Do we have to believe that more money leads to greater happiness?

Money: If only we had a little more, then, of course, we’d be happier.

That is of course the story.

It is a story that one might even say is a crucial linchpin to the functioning of our societies. We hear it from others in subtle and not so subtle ways on a daily basis. The story keeps everything ticking along, business as usual, and most of us have some vested interest in ensuring that the story keeps getting told.

But it is disingenuous story. And a story we are going to have to go beyond. . .

Money and happiness – deconstructing the story

The trouble with the money leads to more happiness story is that there is very little concrete evidence to back it up. There is an astounding amount of research trying to understand the effects of having more money on happiness, and what is abundantly clear is that once our basic physiological needs are met any happiness that money could buy, which it can, though often only temporarily and infrequently, is inconsequential when compared to other things. These other things, such as friendships, mental health, physical health, access to green spaces, stable life circumstances, and living a life that feels purposeful, are many magnitudes more important for greater happiness than having more money.

Yet these really important things will regularly get sacrificed by individuals and societies for the sake of having more money and a stronger economy, all in the hope of a happier life. Yet that happier life rarely materialises from such sacrifice.

Why do we do this? There are several reasons that I can think of that prop up the belief that money buys happiness. It helps to be aware of theses reasons. so that then, we can get beyond this belief and stand a chance of living happier lives:

1. Psychological biases

Our minds function in a way that pre-disposition us to think that money is important, and that we need ever larger amounts of it, more than is necessary to fulfil our basic physiological needs. First, there is a tendency to compare with others (relative income theory), second, a tendency for adaptation (adaptation level theory), and third, a tendency to see the things we already have as important for our happiness (loss aversion).

What this means is that if we acquire more money, the benefit will be smaller than expected because not only will others acquire more money too, but any effects will only last a short time because we quickly get used to having more of it. Then once we have more money we may come to rely on it as an important source of happiness and then believe that without it we will be much less happy.

2. Marketing messages

open happiness
Have a short term sugar boost at the detriment to long term health

The punchline to most advertising is that were someone to buy whatever it is that is being advertised then they would be happier with their lives. In our daily lives we are bombarded with carefully crafted messages that largely play on the psychological biases I mentioned above. By, for example, appealing to our desires for status (to conspicuously consume), encouraging people to focus on instant pleasure seeking happiness (short term buzz), and trying to highlight how less happy life is without something (create needs we didn’t have). More generally marketing tries to provoke insecurities and create a discontent with our present circumstances so that we will see that we need money to buy the things that we are told will bring us happiness. There are also mesmerising colours and shapes thrown in their too. I’m of the opinion that if something needs to be advertised then I probably don’t actually need it to be happy. Deep down I know what I need.

3. Media portrayal

richThe media tend to portray the rich as being happy. We are shown photos of people living lavish lifestyles, and they are normally always smiling.

First, there is probably a lot more going on behind those smiles than we will ever know. We don’t know what it took for the person to get to that moment, such as the work they had to do and the sacrifices made. Perhaps hiding behind the smile is a struggle from the argument they had that morning, the lack of sleep and tiredness, or a frustration at the numerous attempts from others to take photos of them. Perhaps there is a mental health issue, such as social anxiety, a body dysmorphia, or a severe depression, that we just cannot see. This similarly applies to the photos we share of ourselves on social media.

Second, it is a very common mistake to confuse correlation with causation. Just because two things appear to relate to one another does not necessarily mean that one happened because of the other. In the case of money and happiness we may see that people with more money are happier and think that it must have been because of the money. However, it could also be because happiness leads to having more money or that there is no link at all and some people are pre-dispositioned (psychologically, genetically, socially) to gain both financial wealth and happiness. There is evidence that both of these factors are important contributors to the correlation.

4. Economic fundamentals

The cornerstone of most economic theory, marginal utility theory, is that more money gives people greater consumption possibilities, and more consumption always means greater utility. Utility for non-economists is the extra satisfaction from consuming some product, more crudely it is happiness. However, many of the underlying assumptions are not only theoretically unsound but have been experimentally falsified.

When it comes to policy matters economists tend to get listened to much more than scientists, and other social scientists. As such, since the story that money buys happiness is embedded so deeply in the profession it pervades many of our national policies.

I originally trained as an economist, but I defected at PhD level and moved to psychology because I was so dissatisfied with the largely unchallenged assumptions that I was being taught. At one point in my career, when I was an undergraduate student, where questioning fundamentals wasn’t valued (although see current student inspired movements demanding more pluralism in economics), I wondered whether the economic teaching was in part a way of conditioning people into thinking a certain way rather than learning about the way the world actually is.

