One of the most intense debates around finance is whether money gives happiness or not. Despite the fact that this dilemma depends on the circumstances and needs of each person, various studies affirm that there is a fairly close relationship between the ability to save and the feelings of happiness of European individuals.
Can we be happy with little money? Is it possible to satisfy all our human needs without taking money into account? Is there a quantitative limit beyond which money stops having an effect on a person’s mood? All these questions continue to generate controversy, but in some of them there is already a certain consensus.
Human beings are happy by nature
According to the ING International Survey, conducted in 2018 of more than 15,000 people across Europe, the United States and Australia, 57% of European citizens say they are happy when asked. On the other hand, only 10% of them answer that they rarely feel really happy; while 32% only feel happy occasionally.
At the same time, most of these respondents said they were comfortable with their financial health. In fact, of those surveyed who said they were happy, 47% were quite comfortable with their savings levels and managing their personal finances, compared to 21% of people who said they were happy only occasionally.
In other words, it seems that there is a certain relationship between money (or rather, financial health) and happiness. Although as we will see later, it all depends on the glass with which it is viewed.
Does money bring happiness? Yes, but to a certain extent
Angus Deaton and Daniel Kahneman, psychologists, Nobel Prize winners in economics and pioneers of behavioral economics, published a paper in 2010 in which they related workers’ happiness to their income level. The conclusions of the study were that yes, money gives happiness, but up to a certain point.
Reviewing surveys of more than 450,000 workers across the United States, Deaton and Kahneman found that the emotional well-being of participants grew as income increased. However, these conclusions were true up to $ 75,000 in annual rent, after which successive increases in income were not offset by greater happiness.
Of course, the study concluded that, in general, obtaining high levels of income serve to obtain greater job satisfaction and fulfillment. In contrast, a low-income individual tends to have lower emotional well-being and lower self-esteem.
This conclusion was also reached by the American psychologist Jean Twenge in an article in The Conversation, but it went a step further, comparing this result in different decades, from 1972 to 2016. And what he found was that, now, the relationship between money and happiness is deeper than ever.
Money or free time: that’s the question
Enjoy more free time or earn more money? For many people, this dilemma triggers everyday decision making. However, some studies suggest that prioritizing savings over free time can determine our level of happiness.
Without going any further, in a recent survey by Columbia University of more than 1,000 students, he wondered if they tended to prioritize time over money or the other way around.
The conclusions the researchers came to were really interesting, and to some extent counterintuitive. One year after graduation, students who they prioritized money over their free time were less happy than colleagues who prioritized free time.
The results of the study, which found no substantial differences between socioeconomic strata, served to reject the widespread belief that money brings happiness. Free time was a much more valued commodity by the students.
Reasons to believe that money brings happiness
Beyond studies that directly link happiness and money, the truth is that there are a number of obvious reasons that explain why good financial health can contribute to happiness:
|Provides peace of mind.
The emotional stability that comes with having long-term healthy finances does help you reach your happiness goals. In fact, in situations of economic recessions in which job uncertainty is predominant, good financial health is synonymous with peace of mind and solvency, which has a direct psychological impact on our happiness.
|Basic needs are covered.
Maslow’s famous pyramid states that we will only pay attention to the needs at the top of the pyramid if the most basic needs have been met first. This theory shows why it is not possible to achieve self-realization if we have not previously satisfied the needs of food, clothing or housing, for example, for which a certain financial outlay is necessary.
Arguments to defend that money does not bring happiness
There are also arguments against the theory that money brings happiness. Among them, the following stand out:
|Time is not bought.
Money can never buy the most precious and limited commodity that exists: time. Studies like the one from Columbia University show why many people prefer to have free time rather than earn a lot of money.
|The importance of emotional salary.
More and more companies use the emotional salary, a concept that refers to all those non-economic rewards that the worker can obtain from the company; Its objective is to positively encourage the image you have about your work environment. And here the work-life balance wins by a landslide. In fact, according to a study by Adecco, 64% of workers would give up a higher salary in exchange for greater “job happiness”.
|Freedom and prosperity are priceless.
At the global level, there is a direct relationship between happiness and the regime of freedoms enjoyed by the citizens of a country. According to the Global Happiness Index prepared by the United Nations, the first countries in the ranking are traditionally those whose citizens enjoy greater social and economic freedom, and they usually correspond to the most prosperous countries.
Meanwhile, the debate between money and happiness runs its course. There is no doubt that happiness is related to money, but with many nuances, since, as the saying goes, “money is not everything.”
In Orange | Money does bring happiness. Or not. This is how saving affects European citizens