Making Happiness From Money

Adverts showing us products we don’t have but apparently need, stacks of magazines cover the opulent lives of the rich and famous and TV programmes portray celebrity life as if it’s to be aspired and admired.

  • We’re surrounded by a narrative which depicts a life which seems to provide ultimate happiness. No wonder we get sucked into the belief that wealth and material possessions is the key to a happy life …but it this true?

A longitudinal study of lottery winners (Brickman et al.) who won between £50 thousand and £1million showed them to experience less pleasure in everyday life and, after the initial high, their happiness plummets rapidly.
As mentioned in another blog (Happiness & Money: The Truth), the happiness ‘cut off point’ is £6000 per month, after which levels of happiness stop increasing. Other research suggests that an optimal level of income for a happy life seems to be around £3000 per month. It’s postulated that 3 grand a month income provides enough to comfortably cover bills and any unforeseen expenses but crucially not so much that money loses it’s value and we still have to save up to purchase larger items such as a holiday or new car for example.

Saving up to buy what we want provides a sense of achievement which is a key element in the provision of purpose. I.e. purpose of money and the work we do to earn that money. Saving up also includes an element virtuous elements such as patience and learning to delay gratification. 

Even so, there’s clear evidence to suggest that the key to making happiness out of money is what you do with it.

In one experiment, a group of students were given money to spend on themselves and another group to spend on someone else (prosocial spending). Measures of happiness were taken before their shopping spree and at intervals after they had spent the cash. This type of experiment has been replicated to consistently show that buying things for yourself creates an initial happiness spike followed by a rapid fall. Whereas, spending money on someone else produces a significant ‘happiness high’ which continues for days.

It also depends on who you buy your gift for too. The happiness ‘hit’ doesn’t last as long when buying for a family member or loved one when compared to buying for someone less close to you. It’s thought that this is because there’s a level of expectation when buying for someone you love, it’s more common place and perhaps a more frequent or expected random act f kindness. Whereas, when providing an unexpected gift for some one less well known or complete stranger, the happiness hit persists for even longer.

When random strangers were given just a small token for a gift such as paying for their coffee or lottery ticket, follow-ups showed that they were also far more likely to do something kind or compassionate for someone else that same day. It would seem that random acts of kindness has a tendency to spread far beyond the initial act.

Also, money should be spent on experiences too. Numerous studies consistently find that spending money on experiences not only increases the amount of pleasure experienced in life but also provides a much longer-lasting happiness boost in comparison to buying material ‘stuff’.
The question is, why?
Why do we experience longer-lasting happiness from prosocial spending? What is happening within us to produce this effect?
Why is the joy from material possession fleeting in comparison to experiences such as a day out, a meal with friends or a trip to the theatre?

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