Money can’t buy happiness. Or can it?
Written by Peter Heijen on 7 February 2023
It sounds so cliche, the question whether money brings happiness. The answer to this question, if understood correctly, could turn the world upside down for the amount of happiness all people collectively experience on earth. And at the same time, the climate – which is undeniably crucial for the future of humankind- could also be saved.
If we don't get too philosophical, the answer to the question is not complicated. A great deal of research has been done by scientists and philosophers on the relationship between money and happiness. Their conclusion? It turns out there’s a clear link between money and happiness. Money does indeed make you happy when you don't have too much of it. But it will not continue to do so. Once you have enough, it adds less and less. The more money you have, the less it contributes to your happiness. And when you have too much of it, it even contributes to a decrease in your sense of fulfillment, as the chart shows.
So more money does not give more fulfillment. What does create satisfaction is giving, according to scientific research. It can even be seen in your brain activity. In a recent study, researchers at the University of Pittsburgh gave volunteers a choice: they could perform a task which would benefit themselves, a charity or a particular friend in need. Afterwards, a brain scan showed a noticeable - and fascinating - difference based on their choice. Not only did the participants who chose to help a particular person show increased brain activity in two "reward centers" of their brains, they also had decreased activity in three other brain regions that take care of the body's physical response to stress through blood pressure and inflammation. A large-scale second study showed similar results.
"People are born particularly vulnerable and dependent on others," explains Tristen Inagaki, PhD, assistant professor of psychology at the University of Pittsburgh, who led both studies. "As a result, after birth, we need a long period of intensive care to survive." The instinctive desire to help others may depend on specific brain regions. They warrant more supportive behavior. "The same mechanisms that ensure giving to others may also contribute to the long-term health effects we see with giving," Inagaki said. Research shows that people who care for others and take actions to help those in need are less likely to get sick and they live longer. Helping others has also been shown to improve self-esteem, provide a rosier view of the world, reduce risky or problematic behaviors and prevent depression. Moreover, the more you help others, the more you want to keep helping.
As an econometrician, I was trained to optimize. But to maximize happiness and fulfillment in the world I didn't need to study econometrics, because the conclusion seems simple. If people who are to the right of the peak in the graph above would give the surplus money to those to the left of it, the overall level of happiness in the world would increase. Those who have less are happy to get ahead, while those who have more get the satisfaction of giving. Because as Ivan Wolffers, Emeritus Professor of Healthcare says, "Money does make you happy, but you have to give it away."
Just do it
If it’s that simple, why does this still not happen? That's tricky. I suspect it has to do with large corporations around the world telling ordinary citizens that buying their products does contribute to greater happiness. And that this commercialism is so widespread in the West that we have come to believe in it. It's time we all burst that bubble.
So just do it, give it a try. Learn how nice and fulfilling it can be to help others by, for example, giving away your money. Or lend it to someone, that also helps 😉. As long as you give your money meaning by helping someone else, it will make you happy!
Source: https://www.nih.gov/news-events/nih-research-matters/brain-imaging-reveals-joys-giving, https://www.bnnvara.nl/joop/artikelen/geld-maakt-gelukkig-maar-dan-moet-je-het-wel-weggeven