such data may leave all you lottery-playing hopefuls out there feeling rather dejected. But don't lose heart just yet -- there are more effective paths to happiness than hitting the jackpot. For starters, you may want to rethink quitting that job of yours.

 

Can happiness buy money?

Although money may not buy happiness, the reverse may actually be true. Happy people are usually more productive, possess more initiative and work harder than people who are depressed or uninterested in their work. The drive associated with being happy often pays off in terms of success, and yes, you guessed it, the money that comes along with it [source: Begley].

Money Versus Success

As much as you may be loathe to admit it, your dreary 9-to-5 job could be giving you more happiness than you realize. Research indicates that one of the reasons people with greater salaries often seem happier than their peers is actually an outcome of their success rather than the dough they're raking in. In general, people who make more money also tend to be more successful at what they do: It's this success that makes them feel good, not the money itself. The money is a mere sideshow of the real happiness booster [source: Brooks].

Successful people are also usually more productive and satisfied with their jobs, thus creating positive feelings of self worth, pride and contentment. The extra money the hard work creates is simply an added benefit -- the good feelings would be there regardless of the payoff. People with jobs they find highly satisfying but that don't pay as well can be just as content, and the cattle-herding Masai mentioned on the first page bear this out.

Another reason success stimulates feelings of happiness is because of the challenges involved. People get a charge out of pushing their mental and physical capacities to the limit, and when they pursue something that fully captures their interest and attention, time passes by imperceptibly. Not only is the hard-earned outcome rewarding, but so is the sweat put into making it happen. Scientists have nicknamed this phenomenon flow and they give it credit for a number of positive emotions. Results of one study indicate workers would happily take a 20 percent pay cut if it meant their job would involve more variety or require more skill [source: Futrelle].

But don't turn down your next salary raise just yet. If you play your cards right, you might be able to squeeze a few extra bits of joy out of that work bonus.

Actress Natalie Portman gives money to a person on the street in 2003 in New York City.

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Modern Day Robin Hood

Since you can't spend your lottery winnings or Christmas bonus on happiness, you may need a few pointers on what you should spend it on. If it's happiness you're after, you might do best to simply give it away.

In an experiment that would make Mother Theresa proud, a group of researchers gave students $5 or $20 to spend. Half of the students were told to spend the money on something for themselves and the other half to spend it on someone else. Despite the students' belief that they'd be happier if they were assigned to the "spend it on yourself group," when polled afterwards the students who used the money to help someone else actually reported higher levels of happiness, regardless of how much money they were given in the first place [source: Goldberg].

In a similar study involving work bonuses, employees were able to increase their happiness level by an entire point on a 5-point scale when they spent one-third of their bonuses on others. This was true regardless of whether that bonus was $3,000 or $8,000, indicating that when it comes to happiness, it's not the amount of money you earn but how you spend it that really matters [source: Bryner].

While the exact reason for this selfless spending euphoria isn't certain, it's possible that it generates feelings of gratitude, makes a person feel better about themselves or simply involves more social interaction, all of which are linked to happiness.

On a similar note, people also tend to report higher levels of satisfaction after spending money on experiences rather than things. For instance, purchasing tickets to a movie with a group of friends is likely to make you feel better than impulsively buying a T-shirt at the mall. While the positive feelings associated with the movie outing can be relived again and again, the T-shirt's novelty will probably wear off after a couple of spins in the wash.

Basically what all of this data about money and happiness tells us is that it's called cold hard cash for a reason. You can buy all of the flashy cars, Armani suits and diamond rings you want, but at the end of the day, you're going to be the same person -- just with more stuff. Without the things that research tells us are the real sources of happiness -- social connections, challenging work, good health -- you're not going to get very far in your new set of wheels.

Lots More Information

Sources

  • Ackman, Dan. "Putting a price on happiness." Forbes. Sept. 22, 2004. (May 12, 2009)http://www.msnbc.msn.com/id/6070800/
  • Begley, Sharon. "Why Money Doesn't Buy Happiness." Newsweek. Oct. 14, 2007. (May 12, 2009)http://www.newsweek.com/id/43884
  • Britt, Robert Roy. "When Money Does Buy Happiness." Live Science. April 6, 2005. (May 12, 2009)http://www.livescience.com/strangenews/050406_money_happy.html
  • Brooks, Arthur C. "Can Money Buy Happiness?" The American. May/June, 2008. (May 12, 2009)http://www.american.com/archive/2008/may-june-magazine-contents/can-money-buy-happiness
  • Bryner, Jeanna. "Key to Happiness: Give Away Money." Live Science. March 20, 2008. (May 12, 2009)http://www.livescience.com/health/080320-happiness-money.html
  • Futrelle, David. "Can Money Buy Happiness?" CNN Money. July 18, 2006. (May 12, 2009)http://money.cnn.com/magazines/moneymag/moneymag_archive/2006/08/01/8382225/index.htm
  • Goldberg, Carey. "Money makes you happy-if you spend it on others."The Boston Globe." March 21, 2008. (May 12, 2009)http://www.boston.com/business/personalfinance/articles/2008/03/21/money_makes_you_happy___if_you_spend_it_on_others/?page=1
  • Graber, Cynthia. "Money Can Buy Happiness Sometimes." Scientific American. Feb. 25, 2009. (May 12, 2009)http://www.scientificamerican.com/podcast/episode.cfm?id=money-can-buy-happiness-sometimes-09-02-25
  • Kahneman, Daniel, et al. "A Survey Method for Characterizing Daily Life Experience: The Day Reconstruction Method." Science. Vol. 306, Issue 5702. Dec. 3, 2004.
  • Stehr, Emily. "Khneman, Krueger develop happiness survey." The Daily Princetonian. Jan. 14, 2005. (May 12, 2009)http://www.dailyprincetonian.com/2005/01/14/11812/