The wisdom of the ages insists that money can't buy happiness. At the same time, having to count every penny is stressful and often outright misery inducing, so clearly money can buy some level of life improvement. But how much? And when does chasing another dollar just make you a workaholic?
The relationship between money and happiness is obviously complicated. Can recent research help untangle the truth about when financial ambition is sensible and when it's unhealthy? It's an important question, after all. Most of us are chasing a higher income on the theory it'll improve our happiness and the well-being of our loved ones. If that extra money won't have an impact, then why not just go fishing (or read a book, take a nap, go out for a date night, etc.)?
Thankfully, for those looking to find the perfect balance between ambition and enjoyment, a host of economists and others are hard at work trying to untangle this thorny (and personal) question. Site 80,000 Hours, which is dedicated to helping people make rational decisions about how best to spend their professional lives, recently rounded up the latest, fascinating findings. Check out the long article for all the details, but here are the basics.
1. Money can buy (some) life satisfaction.
The Beatles might have been right that money can't buy you love, but economists have pretty well determined that when it comes to broad measures of overall life satisfaction, the more well off you are, the more likely you are to be content with your lot. "Recent surveys of hundreds of thousands of people, in over 150 countries, show that richer people report being more satisfied with their lives overall," sums up the post.
However, it's worth noting that as you get richer, the more money it takes to lift your spirits. If you're living on a dollar a day, another dollar will make you ecstatic. If you are making $50,000 a year, doubling your salary will barely move the needle, so don't take this overall correlation as a scientific endorsement for unbridled financial ambition.
2. Happiness? Maybe not so much.
While more money seems to go hand in hand with more life satisfaction, moment-to-moment happiness is a different matter. Of course, money can help put you in a fleeting good mood (hello, lovely glass of wine or relaxing beach vacation!). But the relationship between earnings and daily happiness levels is much weaker than the connection between money and the broader measure of "life satisfaction."
Why? Perhaps because outlook and immediate circumstance count so much in regards to happiness. Or maybe it's because those who make more often can choose to spend their time on activities they feel are impactful. Running a business might not make you immediately happy day-to-day in the same way that seeing a friend or eating chocolate will, but it will probably boost your sense of overall life satisfaction.
That's the theory of entrepreneur and author Ben Casnocha, who commented on the 80,000 roundup on his blog (and also gets a hat tip for pointing me to the post). "The actual best part about being super rich, as far as I can tell, is this: You're more likely to feel like you led a life of meaning. You might not be happy all the time or most of the time, but you will feel like your time on this earth counted for something," he writes, offering this example:
"Someone like Meg Whitman can walk the HP campus and see thousands of employees who support their families thanks to employment at HP; she can read stories about the millions of people who use HP products every day to be better at their job. That imbues her life with a sense that her life matters." Rich people in less concrete careers, such as bankers, can write checks to charity to get a similar thrill.
3. There is a "magic" level of income.
The 80,000 post sums up the research like this: "You take the best opportunities to invest in your happiness first, so as you get more money, it becomes harder and harder to buy more happiness. Eventually the effect of additional income of happiness becomes negligible relative to other factors."
So when, scientifically speaking, should you take your foot off the gas in your efforts to earn more? Is there a specific figure? According to the post there is a "magic number," and it might surprise you how low it is.
"If you already earn over $40,000, then you need to gain an extra $40,000 per year just to gain 0.5 on a 10-point scale of life satisfaction. You can expect little if any noticeable effect on day-to-day happiness, stress, or sadness. That's a lot of income for a limited gain," claims the post.
If that $40,000 a year magic number sounds quite low to you, note that there are several really huge caveats to consider. That's for a single person living somewhere with an average cost of living. If you've got kids or call San Francisco or New York home, you're going to have to adjust that figure significantly upward.
Nonetheless, the essential takeaway of the research is clear, the post insists. There are plenty of good reasons to keep working hard after you've reached a moderate yet comfortable level of income -- maybe you genuinely enjoy your career, maybe you're building something you value for non-monetary reasons, maybe you're trying to earn two or more years of income now so you can travel or otherwise kick back later, but in general, "once you're earning above about $40,000, don't focus on earning more money." Instead, focus on fulfillment.
Do you buy 80,000 Hours argument that above this level of income more money won't make you happier?