.More Money, Less Happiness: When Money Makes You Miserable
More Money, Less Happiness: When Money Makes You Miserable
By Michael Laurence August 2019
Money, the conventional wisdom says, doesn't buy happiness. Modern psychology seems to back this up, with studies suggesting that beyond an income of $75,000, money doesn't make you any happier.
This conclusion is simultaneously obvious and counter-intuitive.
As an abstract principle, most us acknowledge that money doesn't buy happiness. But, at the same time, we all want more of something material — a nicer house, nicer vacations, the ability to live in a certain neighborhood or eat at fancier restaurants — that we think would make us happier. (If you're J.D., you think maybe season tickets to your favorite team might make you happier.)
So, we're left with a conundrum. Or, rather, a series of conundrums: Does income in excess of $75,000 make us happier? And if not, why not?
When Money Makes You Happier
In answer to the first question, I believe that all else equal — and as we'll see below, this is a huge qualifier, as things are rarely equal — more money generally makes you happier.
To be clear, money won't solve every problem. If you're lonely or bitter or angry, for instance, more money won't make you any happier. But just because money doesn't solve every problem doesn't mean that money won't solve any problems.
Money can make many things easier, or better. With more money you can:
Build a nest-egg.
Pay off your house or car.
Go on more vacations.
Have more kids.
Be a stay at home parent.
Eat better food.
Retire early.
With more money, you can do any number of other things that people enjoy and that make them happier. And if you're a victim of systemic poverty, more money can change your world.
As much as we pay lip-service to the idea of money not making us happy, it often does, and it's okay to admit this. It doesn't make us materialistic or greedy to want retirement savings, a nicer home, a paid-off car, or a trip to Europe.
When Money Makes You Miserable
Assuming that you buy the premise that (in theory) more money should (generally) make us happier, it raises the question of why (in practice) income beyond $75,000 annually doesn't make us any happier.
I think the explanation for this seemingly irreconcilable conflict is that most people spend the extra income poorly. Most people use money ways that make them less happy.
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