Money does buy happiness!

[kcowan]

More money does lead to increased happiness. And there is no ceiling, although it takes progressively more money to obtain a given increment of happiness.

The abstract from a new paper:

What is the relationship between money and well-being? Research distinguishes between two forms of well-being: people’s feelings during the moments of life (experienced well-being) and people’s evaluation of their lives when they pause and reflect (evaluative well-being). Drawing on 1,725,994 experience-sampling reports from 33,391 employed US adults, the present results show that both experienced and evaluative well-being increased linearly with log(income), with an equally steep slope for higher earners as for lower earners. There was no evidence for an experienced well-being plateau above $75,000/y, contrary to some influential past research. There was also no evidence of an income threshold at which experienced and evaluative well-being diverged, suggesting that higher incomes are associated with both feeling better day-to-day and being more satisfied with life overall.

 

[kevink]

Great post, and it reminded me of this new one from Jonathan Clements, in which he debunks both the predetermined happiness set point idea and the one you mention about money not buying incrementally more happiness above a modest income "floor:"

https://humbledollar.com/2021/02/unhappy-results/

 

[garyt]

Like we didn't already know that? All things being equal, of course before somebody says "well what if you're a multi millionaire but a paraplegic?" or something silly like that. Just to not have to worry about bills, surprise or emergency expenses, etc would be enough to make life happier. That doesn't even start into what you can buy and do with more money.

 

[Car-Guy]

More money does lead to increased happiness. And there is no ceiling, although it takes progressively more money to obtain a given increment of happiness.

Well it certainly doesn't hurt IMO. YMMV


From my POV, it's something that just about everyone wants more of. Although I'll admit that I'd need 3 or 4 times my current NW to have any significant positive effect on my lifestyle at this point...

 

[Nemo2]

".....all the happiness in the world can't buy you money" - Toby Keith.

 

[NW-Bound]

More money does lead to increased happiness. And there is no ceiling, although it takes progressively more money to obtain a given increment of happiness.

... both experienced and evaluative well-being increased linearly with log(income), with an equally steep slope for higher earners as for lower earners

Note the log scale.

To get the same happiness increase that you get when going from $100K to $1M, you will need $10M once you have attained the $1M level.

 

[scrabbler1]

It wasn't for me the amount of income but the amount of wealth which allowed me to buy my way out of the bad things in my everyday life - meaning, the work but more importantly, the commute which I so despised. Once I could replace my (part-time) wage income with investment income, the job and its terrible commute went bye-bye.

 

[NW-Bound]

Note the log scale.

To get the same happiness increase that you get when going from $100K to $1M, you will need $10M once you have attained the $1M level.

I forgot to add that an obvious corollary from the above observation is that:

"Happiness is more expensive for rich people than it is for the poor" - NW-Bound

 

[Ready]

I’ve never bought into the idea that happiness plateaus at $75K. That seems completely random and unique to each individual. We lived very frugally while working toward FIRE and now that we can afford to splurge on things we are definitely enjoying doing so. And we enjoy not having any stress associated with surprises like needing a new roof or having an unexpected medical bill.

 

[lesjrp]

Well it certainly doesn't hurt IMO. YMMV


From my POV, it's something that just about everyone wants more of. Although I'll admit that I'd need 3 or 4 times my current NW to have any significant positive effect on my lifestyle at this point...

I guess it requires a different amount mental work to even contemplate it. Bam, hypothetically you have four times as much money. Then you have to theoretically, or worse yet (ha ha) literally, spend it. The whole responsibility thing, much less getting over the low spending rut your now in.

 

[tenant13]

Money in itself - if it just piles up and sits there is not going to make most people happy. You need to use it to actually buy yourself that happiness, whatever it means to you. In my case it's freedom to use my time how I see fit.

Interestingly, that all got upended by Covid. No amount of money will let me travel the way I used to: vagabonding across borders with barely any plan. So anecdotally, it's definitely true that more money (and my portfolio grew by by more than 30% last year) does not translate into more happiness.

 

[Amethyst]

LOL

".....all the happiness in the world can't buy you money" - Toby Keith.

 

[flyingaway]

It will be very stressful when you don't have enough money.

 

[RunningBum]

It wasn't for me the amount of income but the amount of wealth which allowed me to buy my way out of the bad things in my everyday life - meaning, the work but more importantly, the commute which I so despised. Once I could replace my (part-time) wage income with investment income, the job and its terrible commute went bye-bye.

Yep. Having enough money to ER bought me time, and also avoiding doing work I disliked, and people I didn't want to deal with.

It will be very stressful when you don't have enough money.

This too. I think the reduction of stress may be the biggest benefit.

 

[Car-Guy]

hypothetically you have four times as much money. Then you have to theoretically, or worse yet (ha ha) literally, spend it. The whole responsibility thing, much less getting over the low spending rut your now in.

