We’ve all heard the saying “money can’t buy happiness.”
Taken at face value, it makes sense. You needn’t look very far to find examples of rich people who are absolutely miserable. However, I’d argue those people usually aren’t miserable because of their wealth. On a related note, I’d also argue we need to rethink the sentiment behind insisting money doesn’t buy happiness.
Keep reading as I provide some food for thought in this regard.
10 reasons “money can’t buy happiness” is a myth
1. Research shows money does buy happiness
You’ve probably read about the theory that more income offers no additional happiness once you’re earning $75,000. Some studies have proposed higher numbers but the theory is always the same: money’s ability to buy happiness peaks at a certain point.
According to research by Matthew Killingsworth of The Wharton School, however, this notion is flawed.
Killingsworth evaluated 1.7 million data points from over 33,000 study participants and found no specific income level at which more money doesn’t increase happiness.
It’s not that all those other studies limiting happiness after $75,000 or thereabouts are completely incorrect, though. The problem is that, as CNBC reports, they tend to focus on evaluative happiness. In other words, researchers ask people to evaluate and report their happiness in the grand scheme of things.
Killingsworth, meanwhile, asked respondents to report their acute (in the moment) happiness at various points throughout the day.
This distinction matters a lot. Most of us don’t walk around thinking about the big picture 24/7. We’re focused on today, this evening, next weekend, and perhaps any holidays that might be approaching. On this scale, Killingsworth’s study suggests more money produces greater happiness – and there’s no limit.
2. Money buys freedom, which is essential for happiness
As I wrote in this article, nobody makes it through life without addressing the issue of money.
Why do you roll out of bed after two days of relaxation and head to work every Monday, even when it’s snowing and you’d rather stay inside? It’s simple. You’re a responsible adult who needs money to purchase essentials and fulfill long-term goals. Work provides that.
For many people, this is the lure of pursuing financial freedom. We all (whether we realize or acknowledge it) want the ability to make decisions based not on fear (i.e. “I’ll be homeless if I don’t do this”) but rather on their core values and desires.
We can even put a price on it. Check out this article for some tips on calculating how much money it would take to buy your financial freedom.
It should go without saying that freedom is an essential ingredient for happiness. Research (like this analysis by Max Haller and Markus Hadler) confirms it.
3. The apparent correlation between wealth and misery is misleading
People who insist money doesn’t buy happiness often associate it with existential misery. They think about rock stars who seemingly have it all yet still commit suicide or Wall Street bankers who endure incredible amounts of stress every day.
Wealth doesn’t always fit this narrative, though.
A whopping 8,386,508 households in America alone qualify for millionaire status (defined by Phoenix Marketing International as having $1 million or more in investable assets, excluding real estate). Most are virtually anonymous. They mind their own business and enjoy a level of happiness that’s simply unavailable to anyone without money. You can read about them in books like The Millionaire Next Door.
Perhaps we disregard these people for whom money really does buy happiness in an effort to make the world seem fairer. Surely something ominous must be bubbling under the surface whenever large sums of money are present, right? Wrong. Sometimes (perhaps even most of the time), rich people really do have it better.
4. Wealth doesn’t have to attract fake friends and gold diggers
Another common argument I’ve heard from those who believe money can’t buy happiness is that wealthy people universally lack real friends and meaningful relationships. This is a culturally reinforced stereotype that overlooks the plethora of rich people who have great social lives.
For starters, consider that stealth wealth exists. The Millionaire Next Door makes this clear; wealthy people are everywhere. Their neighbors, friends, and even relatives are often unaware. It’s not hard to live like this. They just don’t go flashing their money around. Vultures can’t circle something they don’t know exists.
Second, most people aren’t preoccupied with getting a slice of anyone else’s money. Yes, some bad apples exist. Again, though, many wealthy people have no problem avoiding them while still maintaining meaningful relationships.
Read this article about how rich people choose their friends for a closer look.
5. Consumerism doesn’t always accompany money
Another mistake those in the “money can’t buy happiness” crowd often make is that they assume wealthy people are all in a mad dash to acquire material possessions. This assumption also often doesn’t reflect reality.
In fact, a key takeaway from The Millionaire Next Door is that many rich people live rather modestly and prefer accumulating wealth-producing assets. That’s how they become rich in the first place!
My point? There are fewer rich people going around buying G-Wagons and expecting that to make them happy than you might assume. Smart rich people spend their money in productive ways that make them happy (i.e. building generational wealth or growing businesses).
