Many will disagree, when I say that money in general, does not make you happy. Of course, it can! If you are poor and suddenly get an OK-paid job, win in the lottery or get an inheritance that alleviates your accommodation and household to a reasonable standard, you will be happy. At least for some time.
And if your children are smart or industrious or both you will be glad to send them to appropriate schools. But if your country does not have highly qualified free schools, that’s a problem without money. So if you could afford to send your children to good schools you would most likely feel happy. Schools that also enhance their student’s chances of getting a decent job that can secure their life too. Wouldn’t you then be glad? I guess so!
Research on happiness and money
Most research on the field of money and happiness seem to agree: We need enough money to secure our basic needs. Earning more to achieve that, and a little more extra will increase our wellbeing. Then there is a leveling out of the increase in happiness as your income or money in your bank account rises.
– Two components of happiness regarding money.
Sonja Lyubomirsky, a psychology professor at the University of California, Riverside, specifies the concept of happiness. She says that it is important to divide happiness associated with money into two parts.
1. The Evaluative Component, underscores that you are successful and capable of reaching your goals.
2. The Affective Component refers to the qualities of your emotional life when your income or bank account rises. That is, – how often you experience positive emotions as opposed to negative ones. Positive emotions like joy, affection, and tranquility,
– Money helps only one part of your wellbeing.
With more money on your hand the first part, the evaluative component rises and continues to rise. But that is not so with the second part; the affective component. You may for sure be happy with yourself and your success, without feeling deeply glad, at ease, and joyful.
Besides that, we must admit that happiness or wellbeing above the limit of poverty, depends mostly on your psychology, and reactions to experiences in your early and adolescent life.
– Giving away money
But there seems to be one important investment you can do to sustain and improve happiness and well-being. That is to give away some of your money to people who need them.
Elizabeth Dunn is a professor of psychology at the University of British Columbia. This psychologist is also co-author of the book “Happy Money”. She has done many experiments on this topic. Her experiments began by handing out cash to students on campus.
She told some of them to spend it on themselves and others to spend it on someone else. What happened to their feelings? When tested, – those who spent money on other people were happier than those who treated themselves.
Prof. Dunn has since repeated the experiment in other countries across the world. She has extended it to look at whether people were still happy when it was their own money they had to give away, not only money she had given them for free. She also found that in countries as different as Canada, South Africa, and Uganda, giving away money made people happier. Even when it was their own money people gave away, they were still very happy about it. And this was the case even when they themselves were relatively poor.
We know that in the US. billionaires and other rich, endow themselves in charity and considerable donations. Both astronomically rich Warren Buffet and Bill Gates expressed in 2010 when they wanted to donate 99% of their wealth to charity, that they had never been so happy.
As a Scandinavian, it is typical for me to ask why they could not gladly give away these amounts of money as regular taxes, year by year. The globalized economy is not transparent and it is a problem that some business corporations for example like Google and Facebook, do not pay taxes to the countries they earn money in. (Yes, some of these companies give donations to charity, but often these donations seem to be motivated by improving image and reputation.)
We know that the welfare in most western democracies is declining, money gets into fewer and fewer hands, and wages for ordinary people have fallen. This has been the trend since 1975 and deregulation of banks and taxes started with Reagan and Thatcher.
When these extremely rich companies do not pay a cent, it is difficult to feel very much happiness, when with just an ordinary income, you give away money to the state as taxes. It could be much more gratifying, Francis J. Flynn in Stanford Business Grad. School says after studying research that looks into what people are willing to pay for.
Flynn argues that if you come from a country with a more equal distribution of wealth, like Sweden and Japan, you are more likely to be happy for contributing to the common welfare system than if you come from Italy or Singapore. If you also knew how your money was used, that would absolutely increase your willingness to contribute.
I challenge taxation bureaus all over the world to use their imagination and this knowledge of happiness and giving away money- relation, to think new about presenting this burden to people and companies. Then not as a burden, but as a “willed donation of their money”, to build infrastructure, schools, rails, airports, hospitals, social security, etc. Something we do together. Here we must have in mind the “evaluation component” of money and happiness.
You must feel successful and smart when you pay your taxes, not a stupid idiot that does not know how to avoid taxation. We also know that countries and states with large differences between rich and poor are much more unstable than countries with more equal distribution. In addition to that, it is important to remind company leaders, owners, and shareholders, that countries with a solid welfare base for their citizens and abroad and prosperous working middle class, stimulate business life, not the contrary.
Conclusion:
There seems to be a stronger boost in feelings of wellbeing and happiness, by giving away money to others, than spending it on yourself. This goes for people in rich and poor countries alike.
But having little and getting enough to realize some important goals in life makes you happier than having already much and getting even more. Money gives you status and a feeling of having acquired some important goals in life. This is “the evaluative component” that rises with the size of your bank account.
The other component, “the affectional”, i.e. how often you experience positive emotions like joy, affection, and tranquility, as opposed to negative ones. This part of happiness and money does not often follow the other.
I think it is wise to relate money and happiness to a temporary boost in your ground level of mood. The ground level of mood as such is a much more permanent emotional state. It combines feelings and levels of energy, optimism, and faith in the future. This part however is not much altered by having more money.
The best part of having money is to use them wisely, Sonja Lyubomirsky argues. That is to be grateful for the things you buy, house, or equipment. Don’t forget the first day you bought your new mac or pc. Keep that feeling in mind. If you always raise expectations together with your salary, you will always need more to be satisfied. And you’ll never be, I might add from psychological experience.
To keep up your wellbeing then, share money with others! It need not be millions. Giving away money is an experience with other people that is underestimated. And it will give rise to a wide array of positive feelings. The second best is: Buy experiences more than things because experiences are, believe it or not, more lasting, and they feed the affectional component and elicit a wider spectrum of positive emotions than things.