Not the point I was trying to make... Trust me, I'm not in a low spending rut myself... Many here "may be by choice or circumstances", but not me... But I guess if Bill Gates (or his circle of friends) knew me they'd say I was living in poverty.

 

[Sojourner]

Once I could replace my (part-time) wage income with investment income, the job and its terrible commute went bye-bye.

This is a good example of how incremental increases in wealth can and often do lead to more happiness. Extra wealth gives us the ability to easily erase annoying, uncomfortable, painful things from our lives and replace them with better things. For example, if I'm into the RV lifestyle but only have an old, beaten up, small RV that needs constant maintenance and causes me nearly daily aggravation, being able to (easily) afford a new, larger, luxurious RV is undoubtedly going to make me happier overall. It makes sense to me that you could extrapolate these kinds of "life upgrades" all the way up the net-worth/income scale, with almost no limit.

 

[W2R]

Note the log scale.

To get the same happiness increase that you get when going from $100K to $1M, you will need $10M once you have attained the $1M level.

Good point. An unexpected $1000 would have put me on Cloud Nine back when I was starting out and fairly poor. Now that my circumstances have changed, it would barely be a blip on the radar for me.

I do speculate that at some point, the hassle of dealing with, investing, paying taxes on, and otherwise handling a bunch more money than what I presently have could become more of a hassle than it's worth. But I haven't got there QUITE yet....

 

[finnski1]

Good point. An unexpected $1000 would have put me on Cloud Nine back when I was starting out and fairly poor. Now that my circumstances have changed, it would barely be a blip on the radar for me.

I do speculate that at some point, the hassle of dealing with, investing, paying taxes on, and otherwise handling a bunch more money than what I presently have could become more of a hassle than it's worth. But I haven't got there QUITE yet....

I haven't either but am willing to take one for the team and try it.

 

[W2R]

I haven't either but am willing to take one for the team and try it.

Well OK then! You go first.

I'd rather just enjoy my fairly uneventful and mundane retirement, and nap every afternoon instead of spending any more time messing with financial stuff.

 

[garyt]

Money in itself - if it just piles up and sits there is not going to make most people happy. You need to use it to actually buy yourself that happiness, whatever it means to you. In my case it's freedom to use my time how I see fit.

Interestingly, that all got upended by Covid. No amount of money will let me travel the way I used to: vagabonding across borders with barely any plan. So anecdotally, it's definitely true that more money (and my portfolio grew by by more than 30% last year) does not translate into more happiness.

Apples to oranges. Your money is still buying you more happiness during covid than the guy who lost his job and maybe his house because of covid

 

[NW-Bound]

Good point. An unexpected $1000 would have put me on Cloud Nine back when I was starting out and fairly poor. Now that my circumstances have changed, it would barely be a blip on the radar for me.

I do speculate that at some point, the hassle of dealing with, investing, paying taxes on, and otherwise handling a bunch more money than what I presently have could become more of a hassle than it's worth. But I haven't got there QUITE yet....

It's true that $1K is not a big deal. You need to get a lot of them to make a difference.

I still like to make money, even though I have no immediate need for it.

Active investing is a fun pastime to me. Why, last year, I made $300K from collecting premium off options that I sold. This year, I already made $50K YTD. And these are in addition to the stock gains.

Call me scrooge, but I like to make money.

I already get my wife to agree that when international travel resumes, we will be flying business class exclusively. Other than that, I have no other plans for the money.

 

[Sunset]

Good point. An unexpected $1000 would have put me on Cloud Nine back when I was starting out and fairly poor. Now that my circumstances have changed, it would barely be a blip on the radar for me.

I do speculate that at some point, the hassle of dealing with, investing, paying taxes on, and otherwise handling a bunch more money than what I presently have could become more of a hassle than it's worth. But I haven't got there QUITE yet....

I remember when I opened a savings account by walking to the bank, because they gave out a free ski ticket that normally cost $10 back then.

Now I won't bother to do mouse clicks to open an account unless they give me $250 or more.

As for the hassle of more money, that is non-existant, just hire someone to do it for you, an actual reduction of hassle.

 

[finnski1]

Well OK then! You go first.

I'd rather just enjoy my fairly uneventful and mundane retirement, and nap every afternoon instead of spending any more time messing with financial stuff.

In order for that to happen I would need a Go Fund Me campaign from all the fine folks on here to raise another million or two to my accounts.
Thank you all in advance. I'm much happier already.

 

[brett]

There is definitely a point of diminishing returns based upon your lifestyle and financial situation.

 

[NW-Bound]

And while trying to beat last year's gain on the market, I spend a lot of time and effort to improve my DIY solar storage system, trying to see if I can reduce my power consumption off the grid by a few more kWh. Each kWh costs a few dimes at most.

See, I don't do everything for money. Some, I do for pure fun.