Does money buy happiness? If you ask anyone this question, the obvious answer will be yes. There is an intricate relationship between money and happiness, which confounds literal observation that money is happiness. Critical analysis of money-happiness relationship shows that socioeconomic factors determine the happiness of an individual; therefore, it is quite unsatisfactory to attribute money as the only factor and determinant of happiness.
There is a linear relationship between money and happiness; nevertheless, to some extent money has no effect to the happiness of an individual. “According to rank hypothesis, income and utility are therefore not directly linked: Increasing an individual’s income will only increase their utility if ranked position also increases and will necessarily reduce the utility of others who will lose rank” (Boyce, Brown, & Moore, 2008, p. 1).
If one has the highest-ranking income in a given social group or workplace, one tends to be much happier than the other one with the lowest-ranking income. Money facilitates things that bring happiness but itself does not bring happiness.
Money and Happiness
Since the general perception of money is that it is the ultimate source of happiness, many people work tirelessly day and night to ensure that they earn more money to satisfy their needs.
This belief is quite evident in the way people devote most of their time and energies in work places rather than spending time in pleasure by relaxing with family members and friends. Akin, Norton and Dunn (2008), observe that, “the amount of time the average American spends at work has grown steadily over the past several decades, despite the fact that this apparent investment comes at the cost of family and leisure time” (p. 4).
Although money brings happiness and satisfaction in life through spending to satisfy needs, people also derive pleasure in getting money. Life becomes happier if one is working extra to get more income. Otherwise, working overtime without commensurate income results into loss of happiness and morale of working amongst workers. Hence, money is a motivating factor in the work place and source of pleasure in satisfying needs of the family, and thus there is a linear relationship between money and happiness.
The relationship between money and happiness is very complex since money is not only a factor that determines happiness. The state of happiness results from diverse socioeconomic factors that make it hard to attribute to economic factors only.
Due to existence of the complex relationship, money can have direct relationship with the happiness, but up to a certain level of satiation where money has no effect on happiness. Easterlin paradox reveals that, “since the Second World War, despite getting richer, many countries have not shown improvement in average levels of happiness” (Albor, 2009, p. 38).
Easterlin paradox explains that social and economic factors do not have positive correlation yet they are the factors that influence the state of happiness in an individual, family, community and the entire nation. Improvement in economic factors in terms of increase in income levels does not mean that there is concomitant improvement in social welfare, which reflects happiness in the society.
According to Albor (2009), happiness is composed of seven factors namely, “family relationship, community, social affiliation, financial institution, work, personal freedom and personal values” (p. 44). Thus, money is not the only source of happiness.
Personal Life’s Experiences
My psychological understanding of the fact that money alone cannot buy happiness has helped me in coping with life’s great challenges because the world perceives money as the sole source of happiness. Earlier, I thought that money was everything in life, and that I could even buy happiness with it when deprived of the same.
My dream in life was to achieve great knowledge for the sole purpose of earning huge income that would make my life better and happier. “… priming individuals with the concept of money or wealth appears to increase their feelings of self-sufficiency,” (Quoidbach, Dunn, Petrides, & Mikolajczak, 2010, p. 2). I was so happy nurturing and fantasizing about money, wealth and happiness for I did not know the complexity of happiness because to me, money and happiness were equal.
I longed for the time when I would own as much money and property as I could to surpass everybody in everything including happiness, because money translated into happiness. Not until I gained psychological insight on happiness, only to realize that money was not the core factor in felicity realization.
Having gained psychological perception and understanding of what constitutes happiness, I now perceive life quite differently. I now understand that money is one of the factors that determine happiness, but not the only means to happiness.
Easterlin in explanation of his paradox argues that, “economic growth is a carrier of a material culture of its own that ensures that humankind is forever ensnared in the pursuit of more and more economic goods” (Albor, 2009, p. 47). From this argument, I understand that without psychological perception of what really constitutes happiness, the pursuit of money and wealth will enslave me.
On contrary, people amass money and wealth to have financial freedom, which means abundant happiness, but in real sense, they attain financial slavery. The business of managing and gaining more money is very hectic and weary as an individual spends many hours doing it than having pleasure. I have realized that for money to bring happiness in life there should be a balance between work and pleasure, otherwise overindulgence in money making will lead to enslavement.
I have experienced that the more money one owns, the more he/she walks deeper into this enslavement. Owning a lot of money and wealth is quite challenging because it demand immense psychological attention, which overwhelms the happiness derived from them. At some instances when I have a lot of money, I find myself quite unstable, for I am busy running up and down spending it to attain satisfaction; regrettably, the very goods I buy do not satisfy my thirst for happiness.
Research study by Akin, Norton, & Dunn, (2008), demonstrates that, “…adult Americans erroneously believe that earning less than the median household income is associated with severely diminished happiness- a false belief that may lead many people to chase opportunities for increased wealth” (p. 11). With changed psychological perception, I cannot pursue happiness by indefinitely striving to hoard money and wealth since I will be striving after the wind, and that is vanity.
