The Good Life Campaign: Can Money Buy Happiness?

“You own twice as much rug if you are twice as aware of the rug.”

Allen Ginsberg (Poet)

In one of the earlier posts Now the most important question: What makes us (un)happy? we have already briefly looked at the influence of life circumstances on our well-being, which includes e.g. country of residence, marital status, job security and income. Overall, the effects of life circumstances have a relatively limited effect on our happiness, but particularly the relationship between money and well-being is complex and therefore worth a more detailed discussion.^1-3

In today’s post, we will also look a little bit more closely at the concept of hedonic adaptation (also called the ‘hedonic treadmill’), which describes the human tendency to be very adaptable and adjust relatively quickly to most situations, whether these are good or bad. As previously mentioned, the hedonic adaptation can limit our subjective well-being, as we start taking things for granted.^2-4 Conversely, our well-being increases if we can find ways to limit or slow down the effects of hedonic adaptation, and this will be the second focus of this post.

So does having money make us happier?

Well, this answer is: Yes BUT…

Although there is evidence that there is a significant correlation between income and happiness, this correlation is relatively weak and only present under certain conditions:^3-6

Higher income is correlated to a higher life satisfaction, which is how we rate the quality of our life in general. However, it has little influence on our moment-to-moment mood.
The effects of higher income are most notable in the lower income segment. This makes perfect sense given that we need money to satisfy our basic needs for adequate food, safety, health care, self-control and shelter. The need for safety also includes adequate provision for our future, such as having savings or a reliable pension/retirement provision. Not being able to afford decent food, housing etc. clearly has a significant impact on well-being. However, beyond a certain threshold level, the benefit of additional income is much more limited.
There is also some evidence, that well-being of some people on the higher end on the income scale may be limited, e.g. due to high time pressures and increased stress associated with high-profile jobs. Very wealthy people may also be less able to appreciate the small pleasures in life, due to effects of hedonic adaptation.
The hedonic adaptation can also be a problem at the middle-income level. The sense of being ‘well-off’ is not only determined by our income but also by our desires. For example, social comparison often results in the feeling of ‘relative poverty’: As our aspirations increase and the income of our neighbours and friends increases, it is possible to earn a very decent living and yet not feel ‘well off’.
However, there are also huge individual differences. It appears that the way how you spend your money very much determines whether it makes you happy or not. Materialism (= an excessive focus on physical comforts and luxury goods) appears to be a particular problem. Materialistic people tend to have a lower life satisfaction and decreased sense of meaning, as well as having poorer social relationships, and feeling more insecure when compared to non-materialistic people. This is because the pursuit of money and status diverts energies from things, which are more important for mental well-being: meaningful social connections and personal growth. Tips on how to use your money wisely in a way which supports your well-being can be found below.

As a conclusion, it can be said that poverty can have a negative effect on well-being, but having money does not guarantee a high level of well-being. It may not be so much the absolute amount of your income that you have available but rather your attitude to money (and the way you spend it), which counts, and there are other factors – particularly good social relationships – which are more important for our well-being.^3,6

How to escape the hedonic adaptation

Whether we are talking about income, living conditions/housing, cars, jobs or romantic relationships- we can get used to anything and anybody quite quickly. Of course we sometimes genuinely need change, but all too often we mistake the effects of hedonic adaptation for unhappiness, resulting in unnecessary and often unrewarding ‘chasing’ of novelty. These tips may help to delay the effects of hedonic adaptation:^3,5,7

Cultivating mindfulness and conscious appreciation makes us notice positive events and savour experiences more easily. More information on this topic can be found in the post Staying in the Moment: Mindfulness and Conscious Appreciation
Cultivating gratitude enables us not to take things for granted and prevents us to think that we are somehow entitled to certain things; as a result, we become less materialistic.Trying to live in moderation helps to keep the focus on the things in life, which really matter. Moderation can also evoke positive emotions in itself.For more information on gratitude have a look at last week's post
Introduce variation without changing the circumstances: This is particularly helpful for relationships but may also work in your professional life. Be inventive, stay curious and try to break up the routine as much as possible with new activities, meaningful conversations/discussions, and by exploring new aspects of your life.
Keep an eye on your values and what really matters to you in life- this can help you to see the bigger picture and to find meaning even in trivial everyday activities e.g. helping a colleague, cooking for your family, cleaning up after your pet. If you have not managed to read the post about meaning yet, which explains about the importance of a purpose in life, you can find it here: What do you live for: Finding meaning

