31 October 2005

Money & Happiness

I just noticed that this blogger, Adrian, from Stardom Dreams, hyperlinked to my earlier post about credit cards. He also shares his own thoughts on money and happiness.

Basically, Adrian has looked around and seen some people enjoying material riches (a Cooper, an EC etc) and maxing out their credit cards, and this has led him to muse as follows:
We feel that it is wrong as it is against our mindset. But these group of people just want to enjoy what they reaped and some wants to enjoy it in advance via credit.

You can't really say these kind of people are wrong.

The only "wrong" here is the credit amount gets out of control, banks begin to sue and you become bankrupt. Even then, they had already enjoyed material items that most people with my mindset won't even had the chance to.(I'm sure I won't get to own a Cooper in this lifetime)

So in living a life that I've always preached that we only lived once, is it entirely wrong that we MUST be financially prudent and have savings? Should we not let our urge take over once a while and make ourselves really really happy by getting, say a, EC?

Life is about happiness after all.
There are a couple of things I want to say, but because of my bad habit of excessively lengthy posts, I'll just focus on one angle. That's the nature of the relationship between happiness and money (or material items). Adrian says that life is about happiness, a statement I won't argue with. But he then wonders whether we should splurge once in a while and "make ourselves really really happy by getting, say, an EC".

Well, Adrian, listen carefully to what Mr Wang wants to tell you. Money doesn't buy happiness. That's an old cliche - but it's true. And here are the scientific studies to prove it.

(A) People in Bangladesh and India are happier than people in the US and the UK, despite the much greater wealth of the US and the UK.

(B) Professor Ed Diener discovers that the Masai cattle herdsmen living in dung huts in Kenya are approximately as happy as the 400 richest people in America.

(C) A study of 7,167 students across 41 countries showed that those who valued money over love were less satisfied about life than those who valued love over money.

(D) Personal income in the USA has nearly tripled since 1956, while the number of Americans who say they're very happy has remained the same year after year — about 30%.

(E) Empirical data demonstrates that it is untrue that an increase in wealth brings an increase of a sense of well-being.

There's a lot more, of course. Adrian, if you plow through the literature on happiness, you will discover subtler points. But I'll give you one last point to ponder. The remarkable adaptability of the human race will always prevent it from finding happiness in material things. Like monkeys which quickly get bored with the same old toy, we're just too smart for our own good. We get used to our material possessions so quickly that any happiness we derive from them is necessarily short-lived.

You can verify this for yourself, by looking at the material possessions you do have. Perhaps your digital camera; your handphone; your 19-inch monitor; your most expensive shirt; your watch. Did they bring you happiness when you first purchased them? Quite possibly, yes. Do they still bring happiness now? Nope. The novelty has worn off.

Why do you think it would be different with an EC? Or a Cooper?

14 comments:

Oh said...

it's all relative, no? it's how u compare to ur neighbours that causes all the unhappiness. (sorry i didn't read those articles)

Mr Wang Says So said...

The "relative income" angle has also been explored in other studies, but not in those I cited ...

Mr Wang Says So said...
This comment has been removed by a blog administrator.
Merv said...

I'm kinda the sort that is happy knowing I have the cash in my pocket, rather than knowing that I spent it on some thingamajig that I'll get tired of in a few days.

There are so many websites now that advocate thrift as a lifestyle.

see: (US-centric content, but what the hell..)

http://www.everybodylovesyourmoney.com/

http://www.iwillteachyoutoberich.com/

hugewhaleshark said...

money = consumption = happiness?

The issue must be taken with a large dose of commonsense, IMO. Yes, I believe consumption can bring happiness. I think one should indulge within one's means. I certainly won't like to live like a Masai herdsman, and will not wish it on my worst enemies.

Maybe it is a matter of personal values. Can you buy that fancy car maintain that pricey lifestyle knowing that you are jeopardising the viability of your retirement, or the upbringing of your children? That's the thought I have whenever a big-ticket purchase comes to mind.

Mr Wang Says So said...

Whaleshark:

Haha! But of course you have that thought. Your job is a money job - you're trained to think like that.

Other people in the world cannot even calculate compound interest or manage their money on a day-to-day basis. Let alone think about their retirement needs in 20 years' time.

On the Masai herdsmen - what is the real point I see? Well, realistically none of us are going to Kenya to be Masai herdsmen. On the other hand, many of us WILL strive to be as rich as we can - millionaires and billionaires, hopefully. If, however, our highest value in life is indeed happiness, then it behoves us to bear in mind what the studies tell us - millionaires and billionaires are neither happier nor sadder than Masai herdsmen. In other words, try another trick, baby, if you want happiness.

I fully agree with you that indulgence within one's means is fine. There are obvious reasons for my saying so, and one not-so-obvious reason. Let me talk about the not-so-obvious reason.

Suppose you are extremely, extremely thrifty (some would say, stingy). You save a lot and you invest a lot and thus you end up being very, very rich, having much, much more than you'll ever really need for your retirement years etc.

So?

Wealth doesn't bring you happiness. That was our starting point, remember.

So indulge and spend some along the way, lah.

adinahaes said...

This is an interesting series of discussions.

But yes I agree that some indulgence is fine, but obviously the people who rack up hundred thousand dollar debts are spending( and indulging) way beyond their means. I suppose, in this, like all things, one has to have a sense of balance. The occasional nice dinner out is one thing, but eating at Shang Palace everyday might be too much both your palate and your wallet.

Take a look at James Gomez's blog; he has an interesting, albeit misguided take on this issue. I'm not so sure I agree with his views; think he's putting too great a burden on the government.

http://jamesgomeznews.blogspot.com/

hugewhaleshark said...

For me, the issue ties up with another, and it is this: how do I bring up my girls to have a well-balanced view of money in today's hard-marketing, high-peer-pressure world? That IMO, is the tricky one. They're very young still, so it's going to be a LONG road.

Kelvin said...

China has the nouveau-rich, $ingapore has the nouveau-poor, tsk tsk.
guess we have to invest in relationships in order to be happy.
meanwhile, I have to rely on 'grown-up' toys for bouts of happiness, such as my mountain bike and watches.

Missing My Friends said...

Actually, money and happiness are postively correlated, but only at low levels of income. After that, the gains are subject to a steep diminishing returns effect.

There is a study published by SMU on this. They also found out that unemployment severly reduces happiness.

Mr Wang Says So said...

Yes, you're right. There are other studies arriving at the same conclusion.

In the US, they even suggested a figure (USD 40,000 annual income). Below this figure, increases in income bring increased happiness. Above this figure, the magnitude of the change in happiness level diminishes rapidly.

For example, if you used to earn USD 20,000 and now you earn USD 25,000, that brings a relatively large change in your happiness level,

but if you used to earn USD 45,000 and now you earn USD 50,000, your happiness level will not change much -

and the happiness of people who earn USD 200,000 a year will statistically not differ from those who earn only half that amount (USD 100,000).

mugster said...

I guess money buys us things that bring us a momentary sense of happiness; such as expensive food, software, clothes and jewelry. Then after a while, we realise all we can do is admire the stuff, it doesn't really improve our life in substantial ways. The best things in life are still simple things. So we are a little bitter as we work our assess off to pay off our debt incurred on those pretty things.

How about this: "Money buys emptiness"?

Acting Like Godot said...

Mmmm, interesting post.

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