The Apparent Conflict between Money and Happiness

One of the most elusive, yet highly coveted elements of existence is happiness. The real mystery is not what attributes and traits are necessary to attain happiness, but instead how to acquire those elements. There appear to be four critical psychological elements for a happy existence: autonomy, competence/achievement, connection and self-esteem. The role of all of these elements in facilitating happiness is understandable. First, autonomy underlies one of the greatest gifts and advantages of human existence, conscious freedom, the ability of an individual to make his/her own choices. It is difficult to believe that a person could be genuinely happy if they are unable to make decisions for themselves. The importance of achievement is self-explanatory as even if one has the freedom to make decisions, if nothing meaningful is accomplished from that freedom there is little reason to have it. Such a conclusion is akin to the Samuel Clemens quote of, “The man who does not read good books has no advantage over the man who cannot read them.” In addition it does not take a psychologist to conclude that when an individual succeeds in his/her endeavors it will create a greater sense of pride and esteem versus those times when an individual fails.

Connection is also rather self-explanatory as humans are very social creatures that tend to shun the darkness and isolation, so finding closeness to other human beings is important on two levels. First, this ‘need’ to be social is derived from an evolutionary origin for the world was once a much more savage and dangerous place for man, thus union of manpower and skills dramatically increased the probability of survival. Clearly if survival is enhanced by these teams of individuals, it would be wise to establish these groups even if there was no original underlying genetic predisposition motivating their formation. While the world may not be as dangerous as it was in the past, formation of groups still generates benefits through breadth of skill acquisition and deployment.

Second, human beings frequently need to associate commonality between those they interact with to motivate and feel comfortable with the interaction. These commonalities may diminish some of the uniqueness and diversity of these associated individuals, but also increases the probability of a positive interaction and reassurance that one is not alone or outcast. Finally typically the more confidence an individual has the happier they will be in life. With the characterization of these key elements the next step is to cultivate methodologies and strategies to isolate and enhance these elements.

When reviewing the four critical elements one methodology that immediately jumps to mind to achieve these elements is to become wealthy. Clearly the more money one has the greater the level of autonomy because the number of available opportunities one can choose from increases with the amount of money one has available. Society has determined in a mass-scale approval that the accumulation of wealth is a significant accomplishment that should be aspired to, thus the acquisition of wealth can be viewed as a significant accomplishment potentially validating one’s existence. In addition money should also improve the aspect of connection for the greater number of opportunities an individual can partake in, the greater the level of interaction one can have with different individuals creating more and deeper relationships with other people. Finally self-esteem should be considerably larger in people with significant wealth than those without significant wealth both as a measure of accomplishment, as mentioned above, and as a measure of self-importance as unfortunately in our society the more money an individual has the more importance they are given.

Remarkably, numerous studies reveal that this logical conclusion with regards to the relationship between happiness and money is not correct, at least to a certain extent. Most studies that attempt to correlate wealth and happiness reveal that once a certain ceiling threshold is attained, usually an annual amount of 40,000 - 50,000 dollars, there is little increase in happiness as wealth continues to rise. 1-5 So where is the breakdown between the theory that predicts a corresponding increase in happiness with relation to an increase in wealth and the polling studies that indicate happiness leveling off after a certain point regardless of the amount of wealth acquired?

Four reasonable theories jump to mind to explain this apparent contradiction. First, as individuals gain money they are unwilling or unable to utilize the money to enhance the defined elements that increase their overall happiness. This failure could occur because they do not necessarily know about the elements that drive happiness or they do not know how to correlate those elements to their greater amount of wealth. Therefore, they become the individual that elects not to read good books despite having the ability to read at a college level.

Second, there is an increase in negative behavior and events associated with greater wealth that acts as a counterbalance to the happiness enhancement effects. The increase in negative events is not something to be immediately dismissed because one could attest to an increase in stress with an increase in funds due to a greater sense of responsibility to properly distribute the resources among family members and acquaintances who may request funds. Such a situation can be stressful, but the money belongs to the individual and the final say for the distribution of such funds is that person’s alone and as long as a logical and rational reason exists to support whatever decision made there is no reason to stress over the outcome or how relatives will respond to the decision. An addendum to this negative interaction would be high profile wealth would become a larger target of crime increasing stress through the need for higher levels of security and/or bodyguards.

Third, the polling information could simply be misrepresented in that individuals of a lower wealth standing are mischaracterizing or lying about their total levels of happiness and in reality are more unhappy than what they indicate in this polling information. If this were the case then there would be a larger proportional increase in happiness corresponding to an increase in wealth, thus creating a stronger connection in wealth increasing happiness.