Life’s Experiences of Others
Many people poorly understand the relationship between money and happiness. They think that the only means to attain happiness is through the satisfaction of human needs that literally money can buy. However, money cannot buy everything that determines happiness, for instance, good friends, friendly community, and personal values amongst other key factors that define happiness.
Due to lack of psychological understanding of real meaning and source of happiness, many people grope in economic circles thinking that happiness lies there. False perception of happiness has made many people to struggle endlessly in pursuit of financial happiness, which never materializes. People think that solutions of many problems they encounter in life lies in money, because money pays education, rent, food, healthcare and many others needs.
Smith (2008) cautions this form of thinking for people assume that they “…might work longer hours to make more money, but then face heightened anxieties regarding childcare cost, comminuting, diminished leisure, physical and mental costs that accrue for the well-being of the families” (Smith, 2008, p. 20). In the course of achieving happiness through financial means, the process is tedious and very demanding making people to lose happiness instead of gaining more.
As aforementioned, money alone cannot have overwhelming influence on happiness since there are other factors that influence the status of happiness. These factors are personal values, personal freedom, family, community, work and social affiliation.
These factors constitute happiness; unfortunately, due to poor psychological understanding, many people neglect them and focus on the financial aspect of happiness only. Below poverty level, money is the overriding factor of happiness and as the financial status changes above the poverty level, others factors gradually become dominant.
International comparison of average levels of happiness shows that, “…among poorer countries, gains in income are accompanied by dramatic increases in happiness, but among richer countries, higher income do not buy more happiness” (Albor, 2009, p. 39). This confirms that, at the level of satiation, money no longer determines happiness but other factors begin to have significant influence. Thus, achievement of the greatest felicity requires consideration of all factors that constitutes happiness.
All the factors, which constitute happiness, are in two broad categories, social and economic factors. Economic factors partially influence happiness because the perception and the source of happiness lie in the social context of life, as happiness is not quantifiable in terms of money. According to Albor, “happiness is a universal feeling that all human beings have the potential to experience” (2009, p. 40).
Happiness is a contagious feeling, which makes everybody happy in the family, community, workplace and the whole world. I have noticed that, people think that money is everything in life, for out of their abundant riches; they afford to live in seclusion where they get satisfaction of their wealth and money while the surrounding people are struggling in abject poverty. Only the sight of the poor people makes them lose happiness.
Moreover, they live in great fear of robbery attacks and property loss, wishing to have their own continent, free from the eyesore status of the poor. All these happen because they have poor psychological understanding of happiness. If they could embrace social factors, they could derive ample happiness from their environment by relating to and assisting the poor.
In pursuit of happiness, young people do not have the right perception of what constitutes happiness. Given the choice between the money and schooling, they would prefer money, because they do not understand that money gives short-lived happiness. Regardless of virtues, and values we instill in children, they still perceive that money equals happiness.
Smith (2008) argues that, “… rather than setting off to follow their deepest passions, many of our most talented and driven graduates just need to get a job, whatever job that best allows them to begin their a life of paying off debt,” (p. 23). Young people have abandoned personal development, which is another source of happiness and are busy pursuing financial pleasures that give short-lived happiness.
In youths, there are many pleasures money can buy, hence, money has blinded their life’s priorities due to false satisfaction of needs that brings happiness. A rich person without personal development is as a fool is a sea of knowledge who wants to satisfy psychological needs out of folly. For one to achieve lasting happiness it requires understanding of the factors that significantly contribute to happiness and not mere stereotyping that money is equal to happiness.
Money and happiness have linear relationship but up to a certain level of satiation where other factors of happiness such as work, family, community, social affiliation, personal values and freedom, come into effect. Poor psychological understanding of happiness has led many people to believe erroneously that, money is the only source of happiness.
It is true that money brings happiness but the misunderstanding arises in the cumulative source of happiness. People derive happiness from both economic and social aspects of life, but rarely do people consider the social aspects. Social aspects demand psychological understanding of happiness; however, many people fail to realize its importance as source of happiness in the family, community and the entire society.
Therefore, people should be wary in attributing money as the only source of happiness for they will pursue happiness in vain, unless they come to the realization that social aspects are also integral part of happiness. Thus, happiness and money have partial relationship; whereby, money facilitates things that bring happiness but in itself, money lacks the capacity to bring happiness.
Akin, L., Norton, M., & Dunn, E. (2008). From Wealth to Well-Being? Money Matters, but Less People Think. Journal of Psychology University of British Columbia, 2(5), 1-20.
Albor, C. (2009). How Much Can Money Buy Happiness? Is the Debate Over for the Easterlin Paradox? Radical Statistics, 1(98), 38-48.
Boyce, C., Brown, G., & Moore, S. (2008). Money Happiness: Rank of Income, not Income, Affects Life Satisfaction. University of Warwick Psychology Journal, 1-16.
Quoidbach, J., Dunn, E., Petrides, K., & Mikolajczak, M. (2010). Money Giveth, Money Taketh Away: the Dual Effect of Wealth on Happiness. Association for Psychological Science, 20(5), 1-5.
Smith, N. (2008). Poverty, Money, and Happiness. A University Dialogue on Poverty and Opportunity Journal, 20-25.