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Old 02-02-2011, 02:32 PM   #21
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This is very simple. If money never figures into your decision making, or into your perception of lifetime security, then more money would perhaps not make you happier.

If it does, more money will likely make you happier, or at least less stressed.

But if money never figured into your perceptions and decisions, you wouldn't be here obsessing on this board.

Comparing a well-off 55 year old with a mostly penniless 21 year old really doesn't prove much, except that for most of us, youth trumps money.

Another "Who knew?" moment.

Ha
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Old 02-02-2011, 03:18 PM   #22
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I suspect that if you could graph this you would see up to a point every dollar more you had would make you a little happier, up to a point. At some point the curve decreases or possibly goes down. I also suspect that each persons curve is different. I think most of this board would consider themselves happy, at least those that have reached FI, and those that have RE'd even more. Money has something to do with that.

For me, money does not make me happy but being FI, i.e. having enough money, allows me to do the things that make me happy. However, just having money, or being FI does not guarantee you happiness. However, IMHO, it is impossible to to achieve long term happiness without having the means to support it.
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Old 02-02-2011, 03:20 PM   #23
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Pretty happy with what I've got. A few million may put a bigger grin on my mug. Any givers to see if it will work?
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Old 02-02-2011, 03:33 PM   #24
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I think Wharton might have a slight bias, being a Business School and all. But as an earlier posted noted, it is all about Maslow's Hierarchy of needs. If your basic needs are not being met, you will not be happy. Once the basic needs of food, shelter and security are met, a lot of the other needs are non monetarily driven (with maybe the exception of esteem....at least in our society).
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Old 02-02-2011, 03:35 PM   #25
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If money never figures into your decision making, or into your perception of lifetime security, then more money would perhaps not make you happier.
This is really the crux of the issue IMO. Absolutely spot on.

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Comparing a well off 55 year old with a mostly penniless 21 year old really doesn't prove much, except that for most of us, youth trumps money.
I'd say the penniless 21-yr-old is happier because he has no house payment, no car payment, no tax issues, no neighbor-envy, no nasty commute, no unbearable j*b that he can't leave.

There's something very wrong or incomplete in the study. I've spent time in 35+ countries and lived in a few, and there is no way that citizens of the highest-GDP countries are the happiest people on Earth. Not even close. It's a fiction we tell ourselves to avoid blowing our brains out on Monday morning.
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Old 02-02-2011, 03:42 PM   #26
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Allow me to give you my version:

While having money in and of itself does not ensure happiness it sure helps in the pursuit of pleasure.
And I would guess pleasure is temporary happiness?
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Old 02-02-2011, 03:55 PM   #27
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Old 02-02-2011, 04:05 PM   #28
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Newer research I have seen breaks happiness into two separate parts. The first being general happiness which stays about the same as long as you are not struggling with poverty. That's consistent with the article. However the other part, perhaps called life satisfaction, does indeed go up moderately with income.

Money can buy one form of happiness, massive global study concludes

Evidently the life satisfaction part of happiness does indeed go up with wealth.
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Old 02-02-2011, 05:37 PM   #29
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Kind of like "Blessed are the meek, for they shall inherit the earth." Or, "It is easier for a camel to pass through the eye of a needle than for a rich man to enter into the Kingdom of God".

Come to think of it, these say nothing about the fate of a rich, but meek, woman. If she can be found.

Ha
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Old 02-02-2011, 06:08 PM   #30
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Let's revisit this.

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So they find the trifecta -
1) You're happier if you have more than your neighbors, and
2) You're happier if you have more on an absolute level, and
3) You're happier if you have more than you did some years ago.
1) "Neighbors" can be in the broad sense, and not the guys next door. It also means the environment or the society that one lives in. I am sure that while many of us say that we are or would be happy with a small 1200 sq.ft. home, most sub-Saharan Africans would have their standards a lot lower.

2) Yes, one only needs the basics. But what does that include? Would one be happy without an Internet connection, his or her iSomethings, MP3 players, cable TVs, wireless phones, etc... These are taken for granted now. Yet, one does not have to go back very far to see that even richest people in this world did not enjoy these technologies. How did we suddenly become dependent on that?

3) We always want more things, although we may not admit to it. We bought new electronic toys, cars, and RVs. Even experiences like vacation, travel, or going to concert are still "new" things that we want to keep enjoying this year and the next.
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Old 02-02-2011, 06:27 PM   #31
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Let's revisit this.
2) Yes, one only needs the basics. But what does that include? Would one be happy without an Internet connection, his or her iSomethings, MP3 players, cable TVs, wireless phones, etc... These are taken for granted now. Yet, one does not have to go back very long to see that even richest people in this world do not enjoy these technologies. How did we suddenly become dependent on that?
Many of these things are almost as much trouble- to learn, to use, to keep up, as they are useful in the abstract. But as soon as they are widely adopted by others, I maintain that most of us actually need them, and this has nothing at all to do with keeping up with the Jones'. Instead it has to do with social changes that make them necessary. Last weekend I went out to go to a couple RE open houses, but I forgot my phone. I got to the buildings, and no apt buzzer# was listed- just a phone number to call. The agent was upstairs, knowing that no one would not have a cell phone. Although there was a grocery right next door, no pay phone there. In fact, I can't remember when the last time I saw a pay phone was.

Ditto email, Facebook, etc etc etc. Except for weddings few people send out invitations anymore- Evites instead. No computer, or smart phone- too bad.