5. Unsustainable debt

debt.jpgDebt is one of the most critical aspects to sustaining the belief that more money will lead to greater happiness. It is so critical because it is nearly almost true. It is a sneaky one.

Many people are in debt, often large unsustainable debt, and we know that burdensome debt can result in severe psychological distress. Therefore it would be easy to say that if people in debt had more money, then they would be able to better service that debt and therefore have less psychological distress. First, this does not mean that money buys happiness, rather it means that more money may reduce psychological distress in those with unsustainable debt. Second, the debt a person may be trying to pay back may in all likelihood have come from buying things under the belief that they would obtain greater happiness. Third, it assumes that people pay back their debt rather than use the excess money to buy things that they think will bring greater happiness. Unsustainable debt is crucial in sustaining the story that money buys happiness. .

6. Vested interests

Most, if not all, of us have some vested interest in perpetuating the story that more money brings greater happiness. We’ve bought into it so to speak, and to let go of the belief is going to be challenging.

For example, perhaps we spent most of our life in pursuit of money believing it to be the key to happiness, as others perhaps told us it would. If we did invest a lot of time in pursuing money then it becomes psychologically essential to sustain the belief that money is key to our happiness, whether true or not. The reason being that it might be too psychologically challenging to admit to one’s self that what one thought was key for happiness, and that we put a lot of energy trying to obtain, actually isn’t. It also may be important to convince others of the belief too, and surround ourselves with others who prop up this belief.

We will also look for evidence that confirms our belief rather than disconfirms it. As such a study showing that money does buy happiness might get more news coverage, no matter how misleading the study and badly reported by the media, than a study that doesn’t support that story.

We might want to blame others, but the marketers, the media, the economists, the politicians – are just people too, and they came to believe the same story through similar ways that we did. Those marketers have jobs in which them receiving money, which they believe they need for their happiness, relies on everyone believing the story that they themselves believe. Economists are valued, and therefore paid so well, because they are the experts at providing us with what we believe we so desperately need. Whilst politicians are much more likely to keep their jobs by conforming with, rather than challenging, the status quo. As such, they tend to prioritise policies that promote economic growth at all costs over real social progress that genuinely improves people’s lives.

Letting go of the belief. . .one by one

freedom.jpgI don’t doubt that the money-happiness belief is key to sustaining and keeping stable our present system. Yet the present system is not one that is creating much in the way of sustainable and equitable happiness. If we want to stand any chance of living more happily both now and in the future then what we need to do is individually and collectively challenge the belief that money is key to happiness, and eventually go beyond that belief.

I am not suggesting we simply stop believing the money and happiness story overnight and act immediately – it will take time to unpick the story since it has been deeply and complexly interwoven into the fabric of our societies by no-one in particular. The story is everywhere and it influences our everyday existence. It may also be vital for others that you continue to believe the money and happiness story, which may get in the way of you going beyond it.

But consider this…

Maybe you do actually have enough. Perhaps in seeing that you have enough maybe working long hours in the job that doesn’t really fulfil you or you perhaps even hate, to buy those things that you don’t actually need, will become less appealing. Perhaps buying things for others can be substituted for time with others. Perhaps if you consume and work a little less there could be a little more time for pursuing a hobby you love, going for more walks in nature, or contributing something to your community. Perhaps you could live a little more humbly, pay down the debts, or at least not increase them, and find more freedom in your daily life outside of the economic machine. You will, as a result, probably be a little happier too, and there is plenty of evidence to suggest that you will be.

If enough of us shake this belief and start acting in ways that preference happiness and well-being over financial considerations there is no saying what would happen. Perhaps businesses, politicians, and policymakers, might take notice, and they might step up their encouragements for people to consume and work more (lower interest rates, lower taxes, more cut-price goods, less regulation, a change to minimum wages). However, perhaps it will precipitate deeper shifts in our societies, perhaps business, politicians, and policy makers respond in parallel and start to value happiness and well-being and even help people to make changes. Perhaps one day, as happened in Bhutan, an enlightened leader will step forth and instigate major societal shifts.

We do have some choice, some much more than others. However, we are up against it for all the reasons I’ve outlined – psychological biases, marketing messages, media portrayals, economic fundamentals, unsustainable debt, and vested interests – yet each of us has a role in eventually seeing beyond the story. We can get there…one by one, and each at our own pace.

money and happiness

***If this post was interesting then please consider sharing it, and/or reading some of the other posts I have written about money and happiness in the links below that are based on my 10 plus years of research in this area.

Some other posts I’ve written about money and happiness

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