Can Money Buy Happiness?

24 Dec, 2009 || by

I recently read that Richard Hatch, winner of the first television hit, Survivor, has been indicted on charges of tax evasion, filing a false tax return, and bank fraud.  He reportedly neglected to pay taxes on the $1,000,000 prize he collected after winning Survivor: Borneo in August, 2000.  Mr. Hatch appears to have failed to report hundreds of thousands of dollars he earned from guest appearances and personal investments.  If found guilty of all charges, he faces up to 75 years in prison and millions of dollars in fines.

Similar examples abound:  World boxing champion, Mike Tyson; entertainers Burt Reynolds, Willie Nelson and MC Hammer… all have filed bankruptcy.  MC Hammer reportedly made 33 million dollars in 1990 alone, but he still went bankrupt.  It would seem to me that if I made 33 million dollars in one year, I would be financially set for life.  How can one go through that much money in so short a time?  Did all the money earned by MC, Willie, Mr. Hatch and the others buy them happiness?

In their article, “Lottery Winners and Accident Victims: Is Happiness Relative?” researchers Brickman, Coates and Janoff-Bulman report that it is common for people who play the lottery to fantasize about how winning would significantly improve their lives.   In reality, while lottery winners do tend to experience a flood of positive emotion during the early weeks following their win, follow-up studies show this feeling of happiness is short-lived.  In fact, according to this study, lottery winners report their feelings of happiness quickly return to normal, if not below normal. Evidently, the saying “Money doesn’t buy happiness” holds some truth.

In another study, reported on by Ruut Veenhoven in “Happiness of Nations”, Japan’s average level of citizen happiness remained unchanged during the years between 1960 and the late 1980’s, a period when the country rose from being relatively poor to becoming an international powerhouse.  Likewise, in the United States, even enough consumer buying power has more than doubled since the 1950’s, the average American’s reported feeling of happiness has remained unchanged. Despite having more money in their pockets, logically allowing for the purchase of many more luxuries, reported levels of happiness remained the same.

Why is this?  Why doesn’t having more money make us happier?  Having more money seems to only provide a temporary surge in happiness.  Inevitably, we seem to adjust quickly to our current circumstances, and our feelings of happiness return to some average, much like the way a thermostat responds to changes we make to the temperature in our homes.

Two theories may help to explain this phenomenon.  The first, the “adaptation” theory, says people tend to “get used to” things quickly.  We adjust to changes and quickly establish a new “set point” for what makes us happy.  When we drop below the new set point, discontent and boredom result.  For example, when I was younger, getting to stay at a hotel was a big treat.  It was clean and uncluttered, had a restaurant and swimming pool, and even room service.  How could one possibly grow to become unhappy with this?  Now, forty years later, I shun the simple hotels for those with more comfortable beds, wireless internet, and “4-Star” ratings.

The second theory is the “relative deprivation” theory.  It states that our feeling of happiness is based on our comparisons of ourselves to others.  A cartoon appearing in The New Yorker Magazine depicted this theory well.  It showed two dogs lying out in the back yard.  One dog is telling the other dog, “I’ve got a bowl, the big yard; I know I should be happy.”

As people climb the ladder of success, they tend to compare themselves to others who are equal to or better off than they are.  In 1930, Bertrand Russell noticed this tendency and stated, “Beggars do not envy millionaires, though of course they will envy other beggars who are more successful.” This could explain why Richard Hatch, the million dollar winner of Survivor, began experiencing financial problems.  Upon becoming a “millionaire”, and then being thrust into the limelight as a celebrity, he may have begun to compare himself with other rich and famous people.  It costs a lot to maintain that type of image and “keep up with the Joneses.”

So jumping on the “I need more to be happier” bandwagon doesn’t appear to be the answer.  Instead, based on the theories of “adaptation” and “relative deprivation”, to be happier we need to make sure we add variety and change to ours lives, and instead of comparing ourselves to others more fortunate than we are (which creates envy), we need to compare ourselves to those who are less fortunate than we are (which creates a feeling of appreciation for what we have).  It seems two old proverbs, “Variety is the spice of life” and “Count your blessings”, hold a great deal of insight for all of us.

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