On Money & Happiness

Originally written: 12/29/07

There is an inherent assumption in our society that a greater amount of money will lead to more happiness. However, I don't think that could be further from the truth. Let's face it, you need a certain amount of money to get the things you need and a few of the things you want. But the incessant desire for money is unhealthy. If someone derives happiness only from money, then that person will always need an increasing amount of money to stay happy. The key insight? HAPPINESS IS RELATIVE.

For example, let's say you have a sum of money that enables you to buy a new TV and a new car. So you buy it. But after a few months those items are not new anymore. You see them everyday. They become old. The new models come out. You need something new to feed your passion. Your base level of happiness now includes these possessions. Before you bought the items, you could say your happiness was a 5. Temporarily, it increased to a 7. But since the only thing that brought you happiness was the purchase and the money that brought you it, your resulting happiness is now 5. Your expectations of happiness have changed, but you remain where you were before.

Another example. Let's say we know a person living in Nigeria. They are poor, but live a good life. The person is neither unhappy nor happy. Now imagine that person moving to the United States. They can take advantage of all the conveniences that life in the US offers. Why hand wash your clothes when you can let the machine do it? Why worry about your food spoiling when you can just put it in the fridge? Initially this person's quality of life will increase dramatically and their happiness level is likely to increase as well. But this is only TEMPORARY. Once one becomes used to these various conveniences, it becomes EXPECTED and is no longer novel. Thus, these conveniences no longer increase the happiness level; they are an expectation and the subtraction of them would likely result in unhappiness. Once one comes to expect something, the lack of it is dissatisfying.

This is the key thing that most people don't understand: the satisfaction derived from a material good is only temporary. To have true, long-lasting happiness, it has to come from something else. It has to come from the love of a significiant other, or an activity that you really enjoy doing, or maybe from being with your family. Everything else: the cars, the TVs, the iPods, etc. will not allow you to attain long-term happiness. If happiness is only derived from these goods, then only increasing amounts of these goods will EVER keep you satisfied and you will need more and more money to stay at a base level of happiness.

In fact, I think in the long-run, having an excessive amount of these goods will make you less happy. Any interruption in your income that allows you to not buy these goods will make you unhappy. Since you only derived your happiness from your money and goods before, the lack of money to buy those goods will really lower your happiness level.

Why can't everyone see this?