Money Can Lead to Happiness
There are many conflicting opinions on the correlation between money and happiness. Some say there’s an obvious positive relationship: the more money they acquire the happier they’ll be. Others denounce the need for money, preferring to live a simple life without the burden of a heavy wallet. Neither opinion is wrong, yet neither is completely right.
Money CAN bring happiness, but only when it’s used right.
Where money makes the most difference is in lower-income levels. People making under 75,000 a year will generally see an improvement in happiness when they start earning more money. However, this improvement in happiness soon plateaus after the 75K mark is reached. The difference in happiness between someone earning 1 million and 10 million isn’t substantial. This is because money can only solve baseline needs. Maslow’s Hierarchy of Human Needs demonstrates this idea perfectly. At the bottom of the hierarchy are needs such as food, rest, safety, and shelter, all of which can be solved with money. On the other hand, the higher levels of the hierarchy show needs such as friends, self-esteem, and achievements. At this point in the hierarchy, money makes little difference in fulfilling these needs. More money does not lead to more happiness for the wealthy, because money can only solve their baseline needs.
If they already have all their basic needs met, why is it that some, even the ultra-wealthy, believe more money will bring them happiness? This answer lies in a phenomenon called impact bias. Although humans are the only animals on the planet that can simulate future situations, we often fail in predicting the emotional effect of positive or negative events. For example, if you asked most people how they would feel if they won the lottery, many would say very happy. The truth is, while they may feel happy momentarily, it won’t last. Due to hedonic adaptation, or the return to baseline satisfaction, most will start to feel a normal level of happiness after the initial rush of winning the lottery. In fact, many would see complications in their relationships and a decrease in happiness, when the people they once considered loyal friends or distant relatives, start asking for a cut of the pie. It’s strange to think winning the lottery can be a bad thing, yet all the horror stories of bankruptcy and torn apart families have prompted some to joke that if you have an enemy you should give them a lottery ticket.
However, while winning millions does little for satisfaction, giving to others does, and the happiness it creates lasts much longer. In one study, college students were given 5 dollars each day for a period of 5 days, and told to either spend the money exclusively on themselves or give it to others. Those who spend the money on themselves had a decrease in happiness while those that spent it on others had a lasting sense of satisfaction. While money itself didn’t bring happiness, the act of giving it to others did.
The researchers involved in the study are still unsure why giving money creates more happiness than using it on one’s self. Some have theorized it’s a biological survival strategy or a way to increase social reputation. However, I think the truth lies in human nature itself and our ability to feel empathy for others. Giving helps us connect to people and makes us feel a sense of belonging. Money is generally thought of as a selfish pursuit, proof of our greed and selfishness as a species. Yet, the fact we feel more happiness from giving proves we can be compassionate and empathetic as well. Money doesn’t need to be thought of as a way to happiness and extravagance and it doesn’t need to be thought of as a terrible thing either. Money can instead be thought of as a way to create a sense of community, by spending it on the people who matter and in the process, achieving happiness as well.
Money and Happiness
Maslow’s Hierarchy of Human Needs
Happiness and Giving
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