• James Woodfall

Can money buy happiness?

Updated: Jun 7, 2020

Psychiatrist, Robert Waldinger, works on the Harvard Study of Adult Development, often called the most extensive study of happiness. In November 2015, Robert spoke at TEDx on the findings of this study.

At the start of the talk, Robert references a survey of millennials who were asked what their most important life goals were. Over 80% said that their goal was to get rich, and another 50% of those same group said their goal was to become famous. The Harvard Study seeks to answer whether these life goals make us happy and has done so by studying a group of 724 men over 75 years. During the period of the study, the researchers asked the participants to answer questions each year on their health, home lives and careers.

Impressively, the study has managed to keep going long enough, and 60 of the original participants are still alive and answering questions in their 90s. When the study commenced, it focussed on two groups of men; Harvard students who graduated during World War 2 and the second a group of boys from one of the poorest neighbourhoods in Boston.

The researchers have followed the many different paths of these men since then, through their careers, health issues and social status. The participants were interviewed about their lives throughout, as well as medical records, including blood and brain scans.

The findings are significant, the largest factor that will affect our happiness, how long we live, and our health is the quality of the relationships we have. Those with healthy family and social connections live happier, longer lives. Loneliness does the exact opposite, resulting in declining brain structure, lower satisfaction with life and earlier death. They also found that you can be lonely and also have friends and family around you, so the quality of those relationships is crucial. Toxic relationships are just as bad for us as having no relationships at all.

When the participants in the study were young men, the same age as the millennials in the survey mentioned earlier, they had the same goals of becoming rich and famous. The learnings from the 75-year study have been that the single, most important factor that will determine how happy you are with your life is the quality of the relationships you have. Great relationships, not money or fame, will give you the most fulfilment in life. They will keep you healthy, both physically and mentally for longer.

In September 2010, Daniel Kahneman and Angus Deaton published a research article on the effects of income on well-being. The study involved more than 450,000 respondents to a daily survey conducted by the Gallup Organisation and contributed to the Gallup-Heathways Well Being Index.

The question that they wanted to answer with their research is, “does money buy happiness?”. Before that, the researchers had to define how they were going to interpret happiness, as it is a deep emotion. They broke it down into two categories that they could measure; emotional well-being and life evaluation. Emotional well-being refers to our experiences with joy, stress, sadness, anger and affection. The frequency and intensity of these emotions make up our overall psychological well-being. The second measure of life evaluation refers to the thoughts people have about their lives when they think about them.

To assess the role that money plays, they used income as a measure. What the researchers noticed when you compare income to emotional well-being, is that there is an increase in emotional well-being as income increases. It makes sense, as low income can mean money worries and financial difficulty. Money worries can contribute significantly to our overall stress levels, and complicated financial decisions can result in conflict with others, an increase in sadness and reduction in joy and affection. The intensity of the stress and grief increases the lower income goes. Low income is miserable.

The relationship between emotional well-being and income is not entirely linear, above $75,000 of household income it flattens out. It means that there is a point at which earning more money doesn’t translate into greater happiness for us. Once our basic financial needs are met, and we are not feeling stress about money, our emotional well-being plateaus.

When it comes to life evaluation, there is a linear relationship between income and the quality of the thoughts that people have about their lives. As income levels increase, the variety of our life experiences increases. Effectively, meaning we have more freedom to do things that are important to us and have experiences that we value. We can go on better holidays and eat at nicer restaurants, for example.

What these two studies tell us is that we can maximise our happiness by doing things we love, with people that are important to us — deepening our relationships with our friends and family through shared experiences. To give a personal example, one of my most memorable experiences in recent years was a trip I took with my wife and father to Monet’s house and gardens in Giverney, France. We had a last-minute plan one weekend to book an early cross channel train to France and drove to the gardens for the day. This day out was not particularly costly (a channel tunnel return ticket, fuel for the car, lunch for three and entry tickets), but the memories of that day and photos we took will stay with me the rest of my life. We talk about it often and very fondly. The quality of the experience was very high versus the cost, and I am confident that the contribution to my happiness and well-being is higher than had I misspent the money.

The best use of your money, to increase your happiness, is on memorable experiences which improve the quality of your relationships, with the people most important to you.

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