New Info On Money and Happiness

September 23, 2016
Jeff Brown, MD

When people are exposed to a stack of money before eating a piece of chocolate, they savor the chocolate less. Our seemingly endless fascination with the subject continues to generate new information that may shine a light on our pursuit of lucre and hopefully thereby illumine our lives.

There are lots of books and articles on the surprisingly tenuous relationship between money and happiness, including this column in the past. But our seemingly endless fascination with the subject continues to generate new information that may shine a light on our pursuit of lucre and hopefully thereby illumine our lives.

For instance, it has been shown in the past that when people get past about $75K in income, more money doesn’t correlate with increasing happiness. But work at Michigan State University has found that increasing cash flow doesn’t make you happier; but it does decrease sadness and negative emotions. It could be because more money allows more options to cope with life’s issues. An entrepreneur friend of mine once put it more crudely when he said “Life is like a manure sandwich; the more dough you have, the less manure you eat.” Cynical perhaps, but more money may get you not more happiness, but less sadness and difficulty.

Dan Gilbert, the economist who appears on TV for an insurance company, has found that buying moments, and therefore memories, generates more lasting happy feelings than the rapid emotional drop off after purchasing new objects. That is with the exception of small pleasures, or treats, we may give ourselves from time to time.

He likewise points out that more pleasure derives from spending one’s money on, or with, others than on ourselves alone. And if we do buy something for ourselves, buying what you actually like gives you more pleasure than buying something to keep up with the Joneses or what you are told you should like.

The Wall Street Journal recently posted other new info on money and happiness. It turns out that most of us feel more secure about how much cash in the bank we have than what our paper net worth might be, even if that amount is many times larger. That result is not surprising for the poorer 50% of us, but it is surprising that it also applies to the richer 50% of us who may not need ready access to cash to get by. There is something abstract and inaccessible about a portfolio or other illiquid assets it seems, for emotional security purposes anyway.

The WSJ also cited another study that correlated what and how we spend based upon our personality type, for its emotional outcome. For instance, when extroverts spend in a book shop, it had no effect on their happiness, whereas introverts became happier. In a spending scenario in a bar, the introverts became measurably less happy. That correlates with the late Joseph Campbell’s missive to “Follow your bliss,” apparently in spending as well as college major, career and so on through life.

Another interesting study brought to light the observation that when people are exposed to a stack of money before eating a piece of chocolate, they savor the chocolate less. This leads us to wonder if having, or even seeing, more money simply raises our aspirations to a level that leaves behind “the little things.”

Any way that you look at it, the whole idea behind accumulating money is to be able to use these limited resources to enable us to maximize joy in this life.