Fourth, while wealth may open the doors of opportunity, the relative system of evaluation primarily used by humans to make judgments on their environment acts as a negative catalyst with regards to money and happiness. The unfortunately reality is that humans judge themselves not on the bases of what they have accomplished, but on what they have accomplished relative to other humans. Such an evaluation system fuels the ego and inherently creates division among humans of unequal standing. Therefore, as one gains wealth one moves further away from the number of meaningful interactions that can be had with other individuals. It is difficult to enjoy an opportunity involving people when one believes he/herself to be superior to others participating in it, thus the human interaction elements of the opportunity flips from positive to negative. Individuals also seem to not savor a reward when given the knowledge that another has also received a similar award.6-9

This monetary ‘betterment’ mindset has been demonstrated both on small empirical scale, with individuals becoming less compassionate after handling money,10 and large empirical scale as the more wealth an individual has the less charitable that individual will be.11 Also the wealth of opportunities available to wealthy individuals may reduce the overall meaning in a given experience, a malaise mindset of ‘that’s all’ could take over. Basically the more extravagant opportunities that become available to wealthy individuals reduces the meaning of the less extravagant opportunities. Unfortunately for wealthy individuals their lives are far more populated by non-extravagant opportunities than extravagant ones. Sadly the wealthy may attempt to change these ratios by gorging themselves on extravagant opportunities, actions that not only cheapen the novelty of the opportunity, but also further push them away from a majority of other individual interactions leaving these wealthy individuals only the opportunity to interaction with very like-minded individuals.

A side question regarding these surveys and studies is the issue of missing linkers in occupational responsibility. Some believe that these happiness studies do not take into consideration the trade-offs involved for jobs with high salaries such as working hours, time spent away from family and loved ones, time spent commuting to and from work, etc. These additional responsibilities increase stress and decrease happiness which may counter-act increases in happiness that stem from the higher salary.

This explanation may have been valid in the past before the era of computers and Internet, but with the way income is distributed in present day it is difficult to view these ‘responsibilities’ as a significant negative component to happiness versus those with lower paying jobs. Modern day specialization has increased efficiency increasing production of the modern higher-salary worker. Unfortunately for most of them that additional efficiency has not been proportionally rewarded through an increase in salary due to the corporate structure.

The simple fact is ask who has more stress in their job individual A who works 2 jobs spanning a 16-hour day just to be able to eat or individual B who works on Wall Street and the answer is rather obvious. One could make the argument that the only jobs that still fit the above description regarding high work with high salary are general practitioners in the medical field and ER doctors because of the large number of patients that need to been seen with a wide variety of diagnostic demands. Incidentally it is not surprising then that there are shortages in these two particular professions.

Other studies seem to support the notion of happiness to human interaction in that when individuals are given the opportunity to redistribute a monetary prize to another person those that do report a higher rate of happiness.12 However, if such an outcome were to suggest correlation between giving money to others and happiness three possible conclusions can be drawn. First, giving away the prize money does indeed accomplish a psychological shift bringing the awarder and the awardee closer together increasing social closeness/connection resulting in greater happiness. Second, there is no real change in social closeness, but instead losing the money reduces the ability of the awarder to partake in some of the more socially isolating opportunities that wealthy individuals have available to them, thus avoiding the lose of sensitivity to the joy elements of less monetary dependent activities. Third, awarding the prize bolsters the ego of the awarder with the mindset of viewing him/herself as being better than the awardee (because he had the ability to give up the money), thus increasing self-worth and happiness.

Sadly based on above discussion the reality of option three being the primary explanation for this increased happiness associated with giving money more than likely increases proportionally to income. This rationality may be part of the reason that wealthy individuals donate so little relative income to charity in that charitable giving is only seen through the scope of ego and most wealthy individuals already view themselves as better than less wealthy individuals, thus there is no reason to ‘confirm’ that belief by giving money to charity.

Overall when looking at the situation objectively the theory that greater wealth begets greater happiness is actually quite sound. Therefore, if people are not happier when acquiring greater wealth they are consciously sabotaging themselves by either generating artificial stresses or not properly utilizing their money to expand and enhance the key attributes of happiness. So apparently the real key to happiness is to be a saboteur instead embracing specific characteristics of uniqueness, strength and conscious freedom in order to capture these happiness elements.

Citations:

1. Diener, E, and Biswas-Diener, R. “Will money increase subjective well-being?” Social Indicators Research. 2002. 57(2): 119-169.

2. Layard, R, Mayraz, G, and Nickell, S. “The marginal utility of income.” Journal of Public
Economics. 2008. 92(8): 1846-1857.

3. Campbell, A, Converse, P. and Rodgers, W. The Quality of American Life:Perceptions, Evaluations, and Satisfactions. 1976. New York: Russell Sage Foundation.

