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Money really can buy happiness

By Judy Martel · Bankrate.com
Sunday, May 29, 2011
Posted: 1 pm ET

It's an age-old question: Does money buy happiness? Most people think wealth and happiness are not mutually exclusive and studies tend to agree, despite the "poor little rich girl" description that's often applied to people like copper mining heiress Huguette Clark. Clark, a recluse, died last week at the age of 104. Even though she left an estimated $500 million, she told friends that "wealth is a menace to happiness."

Clark has plenty of sympathizers, especially when it comes to inherited money. Billionaire investor Warren Buffett has announced he'll leave his children a comfortable inheritance, but not enough that they'll never have to work. He's spearheading an effort to get other wealthy people to follow his example by bequeathing the bulk of their fortunes to charity.

But, as with most everything, there's more nuance to the money and happiness equation. Many studies indicate that the more money people have, the more satisfied they are with their lives. But a study last year by British researchers and psychologists Chris Boyce and Simon Moore took it even further by stating that it's not so much wealth in absolute terms that makes people happy, but status. In other words, if a rich person feels richer than his peers and colleagues, he's happier than he would be with the wealth alone. The study shows that the higher people rank in wealth and income relative to their peers, the happier they feel.

Perhaps we're hardwired to compete, and money is a prize for the winners. But I also make the connection that money goes along with having a purpose. It's why the creator of wealth, who defines a goal and views money (among other yardsticks) as a measure of success is happier than the person who receives a windfall without ever having to lift a finger to earn it.

Do you measure happiness with money and do are you happier if you compare yourself favorably to your peers?

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