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Are you happy? Are you pursuing the things that actually matter, that contribute to your happiness?
In ways that are measurable, most of us are more comfortable today than ever before, but less happy. This “happiness paradox” tells us a lot about the differences between what we think matters and what actually makes us happy.
U.S. Census data reveals that 2019 household incomes reached record levels. Collectively we have never been better off financially.
Joyless Consumption
The average home size in America today is almost 1000 square feet larger than it was 50 years ago. Yet, happiness has not necessarily been a byproduct of this outward material wealth.
In many instances, folks end up in a “rat race” continually chasing ever greater amounts of income so that they can then engage in “joyless consumption” of things. None of this creates happiness, yet we think it does.
While many research studies conclude that higher incomes are associated with happiness, this increase in happiness is not indefinite. There is a point at which higher incomes don’t lead to greater happiness.
Generational Differences
The younger generations, particularly those under age 30 or so today are far different than many of us were at the same age. Research by Dr. Jean Twenge at San Diego State University shows that this cohort is super connected to technology but less happy and unprepared for adulthood.
Even worse, Professor Twenge details how the increased use of social media and technology is likely a precursor for many deleterious psychological maladies. She calls this the iGen, (for the iPhone), since most of those under age 30 have been connected via the smartphone their entire life.
Improving Happiness
There is, however, a positive relationship between money and happiness until a certain point. A number of research studies including a 2010 study from Princeton University authored by Daniel Kahneman and Angus Deaton detail improvement in happiness until about $75,000/per year (about $89,000/per year in 2021 dollars).
Over the years there have been numerous research studies that have attempted to measure the level of subjective well-being with levels of income. For the main, these studies have been inconclusive.
One reason the Princeton study is interesting is that over 450,000 responses were analyzed from the Gallup Healthways Well Being Index. These responses represent a deep dive on the overall topic of well-being.
Subjective well-being actually combines two distinct concepts. The first is sometimes called “happiness materialism” or “hedonic well-being”. This refers to the frequency of daily positive experiences such as joy, affection, and fascination. The second concept, life evaluation, refers to the way we think about our life.
That is, on a scale of 1-10, how satisfied with your life are you today?
Life Evaluation and Emotional Wellbeing
While income and wealth can be indicators of happiness, most of the studies find that this relationship falls apart as income rises beyond a certain point. The Princeton study and a more recent (2018) research study authored by Andrew T. Jebb, Louis Tay, Ed Diener and Shigehiro Oishi from Purdue University reach broadly similar findings in terms of life evaluation and emotional well-being.
The Purdue research also used Gallup World Poll data with representation from 164 countries and 1.7 million individuals worldwide. They found that overall, satiation occurs at $95,000 per year for life evaluation and $60,000-$75,000 for emotional well-being.
The Search for Happiness
A contributing factor to the confusion between money and happiness can be traced directly to what is sometimes called “destination addiction.” That is, constantly searching for happiness by way of the next job, the next place, the next partner. In other words, happiness is always somewhere other than where you are today.
It’s important to consider the primary things money can do. Overall, money can buy things; buy time (by having others do things for us); buy experiences; and provide the ability to do things for others (gifts to charity/family).
Money ties directly into our brain chemistry. Many of our decisions regarding money are connected to pleasure instead of need.
Take a quick look at ads and descriptions of consumer products or services. It’s common for these ads to claim the product will help make you happy. The pleasure circuits in your brain turn on and the next thing you know you bought the soap or whatever in the hopes of finding happiness.
Adaptation
One often observed reason that increasing income doesn’t necessarily translate into happiness is found in the phenomenon known as adaptation. We tend to adapt spending and lifestyle quickly as income changes so that the long-term impact on happiness is diminished. We have a short-term uptick in happiness but it generally doesn’t persist.
Of course, underlying all of this is the concept of enough. Many years ago, I struck up a conversation at a wedding reception with a well-known successful entrepreneur. He said that in his opinion, $30,000 per year of income was enough to build a nice, happy life. Since this was maybe 35 years ago, this translates into about $72,000 today. This figure is remarkably similar to most of the research studies connecting money and happiness.
Enough is a decision, it’s not a number.
Economic Motivation
How you think about money also has a huge impact on how happy you are with your life. While economic motivation to improve your standard of living can be a good thing, taken to the extreme it can become a negative factor.
We all have witnessed friends or family members “work themselves to death.” As the adage goes, you don’t see many tombstones that read “Wish I had worked more.”
While your sense of well-being and happiness is unique, it’s possible to learn from others by witnessing what creates happiness for them. Research suggests that one of the best ways to forecast your enjoyment of something is to observe how others enjoy it.
I have the number 168 written on the whiteboard in my office. This reminds me of the number of hours in every week so that I can pay attention to the things that I do as well as the things I elect not to do. The things that we pursue and the things that we choose not to pursue are both part of our happiness equation.
What you don’t spend your time on might just be as important as what you do. A friend of mine keeps a “to-don’t” list instead of a “to-do” list which I have always thought was genius. Life isn’t happening to you; you’re happening to life.
It’s All About Balance
The connection between life evaluation, emotional well-being and income varies significantly with attributes within your life. For instance, in the Princeton study, the attribute with the highest positive affect was among those who listed religion as being important to their daily life.
Those that were listed as “alone”, i.e. no routine social contact with friends or family, had the largest negative affect in terms of their life evaluation and well-being.
In general, the research suggests that while more money doesn’t buy happiness, less money can often be associated with emotional pain. Doing what matters most (e.g.spending time with those you like/love) and increasing leisure seem to be the largest factors.
Balancing positive and negative life circumstances has a substantial impact on overall happiness. Emotional well-being is often constrained by temperament and aggregation of life events. Control what you can control; let go of the rest. Start there.