4. Diener, E, et Al. “Subjective well-being: three decades of progress.” Psychological Bulletin. 1999. 125: 276-302.

5. Headey, B, and Wearing, A. Understanding Happiness: A Theory of Subjective Well-Being. 1992. Melbourne: Longman Cheshire.

6. McBride, M. “Relative-income effects on subjective well-being in the cross-section.” Journal of Economic Behavior and Organization. 2001. 45: 251-278.

7. Stutzer, A. “The role of income aspirations in individual happiness.” Journal of Economic Behavior and Organization. 2004. 54(1): 89-109.

8. Ferrer-i-Carbonell, A. “Income and well-being: an empirical analysis of the comparison income effect.” Journal of Public Economics. 2005. 89: 997-1019.

9. Knight, J, Song, L, and Gunatilaka, R. “Subjective Well-being and its Determinants in Rural China.” China Economic Review. 2009. 20(4): 635-649.

10. Quoidbach, J. “Money Giveth, Money Taketh Away: The Dual Effect of Wealth on Happiness.” Psychological Science. 2010. doi: 10.1177/0956797610371963 .

11. Vohs, K, et Al. “The Psychological Consequences of Money.” Science. 2006. 314: 1154-1156.

12. Dunn, E, et Al. “Spending Money on Others Promotes Happiness.” Science. 2008. 319: 1687.

A Qualitative Analysis about Depression - Part 1

Currently anti-depressant medication is the most prescribed class of drug being taken by the American public outpacing drugs for heart conditions, cholesterol and even high blood pressure. The pertinent question then is what are people so depressed about, what in their lives is so bad that they have to take drugs to neutralize their ill feelings? Overall depression can arise from one of two causes, psychological or physiological, so the first order of business in this situation is to categorize the origin of the depression from these two avenues. Physiological mechanisms for depression will be discussed at a future time. This post will address psychological depression.

An initial mindset towards psychological depression is that it is self-induced. Such a statement makes rational sense because psychological depression occurs in those of sound mind, otherwise the depression is physiological (there is some form of abnormal brain function that induces depression). Therefore, regardless of whether or not the depression stems from general feelings or a particular event, it is in the control of the individual to neutralize any psychological depression. One of the big presumptions that foster depression is the present existence of obstacles that prevent individuals from undertaking tasks that promote happiness. Although at first glance such a statement seems to make perfect sense, many studies have been conducted which conclude that after a certain threshold point of annual earnings, usually $40,000 – $50,000, money no longer promotes happiness. Basically, more money does not increase happiness.

The interesting question is why exactly does money not seem to augment happiness to a more reasonable threshold of $500,000+? First things first, assume that these studies were not flawed in a way that eliminates their validity. An individual with greater financial resources can participate in a wider variety of opportunities allowing this individual a higher probability to engage in experiences that are fulfilling or rewarding. Basically, the individual has more choice. It seems rational to suggest that participation in fulfilling or rewarding experiences should increase the level of short-term happiness and possibly long-term happiness of an individual. So if more money increases the number of fulfilling or rewarding experiences one can undertake, why do studies contradict this basic reasonable conclusion?

One issue is the paralyzing nature of choice. When options are manageable, for instance 6 different types of computers, have the power of choice derived from wealth is a blessing. However, when possible options increase substantially, instead of 6 what if there were 34 different types of computers, then experts believe choice becomes a burden. One recalls the famous example of the donkey. A donkey is equal distance between two identical bales of hay. Without any distinguishing characteristics to dictate the decision making process, the donkey is unable to decide which bale to eat from and dies of starvation.

The sad fact of the matter is that the paralysis is silly. There is no difference between the bales, thus it does not matter which bale the donkey selects. The same goes for those with money. Money is a fantastic safety net in that even if an individual chooses poorly amongst all of the available options, that poor choice is better nullified by the remaining excess wealth that the individual possesses. So what if the millionaire purchases the wrong type of car, the purchase can simply be recorded as a failure, identify why and a new purchase of another car can be made that better fits the individual’s desires. Thus the problem is not money, but how people interact and view money.

Others would argue that the more financial resources an individual has the greater number of problems that person could come to experience as well. However, such a conclusion does not seem to hold water in that if an individual finds him/herself with more problems solely due to having more money it is the fault of that individual. For example there is no rule that an individual has to demonstrate a certain level of wealth through the purchase of a specific number of tangible elements or that character or personality automatically changes corresponding to a specific amount of wealth. In addition a person does not lose the ability to think rationally or decline certain opportunities after a certain level of financial worth is attained.

Realistically the only thing that really changes for certain in an individual's life with the acquisition of greater financial resources is the number of available opportunities and the level of personal freedom for that individual. That said, there is one problem that can be directly attributed to having excess capital, the appearance of individuals who intend to swindle or beg for money. However, despite this problem for the most part problems with ‘too much money’ arise from the fact that people make bad decisions with money. Whether or not bad decision-making should be considered when relating available capital to happiness is a question for the psychological experts, but how can money, an inanimate object with no ability to reason, be blamed for poor decisions. The fact is that even those bad decisions are muted in their severity for those with money as described above.

