|The money-and-happiness correlation
|By Jay MacDonald
Wise men from Aristotle to The Beatles have observed
that money can't buy happiness, but what inquiring minds really
want to know is: Why not?
After all, we're constantly bombarded with evidence to the contrary, some of which must surely be true. The rich and famous seem to be fabulously happy as they scamper the globe in their private jets, acquiring real estate and adopting orphans, while we mere mortals simmer in rush-hour traffic just to keep food on the table.
Heck, money and happiness even seem to go together
better than love and marriage, which, statistically at least, continues
to have the same success rate as a coin toss.
But appearances can be deceiving.
According to a June
2006 study spearheaded by Princeton economist Alan Krueger and
Nobel Prize-winning psychologist Daniel Kahneman, once you reach
a certain income level, more money does not contribute significantly
to well-being and may actually result in more stress and less bliss.
"The belief that high income is associated with
good mood is widespread but mostly illusory," according to
the study. "People with above-average income are relatively
satisfied with their lives but are barely happier than others in
moment-to-moment experience, tend to be more tense and do not spend
more time in particularly enjoyable activities."
The study found a weaker-than-expected correlation
between income and moment-to-moment happiness in two surveys: a
2004 survey of 909 employed women in Texas and a 2005 survey of
810 women in Ohio. The researchers also looked at a Bureau of Labor
Statistics survey on how folks at various points of the income spectrum
spend their time. They discovered that women who make over $100,000
a year spend 19.6 percent of their time on passive leisure (i.e.,
fun), compared to women who make less than $20,000, who spend 33.5
percent of their time kicking back or socializing. The findings
suggest a "focusing illusion" that leads people to work
for more money even when happier pursuits would ultimately do them
"Despite the weak relationship between income
and global life satisfaction or experienced happiness, many people
are highly motivated to increase their income," according to
the study. "In some cases, this focusing illusion may lead
to a misallocation of time, from accepting lengthy commutes (which
are among the worst moments of the day) to sacrificing time spent
socializing (which are among the best moments of the day)."
While we like to think we're just a lotto combination
away from solving all of life's problems, experts agree that money
itself has very little to do with living happily ever after.
The Jones factor
Remember the Joneses down the street? Daniel Gilbert says they actually
might have more influence on your happiness than all the zeros in
your savings account.
The Harvard psychology professor recently condensed
15 years of thinking about the elusive concept of happiness into
his new book, "Stumbling
on Happiness." He says that beyond a certain point, money
has very little to do with happiness.
"The basic idea that 'If I could make more money
I would be happier' is true if you're living in a cardboard box
under a bridge; it's probably not true if you're making $190,000
a year," he says. "Money does make a difference when it
moves you from abject poverty into the middle class, but it stops
making a large difference at about that point. In terms of happiness,
the difference between making $5,000 a year and $50,000 a year is
dramatic, but the difference between making $100,000 and $100 million
is negligible, almost nonexistent."
Nevertheless, an asset shortfall can dampen your bliss when it comes to keeping up with the Joneses.