How money can increase your well-being:^3,5

Beyond spending money on our basic needs (food, shelter, safety etc.) there is of course nothing wrong with treating ourselves to something nice from time to time, but trying to stay modest and spending the money on small but frequent pleasures tends to boost our well-being more than spending it all on one big splurge.
Spending money on others rather than yourself: It turns out that we derive more happiness from spending money on other people than spending it for ourselves, e.g. spending money on presents for others or charitable donations. Pro-social spending makes us feel good, because we feel better about ourselves and turn our attention outward. It also stimulates positive social interactions and opens opportunities to new friendships.
Use your money to buy experiences rather than goods: Possessions mostly do not change once we buy them (at least not for the better!), and we therefore tend to get used to them particularly quickly. Experiences tend to be more social and are often an opportunity to share time with others, as well as having the potential to be converted into wonderful memories. We are most likely to benefit from activities, which increase (1) our sense of competence (i.e. doing something we feel technically good at) (2) our sense of connection with others (i.e. doing something with or for other people) (3) our sense of autonomy (i.e. doing something which makes us feel that we have control over our life).
Or use your money to buy yourself some time: this may include paying somebody to help with time-consuming tasks (e.g. getting an accountant to help with your tax return or a cleaner to help with you house cleaning), or accepting to earn less and working part-time. You can then use the time for activities that are personally more meaningful to you.
Make best use of all possessions and experiences; consciously savour them and form good memories. As Allen Ginsberg noticed, get more out of your purchases and experiences, if you actively appreciate them- in this way you own ‘twice as much rug’.
Additionally, making purchases well in advance of the event or delivery of an item will give us anticipatory pleasure. If we have time to look forward to an event, we can start savouring it even before the actual experience.
Avoid social comparison. Focus on whether your income is enough to satisfy your needs- not if your neighbour, friend or brother-in-law earns more than you do.

A truly amazing person- What can we learn from…:⁸

Jakob von Uexküll is a Swedish-German journalist and philanthropist. He developed a strong interest in sustainable development and ecology, and tried to convince the Nobel Prize Committee to introduce these new categories in order to encourage people to find innovative and future-orientated solutions for the challenges of the world. Following the committee’s decision not to introduce new prize categories, Jakob von Uexküll founded the Right Livelihood Award, also known as the ‘Alternative Nobel Prize’ in 1980. The award honours and supports ‘courageous people and organisations that have found practical solutions to the root causes of global problems’. In order to fund the significant price money for the first laureates, Jakob von Uexküll sold his valuable philatelic (stamp) collection for 1 million US dollar. Since then, it has been possible to continue the Right Livelihood Award with donations from private philanthropic individuals. In addition to the Award, Jakob von Uexküll has also founded the World Future Council together with Herbert Giradet. The World Future Council identifies and spreads knowledge of the best and most sustainable policy solutions worldwide.

Speaking about his motivation of giving up his precious stamp collection in order to found the Right Livelihood Award, Jakob von Uexküll said: ‘I feel tremendous satisfaction when I see what the prize money can achieve, which is much greater than what I would have felt if I would have kept the collection, or if I would have spent the money on a larger house or a boat.’

Of course we do not all have expensive stamp collections we can spare, but what we can learn from Jakob von Uexküll is that letting go of some of our property or money can help to make the world a slightly better place and at the same time contribute to our own happiness.

You can find out more about the remarkable work of Jakob Uexküll at http://www.rightlivelihood.org and https://www.worldfuturecouncil.org

More on this topic on the web:

You can watch this entertaining TED lecture about making best use of your money to support your wellbeing: www.ted.com/talks/michael_norton

Preview: Achieving accomplishments and fulfilling goals is another important component for our mental well-being. Next week we are going to look at this essential factor and discuss problems associated with goal pursuit: e.g. why we sometimes do not feel as happy as expected when we finally achieve the goal and how to cope if we do not manage to accomplish what we want.

References and further evidence-based reading:

1. Lyubomirsky S, Sheldon KM, Schkade D. Pursuing Happiness: The Architecture of Sustainable Change. Review of General Psychology. 2005;9(2):111-131.

2. Lyubomirsky S. Why Are Some People Happier Than Others: The Role of Cognitive and Motivational Processes in Well-being. American Psychologist. 2001;56(3):239-249.

3. Diener E, Biswas-Diener R. Happiness: Unlocking the Mysteries of Psychological Wealth. Blackwell Publishing; Oxford, UK. 2008

4. Seligman MEP. Flourish: A New Understanding of Happiness and Well-Being- and How to Achieve Them. Nicholas Brealey Publishing; London, UK. 2011.

5. Lyubomirsky S. The Myths of Happiness: What should make you happy but doesn’t, what shouldn’t make you happy but does. Penguin Books; New York. 2013.

6. Seppälä E. The Happiness Track: How to Apply the Science of Happiness to Accelerate Your Success. Piatkus; London, UK. 2016.

7. Hanson R: Hardwiring Happiness: How to reshape your brain and your life. Rider Ebury Publishing, Random House, UK. 2013.

8. References for the section truly amazing person: http://www.br.de/fernsehen/ard-alpha/sendungen/alpha-forum/jakob-uexkuell-gespraech-100.html, https://www.worldfuturecouncil.org/p/jakob-von-uexkull/

If you found this information helpful, please consider supporting the campaign under Just Giving. Of course it is also great if you choose to support another charity or do a practical good deed, but it would be nice if you could let me know that you have done this because you felt inspired by this campaign. Please also feel free to share this post and let me know if you have any constructive feedback- good or bad!

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