A possible counter-argument to the above analysis is that certain problems do not exist for an individual until reaching a certain minimum level of wealth. Some may relate such a statement to living longer because although in theory living longer is great, the longer one lives the greater the probability that certain degenerative neurological conditions arise, problems that tend not to exist for those of a younger age. These problems strip value from those additional years in that although living is better than not living, the additional years are not as joyful or productive as past years. However, such a comparison only works if one allows money to control one’s life. For example one does not need to change personality or behavior when acquiring greater wealth. An individual's personality and decision-making are the controllable and primary elements that determine the types of problems that arise due to the new found wealth unlike the currently uncontrollable degradation of telomeres and free-radical production which largely influence aging and the corresponding neurological conditions.

Now it is true that the probability that unscrupulous individuals seeking to acquire wealth through deceit or intimidation targeting a particular individual will increase with increasing financial wealth. Unfortunately such things may occur even if the individual does not change his/her behavior, but these events are unlikely and there are steps to protect from and remedy these situations. For instance if one does not flaunt wealth then the probability that these unscrupulous individuals will accost that individual will be quite low. In addition, there are legal steps that can be taken to eliminate these individuals from continuing their actions. If one desires the simplicity of life before an excess amount of money there are steps that can be taken to solve this problem as well such as donating money to a worthy charity or giving some money to close hard-working friends and associates of less financial means. Overall with all other elements remaining equal, if an individual is not being harassed or stalked then the total happiness of that individual should increase with increasing available wealth over a much higher rate than simply 40,000 dollars.

If there is a group that has reason to be depressed it is those that are impoverished. Such a lack of basic funds severely restricts the ability to overcome certain obstacles blocking positive experiences. It is these groups that better appreciate the obstacles that wealth can breakdown. Perhaps the upper-middle class and rich can learn a thing or two from that mindset. What can be done about improving happiness for these individuals? The best way is to ensure that they have a level of hope that things can get better. Basically ensure a path exists for these individuals that can be followed which will improve their lives.

Although the specifics of the biological/physiological will be left for another time, it must be mentioned that the problem of depression cannot be solely limited to a biological problem in that if certain genes facilitate depression a person with those expression patters is doomed to depression. As conscious beings with the ability to make choices in our lives, genes can only predispose certain types of action or behavior, but they cannot force action; it is the individual that consciously commits a given action. For instance an individual's genetic structure may predispose that individual to becoming an alcoholic, but it does not drive an individual to consume those first initial alcoholic beverages that could trigger alcoholism. Therefore, in addition to treating the symptoms of depression with pharmaceuticals, not surprisingly it would also be wise for an individual to place him/herself in situations that are not depressing.

Another significant driving force behind depression may be the human sense of the void and the expansiveness of time and the universe itself. At a conscious or subconscious level an individual may embrace an existentialist philosophy where nothing that is accomplished has any lasting meaning in the context of the universe or time itself because the accomplishment is small and finite. This philosophy strips joy from any type of accomplishment because if time is going to eventually destroy the accomplishment and all that benefit or remember it, why accomplish anything that is not essential to survival? Interestingly enough this existentialist philosophy realistically only affects those without real talent to accomplish anything (defense mechanism for inadequacy) or those who do not care about their place in society. Those that find their identity through comparison against others look to accomplish as much as possible to bolster their self-worth, so the ephemeral nature of accomplishment is lost on those people, ironically this may be the only positive attribute of such a shallow mindset.

Although it is true that time acts as the greater eraser the purpose of accomplishment is to provide meaning in the short-term, not the long-term. A simpler way for those with these existentialist beliefs to think about accomplishment is to return to a simple cost-benefit analysis asking the question: is the short-term gain for the individual and society worth the investment? Therefore, although the accomplishment may not last forever it still has meaning and is worth the time the individual puts into it.

In the end non-physiological depression is largely self-induced because individuals do not know how to or choose to not be depressed. Regardless of what empirical studies may report, the inability of money to directly augment happiness past a certain threshold value can largely be attributed to inefficient use and handling of said money by the individual, instead of the money itself. Overall every individual of sound mind has a state of contentment, if not happiness, that is achievable without significant access to resources. Although it can be interpreted that the last sentence was pulled from a kooky self-help book, it really is true that there are scenarios where an individual can find happiness regardless of their current environment. The appropriate strategy seems rather cliché, but individuals should aim to put themselves in good situations as much as possible without detriment to others and learn as much as possible from bad situations in order to avoid future bad situations and terminate current ones as fast as possible.