Does Money Make People Happy?
This is a question we often ask ourselves. Psychology and sociological studies provide elements of an answer.
We are all familiar with the idea that money doesn’t make us happy, but we also know that it can make a big difference! We all need it because we all spend money to support ourselves (housing, food, clothing, transportation, etc.) And for most of us it is a limited resource, so can we spend our money to maximize our happiness? Psychological research offers good insight into the connections between money and happiness.
What is the real wealth that leads to the path to happiness?
Money is important, especially for serenity and personal security. It is a real luxury not to be missed, not to be counted. It allows us to be more peaceful and lighter in the face of daily life. Ask anyone who is missing out on these worries, fears, and stress it can cause. Having a comfortable salary or a high income can for example make it possible to have a house in a quieter neighborhood, to be better covered for one’s health, to eat better and to have more leisure, to make beautiful trips, etc. But this has its limits…
Once our cash flow has reached a certain level and our basic needs in terms of food, health, safety, and shelter are met, the positive effects of money (such as buying the house or car of our dreams) are often offset by the negative effects of maintaining that income (such as working more or having a more stressful job that develops an ever-increasing need that can lead to an unsatisfied side). Then it can make us wonder about the fact that our only wealth is within ourselves. It is money that determines our social level, but not our real wealth!
Doing can make us happier than owning!
Most people think “material” brings more happiness than “experiences”. Physical objects (like the latest iPhone, a purse, or a car) last longer than a concert, a dinner at a restaurant, a cooking class, or a vacation. Of course, buying things makes us happy, brings us the pleasure of owning them, but this is short term.
In the long run, we get used to new things. And even if they may have excited us and made us happy at first, objects become normal, quickly become obsolete, and gradually fade. Even when you drive that dream car, you’ll still be talking about your last seaside vacation with your friends and family. Maybe you will even laugh about the mechanical problems with your car that forced you to spend the night in a dingy hotel. Our good times are priceless because happiness can’t be bought and has no price!
Spending for others can make you happy!
Many people think spending money on them will make them happier than spending it on others. However, when researchers test happiness before and after people spend, they find a higher rate of happiness when they spend on others or donate to an association than when they spend on themselves. This is regardless of the value of the gift or donation; one must also be willing to give in order to receive. One explanation for this phenomenon is that giving to others makes us feel better and allows us to circulate money energy by using it wisely! We can then be happy to give pleasure with money.
What do the studies say about our relationship with money?
Does money make people happy? This is a delicate question, which has very different answers depending on the respondents. According to the VisualCapitalist site, which tried to answer this question from the data point of view, there is a potential answer: money makes people happy, but only to a certain extent.
Here’s a simple exercise: imagine two people, one is a millionaire, and the other has an average income. Which one do you think would be happier if his or her wealth were instantly doubled?
The millionaire would be happy to have more in his bank account, but materially his life would not really be disrupted (, we are talking about a millionaire). The person with an average income could have more in his bank account and could use these new resources to treat himself and his family better, to pay off a debt, or to better balance his daily life between work and private life.
These resources would mean a real change for an individual, potentially increasing life satisfaction and well-being. And like this hypothesis, the data tell the same story when looking at individual countries.
Are the richest countries the happiest?
The VisualCapitalist site has studied the relationship between GDP per capita and reported levels of happiness in each country, using data available from the World Bank and the World Happiness Report 2017.
According to the figures, the relationship between money and happiness is initially strong for countries. Later, when the material elements of Maslow’s pyramid have been gained, the relationship becomes more difficult to predict.
This means that when a country’s wealth increases from $10,000 to $20,000 per person, the happiness trend line will rise. If it doubles again from $30,000 to $60,000, the relationship still holds, but with many more deviations.
For example, in Latin America, people report that they are more satisfied than the relationship between money and happiness might suggest. Costa Rica is representative, with a GDP per capita of $15,400 and a score of 7.14 on the Cantril scale (which measures happiness). Whether it’s the beauty of the country or the culture, Costa Rica has a higher happiness rate than the United States, Belgium, or Germany, countries with higher levels of wealth.
In the Middle East, the situation seems to be reversed. Countries such as Saudi Arabia, Qatar, Iran, Iraq, Yemen, Turkey, and the United Arab Emirates are all on the other side of the trend line. Within the regions themselves, there is also a great deal of diversity. In the Middle East, the rich-happiness continuum does not seem to apply as it does in other parts of the world.
For example, in Qatar, the richest country in the world with a GDP per capita of $127,000, things are even stranger. Qatar has a score of 6.37 on the Cantril scale, making a big exception even in the Middle East. Saudi Arabia, UAE, and Oman are all poorer than Qatar in terms of GDP per capita, yet are happier places. Oman scores 6.85 on the satisfaction scale, with less than a third of Qatar’s per capita wealth.
In short, there is no rule whatever the country, whatever the GDP, the real wealth comes from the heart and not from the bank account, everything happens inside us and not outside. Happiness does not depend on money, it depends on ourselves in the way we open ourselves up to other riches such as love, friendship, sharing, tolerance, taking care of our health, taking an interest in others.
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