6. Consumerism’s failure to deliver happiness isn’t money’s fault
There’s no denying some people with money try to achieve happiness by buying material possessions. Their failure isn’t an indictment of money’s ability to buy happiness. It’s an indictment of their approach and expectations.
Let me expand on that.
Some unhappy couples attempt to solve their marital problems by having children together. Often, this only makes the situation worse. Does that mean children are incapable of making their parents’ lives much happier? Of course not. People who have kids for the right reasons will attest to this.
Likewise, rich people who spend their money with the right motivations report being happier. A Harvard Business School study, for example, found people worth $10 million and up can buy significantly more happiness by making charitable donations. This aligns with research indicating spending money on others makes us happier than spending it on ourselves.
And then there’s that famous Cornell University study indicating those who spend money on experiences rather than things tend to be happier.
The key takeaway? Money can certainly buy happiness. You just need to spend it wisely.
7. People often disparage money to express resentment for how it’s promoted
To expand on my previous point, no well-rounded and emotionally stable person expects any one thing to deliver all of their happiness in life. Yet “your job/degree/relationship won’t make you happy” isn’t a commonly repeated idea quite like “money can’t buy happiness” is.
I believe this is because our attitudes about money are more nuanced (and often resentful) than those related to just about anything else.
For most people, money is the carrot in an endless carrot and stick game. At work, for example, we’re taught success leads to higher pay while failure results in punishment. Simultaneously, many also recognize the carrot’s elusiveness.
The result? People often resent not only those who dangle this carrot in front of them (bosses, the media, and even society as a whole) but ultimately the carrot itself.
That’s how we end up with resentful attitudes towards wealth and common sayings like “money can’t buy happiness.” It’s not that most people believe money is incapable of making them happier. It’s that they resent the way wealth is dangled in front of them.
8. The hedonic treadmill is more nuanced than people think
The hedonic treadmill is the idea that we all maintain a relatively consistent level of happiness throughout life. When we acquire new possessions or wealth, the theory goes, they only boost our happiness temporarily. We always return to that base level sooner or later. To someone who believes money can’t buy happiness, this sounds like definitive proof.
There are a few problems with using the hedonic treadmill to argue this point, though.
As with most theories, there’s plenty of opposing evidence. As highlighted in this academic paper, researchers have discovered several key facts in the years since the hedonic treadmill theory was introduced. Three stand out to me:
- An individual’s base level of happiness depends on their personality.
- People often have multiple base levels of happiness.
- One’s base levels of happiness aren’t fixed; they can change under some circumstances.
To paraphrase the paper’s writers, believing in the hedonic treadmill as a rigid, universal concept would mean believing a diseased beggar is as happy as a billionaire. It’s simply not true.
This aligns with research I mentioned earlier indicating rich people are indeed happier than poor ones.
9. Healthcare costs money (and lots of it)
In my opinion, this is the clincher. I have a hard time accepting money can’t buy happiness when your resources determine whether you live or die following a serious health diagnosis.
According to Gallup, a whopping 25% of Americans say they or a family member delayed seeking treatment for serious health issues due to the cost. Another Gallup poll found more than 34 million Americans know someone who died because they weren’t able to pay for medical treatment.
It’s hard to imagine sufficient money wouldn’t make anyone facing this reality (and their loved ones) happier.
Of course, I’m not saying giving everyone $10 million would be an ideal solution to this problem. In my opinion, universal healthcare (and pharmacare) are better approaches. Countries with these policies essentially buy happiness and peace of mind for their citizens.
Ryan Cooper writing in The Week makes a compelling argument for this. Every nation atop the UN’s World Happiness Report offers robust universal healthcare. It seems no country can crack into the top five without it.
10. Happiness is very subjective
One last issue I’d like to highlight regarding the phrase “money can’t buy happiness” is its vagueness.
Ask 10 people what happiness means to them and you’ll likely get 10 different answers. To some, it means watching their children excel in life. Others find happiness in traveling the world, starting a business, or buying a home. The possibilities are endless – and money facilitates many of them.
Given this subjectivity, it’s impossible to definitively say money can’t buy happiness. The statement can be disproved with just one example to the contrary.
For better or for worse, our society has made money a key part of life. Consequently, those with lots of it tend to be happier.
Whether I’ve convinced you or not, I hope this article has provided food for thought regarding your relationship with money. Jump into my mentions on Twitter here and let me know what you think. Be sure to also check out my other blog posts here.