The Situationist

The Situation of Money and Happiness

Posted by The Situationist Staff on June 13, 2009

Money HappinessFiona Anderson of the Financial Post has an interesting take on a question that has been much discussed for many years: can money buy happiness?  We excerpt the piece below.

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But if the best things in life are free, why is it that we always seem to be after more money? Because we think it can buy happiness.

And for those at the lower end of the income scale, it probably can, according to Michael Schmitt, a social psychologist at Simon Fraser University. “Because having some money is definitely better than having no money at all,” he says.

But Mr. Schmitt words the question differently: Are people with more money generally happier than those with less?

The answer is yes, when we are talking about having enough money to cover food and shelter. But the answer is a definite maybe when you get to middle-class earners and above. “It’s going to be more important if you need money to get access to those things that meet our basic needs,” Mr. Schmitt says. “Beyond that, the effect of having more money seems to be weaker.

“And it seems when people do increase their income and have access to more material wealth, you don’t see corresponding increases in happiness.”

Happiness surveys have been carried out for years. And while income has been going up steadily for the past three or four decades, our level of happiness hasn’t changed much, Mr. Schmitt says.

In the 1950s and 1960s, there were a lot of things that were problematic, he says. “So it’s not like things were perfect and idyllic then. But our increases in material well-being don’t seem to have translated into increases in happiness overall.”

One reason may be evolving aspirations. As people achieve goals they create new ones. While that seems common for financial targets, not all goals have moving goal posts.

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To read the rest of the piece, click here.  For a related post, see Adam Benforado’s Somthing to Smile About.  To review a collection of Situationist posts exploring the causes and consequences of happiness, click here.

2 Responses to “The Situation of Money and Happiness”

  1. Before I was able to write full-time, I was an accountant (strange but true). I did financial consulting for people and I often saw a piss into the wind effect. People didn’t know where their money went and I didn’t advise them to find out or make a budget. I just suggested that they take out so much a week, put it in their wallet, and rely on their eyes and hands to make it last the week for sundries. My experience was that the difference between being able to have a little left over in your bank account and a little into overdraft was small, and had no felt impact on satisfaction, but accumulated significantly. I’m not talking about people addicted to shopping who appear on talk shows, but most average folks.

  2. NIck said

    Hi Situation guys,

    I believe that it’s not possible to make a general statement on whether money makes people more or less happy. Money comes with a whole set of new elements that may have good or bad impact on our happiness, and depending on how susceptible we are to every one of them, the conclusion will go one way or the other (i.e. different from person to person).

    I recently made an effort to provide a more comprehensive picture of what these ad- and disadvantages are. I invite you to have a look at and tell me what you think!

    Thank you,


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