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We think we know what will make us happy, but we don’t. Many of us believe that money will make us happy, but it won’t. Except for the very poor, money cannot buy happiness. Instead of dreaming of vast wealth, we should dream of close friends and healthy bodies and meaningful work.<\/p>\n
Several years ago, James Montier, a “global equity strategist”, took a break from investing in order to publish a brief overview of existing research into the psychology of happiness<\/b><\/a> [PDF]. Montier learned that happiness comprises three components:<\/p>\n If we have no control over our genetic “happy point,” and if we have little control over our circumstances, then it makes sense to focus on those things that we can<\/i> do to make ourselves happy. According to Montier’s paper, these activities include sex, exercise, sleep, and close relationships.<\/p>\n What does not<\/i> bring happiness? Money, and the pursuit of happiness for its own sake. “A vast array of individuals seriously over-rate the importance of money in making themselves, and others, happy,” Montier writes. “Study after study from psychology shows that money doesn’t equal happiness<\/a>.”<\/p>\n Writing in The Washington Post<\/i> last June, Shankar Vedantam described recent research into this subject<\/a>. If the United States is generally wealthier than it was thirty or forty years ago, then why aren’t people happier? Economist Richard Easterlin of the University of Southern California believes that part of the problem is the hedonic treadmill: once we reach a certain level of wealth, we want more. We’re never satisfied. From Vedantam’s article:<\/p>\n Easterlin attributes the phenomenon of happiness levels not keeping pace with economic gains to the fact that people’s desires and expectations change along with their material fortunes<\/b>. Where an American in 1970 may have once dreamed about owning a house, he or she might now dream of owning two. Where people once dreamed of buying a new car, they now dream of buying a luxury model.<\/p>\n “People are wedded to the idea that more money will bring them more happiness,” Easterlin said. “When they think of the effects of more money, they are failing to factor in the fact that when they get more money they are going to want even more money. When they get more money, they are going to want a bigger house. They never have enough money, but what they do is sacrifice their family life and health to get more money.”<\/p>\n The irony is that health and the quality of personal relationships are among the most potent predictors of whether people report they are happy<\/b> \u2014 and they are often the two things people sacrifice in their pursuit of greater wealth.<\/p><\/blockquote>\n Why aren’t rich people happier? Perhaps it’s because many of them are workaholics, because they’re more focused on money than on the things that would bring them joy. A brief companion piece to The Washington Post<\/i> story notes that researchers have found that “being wealthy is often a powerful predictor that people spend less<\/i> time doing pleasurable things<\/b>, and more time doing compulsory things and feeling stressed.”<\/p>\n In general, rich people aren’t much happier than those of us in the middle class. Yes, money can<\/i> buy happiness if it elevates you from poverty, but beyond that the benefits are minimal. So why do so many people believe that money will make things better?<\/p>\n In 2006, Harvard psychology professor Daniel Gilbert published Stumbling on Happiness<\/b><\/i>, a book about our inability to predict what will really make us happy. Here is is a 22-minute video of a presentation Gilbert made at TED<\/a> 2004, in which he compresses his ideas into bite-sized chunks.<\/p>\n\n
<\/span>The Happiness Paradox<\/span><\/h2>\n
<\/span>Stumbling on Happiness<\/span><\/h2>\n