The most fundamental question that needs to be answered before discussing the relation between money and happiness is what one means by happiness. Being a complex concept, more so because it involves human feelings that cannot be quantified, happiness is a word that can be understood in many ways, and which resonates with different people in different ways. There is the day-to-day momentary happiness that one gets out of little pleasures, and then there is the general satisfaction - the feeling of emotional well being and contentment with life - which can also be classified as happiness. The former form of happiness may be the one that has more intensity but is short lived, while the latter has more longevity, although a person experiencing this kind of happiness or contentment might not be able to pin point a single moment when he is happy.
Wealth can bring both these kinds of happiness depending on the amount. Money, in large amounts, has the power to buy things that one desires, especially luxurious ones, and fulfill one’s aspirations, leading to immediate happiness. But the happiness dies out very soon as we get used to the object. On the other hand, when a person is able to sustain a comfortable living with all his basic requirements met, with however little amount of wealth he has, he generally tends to be contented with his life, although there might be other reasons for this.
It is quite evident that not having enough money certainly leads to unhappiness - happiness would be the last thing on a person’s mind when he is barely managing to make both ends meet. However, the more important question is, will having more make one happier? The happiness quotient is bound to be higher when one moves from a state of abject poverty to a state of being comfortable and having their needs met; as compared to a transition from an already comfortable life to a little more sophisticated lifestyle. This is because, beyond a certain point, there is no correlation to the wealth and happiness in one’s life. As long as one is leading a comfortable life with access to basic amenities and good education, he can be happy. However, since words like “comfortable” and “needs” are subjective, it depends on the individual what his idea of a satisfactory life would be.
Two professors from the Princeton University - Daniel Kahneman, a Nobel Laureate, and Angus Deaton, conducted a study in 2006 which revealed that there was an increase in the happiness levels of people as their incomes rose to $70,000 a year. The lower a person’s income from this benchmark, the unhappier he would be. However, there was no rise in the happiness levels once the income reached this point, regardless of how rich a person might be from there on. This was due to the fact that people’s evaluations of their lives were based on how much they earned, which in turn, was based on what they felt about how their lives were going because of their income.
Although this study supports the aforementioned point that money and wealth contributed to happiness only up to a certain level, after which there was no correlation between them, the fact that a numerical value has been ascribed to this level, makes this study quite shaky. A person’s idea of a good income depends on his socio-cultural backgrounds, and since this is different for different people, it cannot be measured using a standard, quantitative way. One major fact to be considered while contemplating on people’s conception of a good income is that people tend to compare their wealth to that of others. Many a time, their happiness depends on how well they are keeping up with their colleagues or neighbors. The happiness, in this case, is due to relative wealth.
The Stoic philosopher Seneca believed that wealth should not be pursued for its own sake, as this would make one subservient to it. According to him, one should not get possessed by or get affected by pleasures like wealth, which comes in the way of one’s journey towards a virtuous life. But in a more pragmatic sense, for someone to even say that they are not affected by wealth, they need to be at a certain privileged position. The horrifying feeling of an empty wallet will never let anyone say that they are not affected by money at all.
An analogy can be drawn between this and the life of a student. Even for a student who is an idealist, to say that he does not get affected by the points he scores in the examination and is only interested in the knowledge he gains, would be extremely impractical if he is failing a semester. The confidence to remain unaffected by these things only comes with the realization that they are at a position where they do not have to struggle to keep their life afloat.
Other than this, a person’s conception of the relationship between money and happiness also depends on how he spends his money. If he uses it for the time spent with family, friends or for doing charity, the happiness is bound to last longer as the memories of those experience are long-lasting, as opposed to spending the money on say, gadgets that will bring a momentary pleasure which will die out soon.
There is a correlation between money and happiness, but correlation always does not mean causation. It is not always the case that more wealth means more happiness. Money helps reduce stress and worry in one’s life and hence provides contentment. Although money is extremely important for one’s survival, there are factors other than a high-paying job that contributes towards a person’s overall happiness. The thought of being independent, getting respected, having a loving family and a fulfilling job can be more meaningful and rewarding to someone than a fat pay cheque.