Money, Happiness and the Pursuit of Both

By Barbara Bartlein

Numerous studies are evaluating the connection between happiness and money. The following are conclusions from a number of research projects conducted by psychologists, economists, and social scientists from the University of Pennsylvania, the University of Illinois, Princeton University, and others.

• Money does not seem to make us happy.

• Not only do we want what we don’t have, we aren’t always sure what exactly it is that we want.

• Once we get it, it doesn’t make us happy.

• People have interesting attitudes about money and what it can do for them and what they will do to get it.

In the book, Are You Normal About Money?, author Bernice Kanner outlines responses from a public survey posted on the Bloomberg Web site. According to respondents, sixty-five percent would live on a deserted island for a year for $1 million dollars. Sixty percent would even admit to a crime that they didn’t do and serve six months in jail for the amount; and ten percent would lend their spouse for a night. For $10 million, most of us would do just about anything; twenty-five percent would abandon our friends, our family, and our church. And for that amount of money, 7 percent—one in every fourteen of us—would even murder.

Part of the problem with money is that people want more. Thanks to fifty plus years of mass media pushing merchandise at us, we are convinced that more will make us happier. For decades, Lewis Lapham has been asking people how much money they would need to be happy. “No matter what their income,” he reports, “a depressing number of Americans believe that if only they had twice as much, they would inherit the estate of happiness promised them in the Declaration of Independence. The man who receives $15,000 a year is sure that he could relieve his sorrow if he had only $30,000 a year; the man with $1 million a year knows that all would be well if he had $2 million a year.” “Nobody,” he concludes, “ever has enough.”

While Americans have become more affluent, their happiness levels have not really increased. In a series of studies by the University of Chicago, the average U.S. family has become 60% richer in the last thirty years, however they are not significantly happier. In 1960, approximately 42% of Americans surveyed pronounced themselves “very happy.” A similar poll in 1990 found 43% were “very happy.”

What seems to matter most for your sense of well-being and your happiness level is how you stack up against your neighbors. People tend to use this yardstick of comparison to evaluate their money and circumstances. Even a millionaire will feel miserable in the company of billionaires.

An example, found in the wild financial years of the mid-eighties, when many New York investment bankers earning “only” $600,000 a year felt poor and suffered from depression, anxiety, and loss of confidence. On less than $600,000, they were unable to keep up with their neighbors, colleagues, and friends. As one broker described his lack of success, “I’m nothing. You understand that, nothing? I earn $250,000 a year, but it’s nothing, and I’m nobody.”

This is the problem with money and consumption. Each new luxury quickly becomes a necessity and then an even newer luxury must be identified. We become convinced that we need the flat screen TV, granite counter tops, and heated seats in the new car. From early on, we learn a pattern of consumption that is focused on “extrinsic values,” of obtaining more to make us happy.

There is increasing evidence, however, that the pursuit of affluence has damaging psychological effects, including severe depression and anxiety. In a series of case studies dating to 1993, Ryan and Kasser examined the effects of pursuing money and material goods. Focusing excessively on obtaining wealth was found to create a lower sense of well-being and self-esteem. Everyone who sought affluence as a goal had a lower score for happiness.

There was one point that all research on happiness seemed to agree; happy people do better than unhappy people in most realms of life; they have better social relationships, do more volunteer work, have better health and make more money. So, money may not make you happier, but being happy may make you more money.

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Barbara Bartlein, CSP is The People Pro and president of Great Lakes Consulting Group which helps businesses sell more goods and services by developing people. She can be reached at 888-747-9953 or by email at barb@thepeoplepro.com. Visit her Web site at www.ThePeoplePro.com.

Published in Networking Today, February 2007