It Turns Out Money Does Buy Happiness
bloomberg.com
bloomberg.com
But I'm quite sure not having the bare minimum to live your own life brings unhappiness.
Nothing lifted me up as much as finally having the income necessary to gain my independence from my parents, and I see many friends also in their late 20s struggling to achieve it and suffering because of it.
Right now, an average wage is not enough for this. Two might barely cut it. And the unhappiness is rising. Protests are growing. I worry for my generation and the new ones.
My definitions:
- Not enough: you're having to choose which necessary expenses to pay and which ones to not pay. Are your children going to be hungry, or are they going to be cold?
- Barely enough: you can pay necessary expenses, but you have to micromanage every dime and make sure deposits clear before expenses are paid. You're forced to buy cheap things that don't last instead of quality things that are less expensive long-term. The slightest mistake in timing deposits/expenses with the resulting fees, or the smallest unexpected expense, throws you back into "Not enough"
- Just enough: basically the same as Barely enough, but you've got a little leeway on the cash flow timing and sometimes you can spend more on quality.
- More than enough: You can set up automated payments for regular expenses, and no longer have to worry about cash flow timing. That's a HUGE stress reduction. You're building savings for unexpected expenses.
- You have enough saved up that you don’t have to care about unexpected medical bills, car repairs etc in the thousands of dollars.
- You can pay for vacations and other unique experiences.
- You can move to nicer neighborhoods, send your kids to nicer schools.
- You can offload stress and inconveniences to others. Hire chefs, nannies, personal assistants, fly first class or private.
- You get to a stage where your money is making more money than most people’s net worth just by sitting around, and “work” is something you do for fun and fulfillment rather than survival.
People are kidding themselves if they think each successive stage of wealth doesn’t also come with more happiness. Yes they might be diminishing returns, but they are returns nonetheless.
- You have enough saved up that you could weather out a significant period of no work, after getting laid off. Enough that you can just walk away from a toxic environment while feeling comfortable. Maybe you can afford to take a risk and spin that side project you've been dreaming about into its own company.
I might be salty...
1. People whose source of revenue forces them to be in the public eye
2. Are so fabulously wealthy that it forces them into the public eye
3. People who display their wealth in a garish and opulent manner
The sweet spot for happiness appears to be ~$50- 100mil without any profile while living in a way that is not (surface level) opulent.
At this point your money buys you a few things:
1. You can take care of the people you care about, not just your nuclear family
2. You can free yourself from most daily chores
3. You have freedom to do what you want, most experiences you want are affordable
4. You can finance some causes you care about at a local or societal level (the latter tends to be more rewarding)
5. You can still make friends with regular folks because it's not obvious just how much money you have
6. You are free of most long term financial worries.
- Start a business that's successful, generates significant profit, but doesn't become public
- Make a series of amazing investment decisions (in other words, take high risk and get lucky)
- Exit a startup for an undisclosed sum (lots of acquisitions never disclose the price)
Even then, I'd imagine your closest friends will learn of your wealth at some point. Still seems like the best possible option though.
A lot of people might choose to legally incorporate as an individual, and pay themselves a salary, if their company has reserves to pay them the salary indefinitely they are essentially set for life while technically never wealthy enough to suffer some of the consequences of people knowing you're that wealthy
One thing I've definitely noticed is the more you earn the more you seem to get for free.
- The ones who work for the bigger companies / multinational get complimentary private healthcare, additional to the state owned one. So they have shorter wait times and usually pay about 80% for healthcare than those without the benefit. I know some that work for international organizations that even have 0% copay insurance coverage valid worldwide.
- Those who have good credit record or higher credit limits. If they happen to run out for money before the end of the month. They can pay interest free with their credit cards as long as they pay back within the next month. And even if they pay back later, their interest rates are 1/4th of those with lower credit records or lower credit limits.
- Those with middle salaries, and stable jobs, can get a short term loan from their bank directly easiliy. There's interest payment but it's not that bad. But those with unstable incomes don't have any other option but to use the most expensive lenders.
- Higher paid jobs usually get complimentary phones and generous data plans from their employers, so they don't need to worry about buying or paying for their phones. If it gets lost or stolen then it gets replaced by their employer. On the other hand others have get second hand phones and pay them with their own money.
- Those with lower incomes can go on vacation to a nearby city or a nearby country. While those with higher income tend to travel at a vary discounted rate using frequent flyer miles.
Well definitely, as can be seen because the richest man in the world does not appear to be the happiest man in the world. Within reason, I'd say more freedom = more happiness, and money is a tool for getting more freedom.
