"Does Money Buy Happiness?"

I recently gave a brief speech on happiness that I based on this post from May. Here is the text:

"Does Money Buy Happiness?"

If you won $300 million dollars, would you be happy? How about over the long-haul? You could do what you want, buy what you want, and never have to work again? You’d be happy forever, right?

It turns out that if the above resulted in a big boost of long-term happiness, you will have beaten the odds in more ways than one. Most lottery winners don’t end up happier over the long-term. Studies of winners show that happiness levels typically return to where they were prior to receiving the jackpot. Some, like Jack Whittaker who woke up on Christmas morning in 2002 and learned he had won the $315 million Powerball, end-up in a much worse position happiness-wise. Jack has even publicly wished he’d never won the darn thing.

Does this surprise you?

You’re not alone. Scientists, psychologists, and economists have all descended on the field of happiness research and something called “positive psychology”—the study of what makes us glad to be alive. In the past few decades we’ve learned a lot about what does and doesn’t give us joy.

Let’s look at winning a big jackpot.

Of course you can experience an immediate boost of happiness with a large influx of cash. You can buy some things you always wanted and do some things you had always dreamed of doing. You’ll feel better for awhile, but odds are not forever.

Why? 2 key reasons according to researchers.

First, people get more satisfaction by earning their cash than winning it.

This might sound like something your dad used to say to get you to do chores for your allowance. However Emory University researchers have measured brain activity of subjects as they received money either for doing nothing or for working for it. The brains of those who had to work for their money were significantly more stimulated and for a prolonged period of time. The “pleasure factor” registered by those who did not have to work for their money was minimal and short-lived.

Observations of the second and third generations of successful entrepreneurs often uncover more depression, substance abuse and marital discord than the general population despite of the great wealth they have inherited.

The second reason that money doesn’t buy long-term happiness is something called "hedonic adaptation,” a scientific term that means as humans we automatically adapt to improved surroundings. It generally takes about 6 months for things to no longer seem special. A bigger house or a nicer car ultimately becomes our baseline and they seem normal, not special. We might work hard to get something nicer or bigger to get another boost but that then becomes our new baseline. It becomes a never-ending treadmill.

If all of this is simply too counter-intuitive for you to accept, listen to the following real world statistics published in peer-reviewed, academic journals:

While Americans' personal income has increased more than 250% over the last fifty years, our happiness level has remained essentially flat.

Also, despite what you might think, Americans earning more that $10 million annually are only marginally happier than average Americans.

So what gives us long-term happiness?

Contemporary understanding of happiness believes that much of our outlook is set by genetics (this is called happiness "set point"). Surprisingly life circumstances (including health, income, race, sex, intelligence, height, weight, and nationality) generally play a smallish role. In fact studies of traffic accident victims, who had 2 or more limbs have found that they ultimately returned to their baseline happiness level despite their lasting injuries.

As much of happiness is set by genetics or life circumstances there is a lot of room to improve your chances to experience the type of life that we all hope for. This is the part of happiness that is up to you.

But don’t plan on using money to accomplish this. Money can't buy the things that make us most happy—including our feeling of purpose in life or our relationships with friends and family. Ironically, too much money can hurt both these.

The message to take home is that your happiness is your responsibility and you can’t buy it. Good luck on your journey.