Someone (maybe it was my mom?) once said, “Rich or poor, it’s nice to have money.”
I used to laugh at this statement, and while it always gives me a chuckle, most people think it’s true that everyone wants more money. Because, of course, more money equals more happiness.
Yet, scads of studies prove there’s no correlation between cash and contentment. A recent one was published in the Proceedings of the National Academy of Sciences.1
In it, scientists surveyed 450,000 Americans. While happiness did climb as income rose, the effect topped off at a certain level. That magic number? I’ll tell you later, but first let’s look at why money may not make you as happy as you think.
Why doesn’t more money equal more joy? A few reasons:
You constantly compare. Happiness scholars have found that how you stand relative to others makes a much bigger difference to your happiness quotient than how much you make in an absolute sense.
Research from Harvard found that happiness depends more on your neighbors’ paychecks than your own.2
When comparing two people with the same income, with one living in a richer area than the other, the person in the richer area reports being less happy.
In other words, the more money you make, the nicer neighborhood you’ll live in, and the nicer the Jones’s house is, which makes you feel unhappy!
You always want more. When I got my first job as doctor, I ran out and bought myself a new car. I was thrilled. And the feeling lasted for about a minute.
There’s a reason for that. It’s called “hedonic adaptation,” a high-falutin psychological term that basically means you get used to it.
Think about what happens when you first step into a super hot shower. It’s scalding, right? But after a few minutes it becomes more bearable. It just, well, is what it is. You no longer feel the temperature at all.
That’s hedonic adaptation, and it happens with everything, including the stuff you buy. So while earning more makes you happy in the short term, you quickly adjust to your new wealth – and everything it buys you.
So you get those new golf clubs or new car or shiny new 45-inch flat-screen. Immediately, a quick jolt of happiness shoots through you, sure. But you quickly get used to the clubs or the car or the size of the screen.
And then, and that 45-incher just sits on the wall, unnoticed. And you’re off in search of a 65-inch screen.
More money = more stress. While you may think that the more money you have the less stressed you’ll be, quite the opposite is true. We actually feel more worried when we gain more wealth.
After surveying data from several different countries, one researcher found that with more money comes more options, which leads to greater stress in trying to get everything done.3
After all, there are truly only a few of hours in the average weekday when you have the flexibility to do as you please. The more options available to fill that time, the more you need to cram. Can you say stressful!?!
Make Money Work For You
I told you earlier that money can make you happy but all I’ve told you about so far is about how money makes you miserable. What gives?
Money can make you happy, but you’ve got to use it in the right way. Here are some ways you can do it:
Spend it on others. One study gave participants envelopes of either $5 or $20. Some participants were told to spend the money on themselves and others to spend it on someone else. Those who blew the bills on others were happier than those who coughed up their cash for themselves, regardless of how much they spent.4
Buy experiences, not stuff. Choosing between a new piece of jewelry and a Hawaiian vacation? Book your plane flight. Research shows that people who spend money on experiences are happier than those who spend money on material possessions.5
Remember I talked about hedonic adaptation? Once that necklace is hanging on your neck, you’ll hardly even notice it. But the Hawaiian vacation will not only linger in your mind for a long time, it will get better every time you think back on it.
What’s more, nobody else is wearing your new necklace. You’re probably going on that trip to Hawaii with others, and the increase in social interaction – a key predictor of people’s happiness – means that experience will generally offer a greater happiness bang for the buck than any material goods. Even a diamond. (Can someone please show this blog post to my wife?)
Pay now, consume later. Most people buy on credit but that’s actually the least path to happiness. Pay for that trip to Paris before you get on the plane and you’ll actually look more forward to the trip.
Plus you’ll have more fun once you get there because the trip is bought and paid for. You can focus all your energies on the Mona Lisa, and none on any bills waiting in your mailbox at home.
Delay gratification. Not only will that increase the anticipatory excitement, it might enhance the experience even more.
In a study published in the Journal of Consumer Research, students were given chocolate. Some had to wait 30 minutes before they could eat the candy; others could eat it immediately. Those who had to wait were more likely to fantasize about the chocolate and to visualize what it would be like to sink their teeth into it.6
So, what’s the magic number for happiness? $75,000 per year. Once you hit that number, there’s no gain in happiness.
What do you think? Do you agree or disagree with the study. And if you could have all the money in the world, what would you do with it? And do you think it would make you happy?
Steve Sisskind, M.D.
Hi, I'm Dr. Steve Sisskind, Chief Medical Officer & Founder at RealDose Nutrition.
As a young physician, I struggled because my patients came to me with serious health issues, but I didn't have the right tools to help them. Medical school taught me how to put "band aids" on their symptoms with drugs and surgery, but not how to address the root causes of their problems.
Years later I discovered a better approach... based on the fundamental idea that the power of nutrition can transform your health and vitality. But there's a lot of confusion... What foods should I eat? Which supplements should I take? What does the science say?
I have dedicated my life to answering these questions... And I share this knowledge with you every day here at RealDose Nutrition.
I invite you to connect with me by joining my free private community. I've helped thousands of people and I know I can help you too!
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1. Kahneman D, Deaton A. High income improves evaluation of life but not emotional well-being. Proc Natl Acad Sci. 2010;107(38):16489-16493. PMID: 20823223.
2. Luttmer EFP. Neighbors as negatives: relative earnings and well-being. Q J Econ. 2005;120(3):963-1002.
3. Hamermesh DS, Lee J. Stressed Out on Four Continents: Time Crunch or Yuppie Kvetch? Cambridge, MA: National Bureau of Economic Research; 2003, NBER Working Paper Series No. 10186. Available at: http://www.nber.org/papers/w10186.
4. Dunn EW, Aknin LB, Norton MI. Prosocial spending and happiness: using money to benefit others pays off. Curr Dir Psychol Sci. In press.
5. Carter TJ, Gilovich T. The relative relativity of material and experiential purchases. J Pers Soc Psychol. 2010;98(1):146-159. PMID: 20053039.
6. Nowlis SM, Mandel N, Brown McCabe D. The effect of a delay between choice and consumption on consumption enjoyment. J Consum Res. 2004; 31(3):502-510.