Lack of money can make you unhappy but does more money above a certain threshold bring happiness? No.
I’ll try to prove that with pseudo-math and book references.
First, can we have a functional relationship between money and happiness? Is there a function Happiness = f(money) where the curve is logarithmic? It’s clear that whatever the relationship is, it is not a curve. Plenty of rich people are on social media and they look busy, and some of them are miserable, not happy. At the same time, there has to be a monk out there with zero money and powerful spirituality close to Nirvana.
Obvious correlations exist elsewhere.
Age
There’s a clear relationship between Age and Happiness. Kids are as happy as a human can be, and so are the elderly (source). Who’s the unhappiest? Working-age adults, and the older they are, the unhappier. The chart with wealth? Almost the opposite (source).
Although correlation doesn’t mean causation, you can say that if Happiness = f(a, b, ...n), one of the parameters is age.
The high of shiny new things
Money can get you items and experiences. More money can get you more items and more pleasant experiences. Purchases make us happy by releasing endorphins and dopamine, and also perhaps by improving our lifestyle a little bit. However:
- The high we can possibly get from a purchase is limited by our brain chemistry
- The high from shopping is a function of anticipation and uncertainty. A kid saving a year for an iPad would get a lot more than a billionaire purchasing a new Ferarri. A sandwich tastes better when you are hungry.
- It’s easy to improve the lifestyle if you’re deprived but hard to do if your needs are met
We can experiment with that – write in a journal how happy you felt from buying different items. An expensive purchase, like a new car, can be no better than a pair of shoes that fit well. A new iPhone can be equal to a cold Coke Zero on a hot summer day or worse. This topic is a can of worms that inspired marketers and philosophers to write books over the last 3 centuries. The satisfaction is measurable, limited, and based on things like goals, needs, risk, and anticipation, not only the price paid.
The curse of the lottery winners
The high increase in income puts people in situations for which they are not prepared to be and pulls them outside of their social circle. A good and very scientific book on the subject is The Winner by David Baldacci. It shows details on the catastrophic impact of quick money on people stating that the vast majority of lottery winners go bankrupt within 2-3 years of their win. The same can be seen with sports stars. Many of them fail once they enter the life of expensive cars, parties, and financially motivated partners in all areas of life – from intimate to business. Another nice fiction book on the subject is Sooley by John Grisham.
So, watching lottery winners and sports stars shows us that the quick exponential growth in wealth comes with changes in social circles and personal life that negatively impact happiness. What about slow growth, that gives people time to adjust and find new social circles? That should work! However, the threshold may never be reached, and the question assumes an imaginary threshold above which no added amount of money makes the person happier.
Before and after ambition
It’s human to compete and strive for more, however, it’s not universally true for all ages.
Would a 1-year-old be happier if they had lots of money, a leather stroller, and servants? They’d likely be happy if they were healthy, dry pants, fed, loved, and slept well. What about a 100-year-old person? Would they be happier if they were the world’s first trillionaire? They’d probably be happiest if they were healthy, well-cared, loved, with good memories of a meaningful life.
Ambition likely is part of the equation for happiness, and so is having a purpose in life.
Recent studies
A great article on the subject was published today that shares the insights by a research group that includes Daniel Kahneman. It mentions two amounts of money that cap happiness – $75K calculated in 2010 and $500K from 2023. Whatever the cap is, the researchers estimated not one but two. I would take the amount with a grain of salt but their overall conclusions matched my expectations.
The search for happiness is related to money up to a point. Other factors have a stronger impact – relationships, health, love, faith, purpose in life, ambition, and so on. Happiness may not be a good life goal at all. I wrote an essay about the Sense of Purpose 6 years ago, and I still believe it.
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