Money can buy you happiness
By Gary Silverman, CFP®
Breaking news: Money can buy you happiness.
I read a lot of studies and even studies about studies. I’ve found if I want to be happy, all I have to do is decide what “fact” would make me happy and read the studies that agree with that fact while ignoring the studies that disagree.
Since I’m in the money business, imagine how happy I was to refresh myself in the writings of economists (and lovers) Betsey Stevenson and Justin Wolfers. In a series of papers over the years they have looked at the relationship of money and folks’ perceived happiness. Guess what they discovered? The more money you have, the happier you tend to be.
There seems to be a rapid rise in happiness as one climbs from the ranks of the abject poor. It makes sense that as you go from hungry to fed, cold to clothed, and homeless to having a roof over your head, you’ll be happier…a lot happier. This trend continues for a while. Princeton University economist Angus Deaton finds that happiness rises pretty well until incomes hit around $75,000. At that point it seems that not only do people have enough for life’s necessities, but also enough to ride through most of life’s jostles (major health problems and things like the financial crisis being some rather large exceptions).
Stevenson and Wolfers added to Princeton’s findings and showed that even as money and income grow beyond $75K, happiness does, in fact, continue to increase. It just goes up more slowly. Let’s face it, there can be some rather large differences in your life going from $50,000 to $100,000 in annual income. There are much less profound differences going from $5 million to $10 million even though the percentage growth is the same.
If you read much in the way of popular literature you’ve likely come across articles lately saying that experiences are more valuable than things. Well, initially, I’d rather have the experience of a loaf of bread rather than a stroll in the park if I am hungry. But according to some work by the Chicago Booth School of Business, once you get your needs taken care of, that sunset walk on the beach will generate more happiness than a new piece of furniture in the house.
They also found that doing good deeds for others has a big impact on increasing your happiness quotient.
In that vein, consider this wonderful gift you can give yourself and those around you: Time. Instead of another piece of jewelry or a fancier car, buy yourself a lawn care service, painter, or even house cleaning services. Happiness will ensue.
But did you really need a bunch of economists to tell you all that?
PS: The “lovers” comment early in the column is because Stevenson and Wolfers seem to get along great and have a couple of kids together, but for tax reasons (remember, they are economists) they have chosen not to marry. Whether that increases their happiness because of the additional money or for other reasons was not approached in the study.
This article was published in the Wichita Falls Times Record News on July 17, 2016.