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Money = Happiness? NOT!
July 3, 2006 3:36 PM

An interesting article in the Washington Post today entitled, Science Confirms: You Really Can't Buy Happiness, is a fascinating synopsis of some of the studies that have been conducted on the effect an increase in financial wealth has on well-being and happiness.

For instance:

A wealth of data in recent decades has shown that once personal wealth exceeds about $12,000 a year, more money produces virtually no increase in life satisfaction. From 1958 to 1987, for example, income in Japan grew fivefold, but researchers could find no corresponding increase in happiness.

In part, said Richard Layard of the London School of Economics, who has studied the phenomenon closely, people feel wealthy by comparing themselves with others. When incomes rise across a nation, people's relative status does not change.

And this:

Another big psychological factor is habituation: Dramatically changing one's wealth does create happiness, but it will last only until people get used to their newfound status, which can be a matter of months or a couple of years at most.

Finally:

"The effect of income on life satisfaction seems to be transient," the researchers added. "We argue that people exaggerate the contribution of income to happiness because they focus, in part, on conventional achievements when evaluating their lives and the lives of others."

Wow. Let's pause a moment to let all priests, nuns and anarchists take a bow and say, "I told you so!"

"People grossly exaggerate the impact that higher incomes would have on their subjective well-being," said Alan Krueger, a professor of economics and public affairs at Princeton University and an author of the study.

So, basically, it's incumbent upon us to focus on the non-financial aspects of our lives: health, family, friends, and society.

Feel free to add your thoughts!

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