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October 20, 2021
“Money doesn’t buy happiness.” For most of my life, I’ve found this idea impossible to justify. Anyone who says a million dollars won’t make them happier must be delusional.
Money gives you more control over your life; the freedom to retire early, the security to support yourself and your family, the comfort of buying things and experiences that excite you, the option of saying “yes” when your friends invite you to dinner...I could go on and on.
So when Yale released its happiness class for free online, I decided to give it a try. The New York Times called it the university’s “most popular class ever” — and the hundreds of people who reported life-changing improvements after taking the class were enough to convince me. Maybe it will change how I spend and think about money, I thought.
The 10-week class, called “The Science of Well-Being,” is taught by Laurie Santos, a professor of psychology and cognitive science. She starts the class by addressing why the things we want in life don’t actually make us happy.
The culprit is a phenomenon called “miswantings,” and it refers to the idea that people sometimes “mispredict” how much they’ll enjoy something in the future.
Santos references several “annoying features of the mind” that influence us to chase after things that don’t really make us happy. Many of the materialistic goals we strive for make little to no lasting impact on our overall life satisfaction, Santos argues. One of the the main misconceptions she addresses is money.
To prove her point, Santos cites a famous 2010 Princeton study. Researchers analyzed the responses of 450,000 Americans who were surveyed about things like their income and whether they were living the best possible life for them. The data showed that while happiness does rise with one’s income, the correlation peaks at about $75,000 per year.
The problem with this study, however, is that it was published nearly a decade ago. Since then, the idea that money doesn’t buy happiness has been disproved by a number of researchers. A 2012 survey by Skandia International’s Wealth Sentiment Monitor, for instance, found the global “happiness income” to be much higher, at $160,000.
And a more recent Harvard study from 2018 suggested that “great wealth does predict greater happiness” — for millionaires. Researchers found “consistent evidence that somewhat higher levels of wealth are not associated with higher well-being, but substantially higher levels (net worth of $8 million or more) are linked to modestly greater well-being.” (While the majority of us aren’t millionaires, there’s still a good amount of data to imply that happiness, to some degree, is tied to money.)
When I asked Santos what she thought of the studies, she replied, “They’re important, but I don’t think they change the message of the class, which is that high wealth has a teeny effect on happiness. The key is that it’s way less than what we predict, and it’s a lot less effective than the other practices we suggest.”
Practices like meditation, gratitude and making time for social connections have the biggest effect on our well-being, she says, adding that they’re much easier to attain than trying to bump past the $10 million mark.
Santos continues: “Money doesn’t increase happiness in the way that we think. Our minds are lying to us about how much of an impact extra cash will have on our happiness.”
Later in the class, Santos interviews Elizabeth Dunn, a happiness researcher and the co-author of “Happy Money.” They discuss why spending money on experiences, rather than things, is what makes us happy.
But don’t things generate experiences? And don’t you need money to buy those things? (The experience of driving down a scenic highway makes me happy, so I’ve spent thousands on a car. The experience of traveling makes me happy, so I’ve spent thousands on tickets — not to mention the hotel, food and sightseeing expenses.)
Santos’ response to my point is, “It depends. If you can be mindful of how the new car feels when you drive it — by taking into account the music, how well it drives and so on — a new car can feel like an experience.”
Okay, that makes a little more sense: It’s more about the trade-off. Money can make me happy if I focus on buying things that generate the same positive experience over and over.
Our minds are lying to us about how much of an impact extra cash will have on our well-being.- Laurie SantosPSYCHOLOGY PROFESSOR, YALE UNIVERSITY
Novel and often short experiences, like an expensive shirt that I’m not going to wear everyday, are less subject to hedonic adaptation. The objective is to keep happiness from fading.
Santos ends the class this way: “So does money really make us happier? Maybe a little bit. Maybe if you’re in the U.S. and you only earn $10,000 a year, then yes, more money would make you happier.” For the rest of us, however, more money won’t make much of a difference.
Overall, the class changed how I think about money, particularly how I spend it and how much I prioritize it. I’m also working on changing my lifestyle and mindset. While there isn’t a single panacea for happiness, what helps the most is taking action where I’m personally deficient.
Santos advised us to experiment with different practices to see what works best. It’s been a few months since I completed the class, and so far, I’ve found these practices and mindset changes to be surprisingly life-changing:
Am I fully convinced that money won’t make me happy? Not entirely. It’ll take a lot of effort on my end, but I’m working on it — and that’s a pretty significant leap if you were to compare Old Dave with New Dave.
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