Thursday, January 25, 2007

People Who Say Money Can’t Buy Happiness . . .

Either don’t know a lot about money or don’t know a lot about happiness.

That has been among my favorite quips for over decade. Yet, how does it jive with the observation by Tyler Cowen and others that the rich aren’t much happier than the rest of us?

Studies of happiness reveal that moving out of poverty does indeed make people happier. However, it’s difficult to separate the happiness of the middle-class from the happiness of the rich. Does this mean that money can’t buy a nicer life after all?

Well, like so many things, it depends. In particular, it depends on what one means by rich. Traditional definitions of rich involve either having a lot of wealth or a lot of income. In particular most studies classify individuals as rich or not based on their yearly income.

Yet, income is not free. It often comes from giving up free time, relationships with family and friends, or work in field that you truly love. A person who chooses to have more time for hobbies or their children is giving up potential income in exchange for these experiences.

In essence they are buying those experiences with lost income. Indeed, time is one of the most expensive things that you can buy and people often appear rich, precisely because they haven’t bought very much free time.

In other words they have tons of money because they didn’t buy happiness. If they had bought happiness they’d have a lot less money left over, and so they wouldn’t show up on our national statistics as rich.

Yet, if by rich we mean having the potential to have a lot of income then I’ll be the rich are certainly happier. Those born into wealth but choosing to spend it providing a comfortable life for their friends and family are probably happy. Those whose natural intelligence, beauty or skill allows them to work only a few hours a day a still command a healthy salary are probably fairly content as well.

Those accidents of fortune are what make people truly rich and spending that fortune on time with family and friends will make them truly happy.


free credit repair said...

people can't buy god, love, family and friends who can make us happy for a lifetime =) thanks for the post. I enjoyed reading it though

Turks and Caicos real estate said...

money really cant buy happiness, infact many rich people end up being lonely, some even leave their money to their dog or cat because this is the only company they have (saddest thing ever!).