Money and happiness – it’s a complex relationship

By September 5, 2018 January 9th, 2019 Blog

You might have heard the saying, money can’t buy happiness. You might agree with it too. But if that’s true, then why do we want more money? Is making money a goal worth pursuing at all, and would it help us feel good about life? We sifted through studies to uncover these answers:

#1: Money brings happiness, but with diminishing returns.

Psychologist Daniel Kahneman and Economist Angus Deaton showed that as income increases, so does life satisfaction. But only up to a point. There’s joy in going from $20,000 a year to $60,000. But from there on, reaching the $80,000 mark adds only marginally to your sense of joy. The reason: once we have our basic needs met, more money doesn’t mean more happiness, says Harvard Psychologist Dan Gilbert. The cutoff beyond which greater income/ money doesn’t mean greater happiness is called the satiation point and it varies for each country. For regions around India, it’s roughly INR 48 lakh per annum!

#2: Wealth includes worries.

If having money makes some aspects of life easy, it also brings its fair share of challenges. Researchers studying the lives of the extremely wealthy found that this group of people had their own concerns – anxiety about children, worries about relationships, and fears of isolation, which were linked to their wealth. In fact, many spoke about how more money is not always helpful. For instance, what would motivate their children, if they didn’t have to fend for themselves or worry about buying a home? Or would people love them for who they are, and not for their riches? A high net worth had its downsides.

#3: Moral values influence how we define happiness.

A Harvard study found that our ideas of happiness are linked to leading a moral life. Participants heard the story of a thief who would steal to buy alcohol. He felt very satisfied with life and seldom had negative emotions like sadness. But when asked to rate the thief’s level of happiness, participants actually felt that he was not happy. What happened here? The participants’ moral values influenced their assessment of happiness. The thief had enough money to buy what he wanted. But to the participants, it wasn’t just enough to feel good or get what you wanted. You had to lead an ethical life too.

Clearly, money helps us enjoy a better quality of life and is essential for our well-being. But just having more money doesn’t equate to being happy. Then, when does money count and how can it help you lead a more joyous life? We’ll tell you in our next post. Stay tuned for it.

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