Money Doesn't Make You Happy - or Does It?

You can't buy happiness, this credo is widespread. And yet money is a great attraction and many people think that once they are rich the...

You can't buy happiness, this credo is widespread. And yet money is a great attraction and many people think that once they are rich they will automatically be happy. Marcel Reich-Ranicki is often quoted as saying that he once made: "Money doesn't make you happy, but it's better to cry in a taxi than in a tram." Translated, this probably means something like: Money isn't everything, but a certain amount of financial resources should already be available to make life pleasant. So does money somehow make you happy? On the trail of a question that has not only occupied philosophers for a long time...

Between the reward system and conscience: It depends on the origin of the money

There is no general answer to the question of whether money makes you happy or not. Happiness is just as subjective a feeling as the definition of wealth. Scientists have dealt extensively with this philosophical topic and have found that very specific aspects are responsible for how much happiness money can trigger.

A study entitled "Moral transgressions corrupt neural representations of value" suggests that it is not necessarily the individual's definition of happiness or wealth that is relevant to answering the question, but rather the origin of money. The neural reward system plays a central role here. If the wealth has been generated in a way that appeals to the individual reward system, then the money does bring happiness. This means that with an honestly earned salary, for example, we can certainly buy happiness and good feelings to a certain extent.

The same goes for money won honestly. Games of chance, for example, are based on the fact that a win specifically addresses the neural reward system. So if we like to wager real money in the casino or in online casinos, we do so because we subconsciously know that winning money has a positive effect on the reward system and thus makes us really happy.

The situation is quite different with fortunes generated in a dishonest or deliberately fraudulent manner. Blessings of money that we receive undeservedly or even when it involves the disadvantage or harm of another person brings a bad conscience onto the scene. Of course, the feeling here is linked to individual moral concepts, but in most cases, the neurological stimulus of the bad conscience is stronger than the impulse for the reward system so that the positive feelings that can accompany money are overshadowed by the negative emotions.

It is therefore not primarily important how much money is available or what value is attached to material things and wealth in life, but rather what stimulus the acquisition or possession of money triggers in the brain. Incidentally, scientists largely agree that the happiness generated by stimulating the neural reward system is short-lived. The feeling of happiness ebbs away quickly. Long-term and heartfelt happiness cannot be generated through the acquisition of money alone. And yet financial security creates the basis for a happy life.

Security in old age as a key factor

When it comes to long-term and heartfelt happiness, safety is a big factor. Those who know that they and their relatives are well taken care of materially usually feel content, secure, inner peace, and therefore also happiness. The topic of security in old age is also of central importance for personally perceived happiness. This is the result of a recent study commissioned by the “7 Years Longer” initiative. As part of the study, a representative group of people over the age of 60 were asked about their satisfaction. Specifically, there were six categories: friends, free time, health, financial situation, housing situation, family, and partnership.

As the evaluation showed, the individual assessment of the personal financial situation is just as decisive for satisfaction in old age as the opportunity to participate in life and financial security in health matters:

“Income is a key factor in happiness in old age. The influence extends beyond financial satisfaction," says study leader Elmar Brähler, professor emeritus for medical psychology and medical sociology at the University of Leipzig. “Financial resources make social participation easier, be it through the use of cultural offerings or the financing of vacations and hobbies. Health care via additional services is also income-dependent.”

Anyone who makes provisions early or can look forward to old age without any worries because of their income is generally happier and happier than people on a low income, for whom the issue of poverty in old age is a concern without additional precautions. Among other things, for example, property owners are happier and more satisfied than people who live in a rental relationship in the middle of their life and beyond. Real estate means financial independence and is additional security with regard to old age.

So how much money makes you happy?

So money does make you happy, at least under certain circumstances and within a certain framework. In fact, it can be quantified quite accurately, as some scientists claim.

Richard Easterlin, who conducted a long-term study between 1946 and 1970 and conducted a long-term study between 1946 and 1970, recognized that subjective happiness in connection with money can be expressed in concrete numbers. The results of his study defined the so-called Easterlin Paradox, which states that money does bring happiness, but only as long as it satisfies the basic human needs for shelter, food, and clothing. For people living at or below the subsistence level, money equals happiness. If the existence is secured, so that existential worries can make way for the free development of one's own lifestyle, most people have reached the maximum level of happiness that money can trigger.

Recent studies build on these findings. Economics Nobel Prize winner Daniel Kahneman and economist Angus Deaton from America have found that if annual income can be doubled from 15,000 to 30,000 euros, this triggers a strong feeling of happiness. The same applies to another doubling from 30,000 euros to 60,000 euros. According to scientific findings, this is the maximum level of economic happiness. According to the study, a further increase in annual income no longer leads to a significant improvement in subjective happiness. Even an enormous jump in salary to an annual income of 100,000 euros or more no longer increases satisfaction and happiness in life across the board. At a certain point, great wealth and consumption can even have a negative impact on life satisfaction. The scientific term for this is “diminishing marginal utility”.

Things are a little different, however, when the additional wealth is used to finance more free time and quality of life, for example in the form of household help. Angus Deaton has a concrete theory as to why people with an annual income of 120,000 euros are no happier than those who have achieved the maximum happiness determined with 60,000 euros:

"Perhaps this is the threshold beyond which people are no longer able to do what matters most to emotional well-being: spending time with family, avoiding illness and pain, or enjoying free time."

Freedom or Leisure: On the Ambivalence of Wealth

Great wealth does not usually come by itself. If you want to earn 100,000 euros and more per year, you have to accept many working hours, possibly also irregular working hours and a loss of free time and quality of life. The beautiful side of life, such as spending time with family and friends, hobbies, and relaxation, often falls by the wayside. Scientists, therefore, speak of the ambivalence of wealth. The financial leeway increases, while the perceived quality of life decreases due to a lack of balance and relaxation. In addition, high-income jobs are often associated with great responsibility and a high level of stress.

A healthy balance of economic freedom and personal freedom to enjoy the security and comfort of your own wealth seems to be the answer to the question of whether money makes you happy.

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Rex Mars: Money Doesn't Make You Happy - or Does It?
Money Doesn't Make You Happy - or Does It?
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