June 2, 2013

Money CAN Buy Happiness

I've always been mildly irritated by the expression 'Money Can't Buy Happiness'.    I'm not entirely sure what the point of that statement is meant to be.     Are they saying that I can't go to the Happy Store and buy 2 kilograms of raw Happy?    I guess not.    Are they saying that poor people are just as happy as rich people?   Seems silly to me.    Are they saying that even rich people can't buy their way out of all their worries?   I'm not sure.   In any case, the expression bothers me.

When I hear that phrase 'Money can't buy happiness', my reaction is to think to myself 'of course it can'.  My smartass reply is that if you aren't sure how it works, you can give me your money and I'll demonstrate it to you.   Any takers?    Probably not.    Apparently that non happy making stuff we call money is just something people cling to for no happy related reason.  

Lets look at it another way.  Lets take away all your money.   Are you more or less happy?   Now lets take away all the stuff you ever bought or ever will buy with all your money.   You now have no home, no car, no food, no stuff, no experiences, no wedding ring, no clothing, no hot showers.... You're now a money free dirty starving homeless person.   Are you happy now?   I doubt it.  

For me it just seems obvious how much of a direct relationship there is between money and happiness.   I am happy to have food, clothing and shelter and unhappy without those things.    I can't get food, shelter and clothing without money.   Money buys me things I need to be happy.    Of course I can't go to the Happy Mart and buy a quart of raw happiness.    But indirectly at least you do need money to be happy.     I suppose I could be happy if I lived the life of a hippy farmer, but to get that life I'd need some money to buy some farm land and a some tie dyed t-shirts.   Or maybe I'm supposed to knit my own t-shirts in order to be a proper non-money having happy person??

There isn't a proportional relationship between money and total happiness level.    I don't think that the average billionaire is a billion times as happy as someone with just $1 to their name.    I don't think that spending a billion dollars will get you a billion times as happy as someone who spends $1.   There is diminishing returns.   But that doesn't mean that you can't buy happiness.      I mean eating a piece of good fried chicken makes me satisfied, but eating 1 million fried chickens will probably kill me.  Thats not to say that eating food doesn't satisfy you... clearly you don't expect unlimited return on your food eating.   I don't think a billion dollars would kill me but it certainly wont' make me 10^9 times as happy as $1 would.

Are there unhappy rich people?   Of course.    Theres also happy poor people.    Theres also happy middle class people and unhappy poor people and happy rich people.   The existence of any level of happiness in the presence of a certain amount of wealth really doesn't mean anything as far as I'm concerned.     Money is only one variable.    There are far too many other variables that relate to happiness.

I'm certainly not saying that money is required to be happy or that lack of money directly results in unhappiness.   At least not entirely.    I do think that dirty, hungry homeless people without clothing or smartphones are not going to be happy in general.  So I would argue that you do need a certain amount of money to be happy.  But past providing the basics for yourself, you can always find people who are happy and unhappy.   Peoples personalities and emotions vary and what makes people happy varies.   One person may be 100% happy simply sitting in a park listening to the birds while another person may achieve their 100% happy level when spending $11 to watch a 3D movie in the theater.   Whatever floats your boat.

Let me ask this:    If money can't buy happiness then does money buy you unhappiness?   Puzzle that one a little.   I'm not sure of the answer.   I think you can probably go buy a lot of unhappiness with your money, but I haven't done any peer reviewed studies to confirm the hypothesis.

If you believe that money can't buy happiness then go give all your money to a dirty, homeless starving person and trade places with them and then see if the exchange of wealth makes the both of you more or less happy.



  1. I think these sorts of sayings are not really meant to be axioms that always hold true. I know you like to research things, so you're probably aware that the consensus thinking is that "money buys a lot of happiness" from $0 to $50K/year or thereabouts, after which the "incremental happiness" purchased is fairly minimal. This is not a surprising find as it's consistent with diminishing marginal utility.

    I think the reason we hear this phrase so often is because the people that say it (or write it) probably already have a pretty decent income and they are talking to people that also do. It also tends to be parroted at key pain points in life. So yes, of course, money can't (directly) heal a broken relationship, a rejection by a friend, or the death of a loved one. It can't stop that unhappiness. But it can buy food, clothing, and basic medical care. To a person who lacks that, money can bring some happiness.

  2. Sure. More money is almost always better than less money.
    But there is some point where enough is enough. For me, I'm good with my financial and I don't focus on making money as much especially if I'm miserable while trying to make money.
    It's all a trade off.


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