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Does MONEY and MATERIALS make us more HAPPY?

  • Writer: Rhucha Kulkarni
    Rhucha Kulkarni
  • Nov 6, 2024
  • 4 min read

 

In today’s consumeristic world, we are being convinced and sometimes, compelled to consume, consume, and consume some more. We often chase larger paychecks, bigger houses, fancier cars – with a hope that the “next big thing” will bring us happiness! It is not just us, but this is how our economies thrive – the more consumerism, the more debt, the more economic growth.


On the other hand, the popular adage plays in our minds – “Money can’t buy happiness”. This may lead us to ponder over What Happiness truly is, and if it is not about money and materials, then what will be our Path to Happiness?

 

Amidst these two distinct opinions around money and happiness, the big question still looms - Will having/making more Money and more Materials make me happier?

 

Money and Happiness: A Literature Snapshot

Much research has been done on the correlation between Money and Happiness aspect. Not surprising, given money and happiness are both so important for us humans !

 

Here are some excerpts from popular research…

·  Pro: Princeton University’s Daniel Kahneman and Angus Deaton (2010) had found that day-to-day happiness rose as annual income increased, but above $75,000 it leveled off and happiness plateaued*1&*2.

·  Against: University of Pennsylvania’s Matthew Killingsworth (2021) found that happiness rose steadily with income well beyond $75,000, without evidence of a plateau*2.

·  Interestingly, the above two came together along with  Penn Integrates Knowledge University Professor Barbara Mellers. The findings - a sharp rise in happiness with money, up to $100,000 annually and then plateaus.

·      In another study, Robert Waldinger and Marc Schulz, authors of "The Good Life" proclaimed that, “No, money will not buy you happiness” *3.


Money is a determinant of happiness, one cannot deny that. However, Money is not the “secret to happiness”. This is because income and emotional wellbeing are not singularly correlated*2. Money buys happiness, but it buys less than most people think (Aknin, Norton, & Dunn, 2009; Diener & Biswas-Diener, 2002; Frey & Stutzer, 2000) *4 . Money does allow people to buy what they please, to live longer and healthier lives, to buffer against worry and harm, to spend on leisure with loved ones, and to control their daily activities, all of which are sources of happiness. Yet, there is a caveat – rich people aren’t that much happier than those who have less.

As aptly put together by Gethin Nadin, Bestselling HR Author & Top Global Employee Experience Influencer (2019, 2020)…

 

Money contributes to happiness when it helps us meet basic needs but the research tells us that above a certain level more money doesn’t actually yield more happiness.


The reason for this is that people don’t spend money right.


How to make your money work for your Happiness?

According to a Harvard study*4, to get more happiness for one’s money, one should…

·      Buy more experiences and fewer material goods

·      Use money to benefit others rather than self

·      Buy many small pleasures rather than fewer large ones

·      Eschew extended warranties and other forms of overpriced insurance

·      Delay consumption

·      Consider how peripheral features of their purchases may affect one’s day-to-day life

·      Beware of comparison shopping

·      Pay close attention to the happiness of others

Some other factors that impact whether our money makes us happy are…


Time Context of Happiness: When the money actually benefits you is another factor which contributes to this “money impacts happiness”. A future-oriented monetary goal, a future promotion and raise, or saving disproportionately for retirement funds, can push the money-drawn happiness into the future and always out of reach*3.

 

The Cultural and Societal Context: Of course, popular research is limited by narrow sample populations. Perceptions about happiness are impacted by individual personality as well as collective thinking. For example, some societies often equate financial success with a good life. Chasing the “American Dream” of a luxurious lavish lifestyle has got many people chase “more” as the path to happiness. This is the extrinsic way of happiness. On the other hand, many Eastern philosophies such as Buddhist beliefs propagate happiness “from within”, urging people to look inwards as the Path to Happiness.

 

How an individual person perceives happiness can be largely impacted by this societal context, because social comparisons and peer pressure can lead humans to embrace values and beliefs that “look good”. Amidst this, today we are seeing the rise of the Authentic Self – as younger generations like Gen Z and Millennials find solace in being “true to their true selves”.

 

The Rise of One’s Own Construct of Happiness

 

Amidst all such “formulas for happiness”, it is important to not get carried away by all the hubbub around happiness. Happiness is still a very personal construct, and one’s own relationship with both money and happiness are greatly influenced by one’s life experiences.  Hence it is important to define for oneself, what both money and happiness mean in one’s life journey. To make money work for your happiness, it is important to reflect on some hard questions…

What makes me truly happy?

How much money do I need to be happy?

How much money do I need to stay happy?

What can I buy that makes me happy?

Does money and materials sustain my happiness?

and many more…

 

Most importantly, it is important to realize, that happiness is just one of the many emotions that make us humans, that make life worth living ! A life filled with Happiness alone shall make life so mundane and boring, won’t it? What makes us realize and cherish the value of being Happy, is all the bitter sweet moments between bouts of happiness.

 

As Ruskin Bond says…

“Happiness is a mysterious thing, to be found somewhere between too little and too much.” (excerpt from A Book of Simple Living)

 

 

 

Sources

 

 

 

 

 

* Happiitude certification

 

 

Indirect References

 

 

 

 

 

 

 

 
 
 

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