Can Money Buy Happiness? Science Says Yes, But It's More Complicated Than You Think
Why are people so into money if they believe, as they often claim, that it "can't buy happiness?" As it turns out, and as we suspected, money really can buy happiness – but only if you're handling your money right. Before you try to spend your way out of a rut, or work your way to a happier wealthier existence, read the latest in psychological research on money and "subjective well-being" (i.e. happiness), as discussed at the annual meeting of the Society for Personality and Social Psychology and reported in Forbes.
First of all, try to spend on experiences and not objects. Experiences are more gratifying to plan and look forward to, and the memories are a gift that keeps on giving. You might think that a new handbag or coat or electronic gadget will make you happy, but it usually just turns out to become another piece of stuff hanging around your home (and then you're stuck storing and caring for the object too, unlike that awesome dinner out with friends or that long-awaited vacation). And buyer's remorse seems to strike the buyers of objects more than the buyers of experiences, too: it's easy to feel conflicted about that consumer good that didn't change your life much at all, in retrospect, but harder to regret what you know was a really good time with loved ones.
Some purchases straddle the line – a new kitchen table is an object, but it also could hold the key to throwing more or better parties. Still, in light of the foregoing, you might want to up your budget for meals out, concerts, and vacations, and reduce your budget for clothes, cars, and gadgetry.
Speaking of your total budget... for a while in the recent past, economists and psychologists believed that, past a certain medium-high but not astronomically-high point, income has a rapidly diminishing effect on happiness. In other words, happiness rises quickly with income but only to a point, at which money's happiness effects quickly level off, and this point has been estimated to exist around $75,000 USD per year of income. Relative status also matters – the richest people within a country seem like the happiest, even if their absolute wealth varies widely.
Newer research suggests that there is no leveling off point for income and happiness, though. If income keeps making you happier ad infinitum, then you would do well to keep pursuing more of it, making smart related choices along the way. Since commutes destroy happiness (and are more expensive financially than you think, in their hidden costs), spend whatever you need to in order to live near work. If hiring a cleaning service or splurging on takeout once per week saves your sanity, your relationship, and your work productivity, then by all means spend pretty freely on that.
Whatever you do with your money, though, don't get too used to it. Complacency encourages you to derive less happiness from your experiences and stuff than you might otherwise be able to. For instance, a study showed that well-traveled people were less likely to savor their new experiences, and that this jadedness kept them from enjoying additional experiences to the fullest. But this perception was manipulable – when participants were made to feel less well-traveled, they enjoyed an ordinary experience more. So while gratitude is healthy, feeling too abundant will just make you feel accustomed to things that you would do better to actively enjoy.
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