> The relationship between money and happiness is surprisingly weak, which may stem in part from the way people spend it. Drawing on empirical research, we propose eight principles designed to help consumers get more happiness for their money. Specifically, we suggest that consumers should (1) buy more experiences and fewer material goods; (2) use their money to benefit others rather than themselves; (3) buy many small pleasures rather than fewer large ones; (4) eschew extended warranties and other forms of overpriced insurance; (5) delay consumption; (6) consider how peripheral features of their purchases may affect their day-to-day lives; (7) beware of comparison shopping; and (8) pay close attention to the happiness of others.
[1]: https://scholar.harvard.edu/files/danielgilbert/files/if-mon...
That greater income and wealth have diminishing returns is easily observed, but this idea there’s zero benefit past some threshold was always just innumeracy.
It’s just that people are terrible at understanding curves that look vaguely logarithmic, combined with small sample sizes of people with very high incomes willing to take psychology surveys.
It’s also bc people gravitate towards beliefs that protect their ego, however false they may be. If you’re not wealthy, believing that wealth doesn’t make you happy is very comforting. It’s not so different from how religion is used to cope with life’s suffering.
I think society has changed a bit in terms of network effects and how much you had compared to a fixed group was more significant to both you and them when the original study was done.
Whether or not this idea is wrong is actually besides my point.
My point is that one of the main reasons this idea spread so quickly is because it provides comfort to those who are not wealthy.
It actually seems to say that disvomforts required to earn a lot of money would make you less happy than earning a good amount with less effort and it generally won't make up for more relevant factors in happiness. I.e. an easy tenure would make someone happier than being a law partner earning 4 times more.
But I agree with fairity that a lot of the appeal of this pop-science junk idea "$75k is all you need" was "haha, those rich people aren't actually any happier than me, in fact they're making dumb choices because more money is a dumb thing to pursue".
It's just not true. Much richer people are in fact very likely to be happier than you. Not 100% of the time, because money doesn't solve all human problems, but 10x more money solves a huge fraction of problems for basically everyone, and people who aren't rich are just fooling themselves a lot of the time.
https://www.youtube.com/watch?v=-ra34dUWcmw
More glibly:
"'Money doesn't buy happiness!' Do you live in America...? Because it buys a waverunner. You ever seen a sad person on a waverunner?"
- Daniel Tosh
— Arnold Schwarzenegger
"The correlation between average happiness and log(income) is 0.09 in the experience sampling data, for example, and the difference between the medians of happiness at household incomes of $15,000 and $250,000 is about five points on a 100-point scale. The flattening and accelerating patterns are even smaller modulations of a small effect. However, the emotional effects of other circumstances are also small. KD reported that the effect of an approximately fourfold difference in income is about equal to the effect of being a caregiver, twice as large as the effect of being married, about equal to the effect of a weekend, and less than a third as large as the effect of a headache."
On the other hand when thinking, being solely preoccupied and achieving things only for money's sake eventually leaves one empty, shallow and unhappy. Too much money does change people for the worse, it turns you into a snob if you get carried away in that direction. Plenty of people would be happy if they could make a living and not having to strain themselves or stress out about money matters, all that without needing to be the richest on the block. In that sense when having an unhappy attitude getting hold of a large chunk of money would only temporarily alleviate that unhappiness.
It's really up to your mind to define happiness in a way.
Don't you think I already know what you just wrote?
If you have money, you can go to any restaurant you like and order anything you like and now have to worry. IIRC DHH mentioned something like that happened with him after BaseCamp became popular.
You can avoid waiting in lines. At the airport, instead of waiting in long security lines and crowded terminals, you can buy first class and go through smaller dedicated security lines and wait in a nice lounge. You can even avoid the trip to a crowded airport completely if you fly via private jet.
You can pay someone to clean your home.
All these things buy time and attention. If you use that extra time and attention for something worthwhile - that is up to you
I want to buy and renovate a small chateau fulltime and building a park and greenhouse and stuff.
When I tell this to people most say 'you know this is soooo much work's and I have to correct them that's a lot of fun.
I need a certain amount of money to do so. Otherwise I need to keep working full-time until 60...
On the other hand staying in an expensive resort gets old after a while. Not seeing family gets lonely.
But way too many people in our society struggle anyway
After that I can imagine there to be diminishing returns.
So probably somewhere in the $150k-200k/yr range today.
Not even getting to the part about all the sacrifices I've made to make this money.