A desirable woman can ignore some of this, though few of them are confident enough to do so. The rest of us get them, or miss out. I would even miss out on some of my contact with my granddaughter, if I didn't have a cell phone with me, and a smart phone would be better as they may email or call or usually not both on a spur of the moment thing.

It is very easy to say, we don't need this, we don't need that, and this is true. But not having many of these things will change our lives and the ways that we are able to interface with others. For some that will be just fine. But many others would experience a loss.

In the US, I doubt that 1/100 young adults do not have cell phones, and I would imagine though I am not sure that 1/2 of them have smart phones. At least the employed ones.

Ha
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Old 02-02-2011, 06:30 PM   #32
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Yes, one only needs the basics. But what does that include? Would one be happy without an Internet connection, his or her iSomethings, MP3 players, cable TVs, wireless phones, etc... These are taken for granted now. Yet, one does not have to go back very far to see that even richest people in this world did not enjoy these technologies. How did we suddenly become dependent on that?
The hedonistic treadmill defined.
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Old 02-02-2011, 06:40 PM   #33
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Well I was surprised because other studies have shown that about 10% of our happiness is due to our circumstances (yes, including money). The remaining 90% of an individual's happiness comes from our genetics and intentional activities. Please see an example of such studies here : http://www.trendfollowing.com/whitepaper/happiness.pdf

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It boggles the mind that someone would be surprised that having more money, on average, makes one happier.
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Old 02-02-2011, 06:48 PM   #34
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Greater financial security has made me happier. I don't spend more, but I fear less, and that has made me happier.
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Old 02-02-2011, 07:02 PM   #35
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Greater financial security has made me happier. I don't spend more, but I fear less, and that has made me happier.
Now, that's something I can relate to.

Just fired up Quicken, which said my portfolio set a new high today. It's up 2.8% year to date. Nice!

Now, if I get diagnosed with some disease tomorrow, all the above would not mean anything even if the disease is not terminal. But barring some terrible news like that, I will readily say that seeing my portfolio going up makes me happy. I would not be honest otherwise. It may not be because I plan to use that money for anything. It may be simply because I can pat myself on the back for being a good investor, and that I have picked nice, nice stocks.
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Old 02-02-2011, 07:28 PM   #36
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I think Wharton might have a slight bias, being a Business School and all. But as an earlier posted noted, it is all about Maslow's Hierarchy of needs. If your basic needs are not being met, you will not be happy. Once the basic needs of food, shelter and security are met, a lot of the other needs are non monetarily driven (with maybe the exception of esteem....at least in our society).
I'll torture a car analogy.

I've driven beaters for most of my life and in the 1990s I thought it was a big stretch to pay $8K for a used Ford Taurus wagon. The advantage of driving beaters is that I don't have to clean them, let alone worry about getting the upholstery dirty. Heck, I don't even have to worry about dings in the body panels.

It was my daughter's idea to upgrade to a Prius, not mine, and I approached it with some trepidation. However it supported her initiative, it's about the safest vehicle a teen could hope to handle, and the up-front cost appears to be paying for itself in zero maintenance costs. So I can pretend that it's not much more than a beater. I still don't clean it, worry about the upholstery, or fret about the body panels.

If I was to upgrade to a late-model Mustang or a BMW or a Mercedes or a Jaguar or a Tesla then I'd be overwhelmed with the responsibility and the expense. I don't mean the maintenance-- I mean the gas, the insurance, and the theft concerns. We could devote the resources to pay for it, which I guess means it's technically affordable, but I wouldn't enjoy it. I'd enjoy working one out on a racetrack but otherwise they certainly don't match our values. A Prius is about as far as we feel comfortable stretching the envelope.

If we went from $9M to $10M, my main reaction would be annoyance at having to widen all the columns on the spreadsheet. Then I'd have to figure out how to be a fiduciary custodian of that huge amount of resources... whether that be a personal foundation, a family bank, a generation-skipping trust, or a combination of all three.

So, no, I'm happy when the slope on the hedonic treadmill starts to flatten out, and I don't need to push it into overdrive.
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Old 02-02-2011, 09:00 PM   #37
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Greater financial security has made me happier. I don't spend more, but I fear less, and that has made me happier.
Good point.
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Old 02-02-2011, 09:16 PM   #38
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And I would guess pleasure is temporary happiness?
Agreed. I think of pleasure as being a more short-lived thing often connected to the senses, and happiness as being a more general and longer-lasting feeling of enjoyment and satisfaction.
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Old 02-02-2011, 11:04 PM   #39
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Let's revisit this.

2) Yes, one only needs the basics. But what does that include? Would one be happy without an Internet connection, his or her iSomethings, MP3 players, cable TVs, wireless phones, etc... These are taken for granted now. Yet, one does not have to go back very far to see that even richest people in this world did not enjoy these technologies. How did we suddenly become dependent on that?
The richest a few years back had their own court jesters, their own musicians, chefs, gardens, etc. Much of the arts was sponsored by the rich.

They did OK.

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Old 02-03-2011, 01:17 AM   #40
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Perhaps this thing actually runs in reverse.
WHAT IF a person who is naturally happy, doesn't need "stuff", and winds up gathering money. A naturally sad person tries to fill the hole by buying things, and in the end is broke. In this case, I would be wrong to assume it was money that brought the happiness.
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