August 25, 2009
MasterCard is right. All those priceless moments cost money
Money can’t buy love; it can’t buy true friendship. In fact, all the best things in life, at MasterCard says, are priceless.
It turns out however, all this conventional wisdom is wrong.
New research, as reported in the Boston Globe, actually does buy happiness, if its correctly spent. “For deep-seated psychological reasons, when it comes to spending money, we tend to value goods over experiences, ourselves over others, things over people. When it comes to happiness, none of these decisions are right.”
In other words consumption doesn’t make us happy. Once our basic needs are met, more money doesn’t do much to make us enjoy our lives more. This graph , picked up from Conor Clarke, illustrates the point well by linking happiness and GDP.
However, these findings neglect one thing. Money used in a certain way does make us happy. In a study of a group of employees following a special profit-sharing bonus, researchers “found that the only factor that reliably predicted which workers would be happy six to eight weeks after the bonus was their prosocial spending – the more money people spent on charity and gifts for others, the happier they were.”
Also, money spent on experiences did more to make people happier, probably because experiences like vacations, travel, or other events involve other people. The experience then changes the person in certain ways that stick around much better than the feeling of joy that comes from a new TV or cable subscription package.
The research on money coincides with other research on what makes people happy: Relationships with other people. That may be why church-goers are happier, married people are happier, people who are involved in voluntary organizations are happier.
Money does make us happy, but only if we don’t keep it for ourselves.