How can money buy happiness?
In December 2012, a Spanish village won the lottery. 128 million Euros were distributed between the 250 inhabitants. Except for Costis – the one guy without a lottery ticket.
It is clear: Costis is definitely the unlucky one in this story. But will he also turn out the unhappy one?
Even if neither you nor of your neighbors have ever won the lottery, you probably wonder sometimes if money can buy happiness. So, let us have a closer look at that!
Poverty can make you unhappy
The 128 million Euros arrived at the village Sodeto in a difficult time: the Spanish financial crisis. The unemployment was high. Young people kept leaving the village for the big cities.
Why does that matter here? Because money has the greatest potential to boost the happiness of those who are poor. While money does not generally make people happier, it is evident that poverty generally makes people unhappy.
It is pretty simple: Being poor involves a lot of stress and worries. How to get through the month? Could I afford a doctor if my kids got sick? Depression and anxiety are found more often in people with little money. And, of course, poverty cannot only affect mental but also physical well-being. We all know how being sick is a mood killer.
It seems that we have found the first case in which money can buy happiness: When it alleviates poverty.
Still, more wealth does not necessarily make you happier
However, what if you are not poor, but reasonably well off or even rich? Will more money make you even happier then?
Less likely. But this will, however, not prevent you from thinking that it might. In a study, wealthy people were asked how happy they felt. While researchers could not find a correlation between their wealth and their happiness, there was one constant still: people said that they would be perfectly happy if they had three or four times as much money - completely independent of how much they had already.
So maybe Costis’s neighbors are not so much happier than he is. His job as a documentary filmmaker pays enough, so he does not have to suffer the downsides of poverty. Unlike his neighbors, however, he does not have to face the downsides of abundance either. Yes, there are psychological disadvantages of wealth. A study found that rich people find it harder to savor simple pleasures. A nice but ordinary holiday destination, usually does not give them much joy. Big money, big expectations.
Buy experiences = buy happiness
Speaking of holidays: There are ways in which money can make you happy – even if you are already somewhat well off. Going on vacations is one of them. While in many cases, happiness does not depend on how much money you have, it does largely depend on how you spend that money.
Research shows that people derive more happiness from investing into experiences than into material good. This means, for example, that the lucky lottery winners should buy trips, concert tickets and restaurant visits than luxury goods. At least, if they would rather have a happy life than gold-plated water taps.
There are several reasons why buying experiences makes you more happy than buying shoes or gadgets. Anticipation is one of them. In general, you enjoy looking forward to your holidays or the concert of your favorite band – much more than to the delivery of your new phone.
And the joy does not stop after the experience. While material goods often loose their attraction – they wear off, become obsolete or broken – memories get better over time. Since people remember good things longer than bad experiences, that rainy week you spent in a mediocre hotel by the sea is likely to get better and better over the years. Unlike your new iPhone.
And then there is still the social component. Experiences are often about human contact – to a much greater extent than the purchase of material goods. As social beings, human interactions is crucial for our happiness. This works for the experience itself, as well as its aftermath. Holidays give you a lot more fruitful topics of conversation than your new sofa or shoes.
It is more blessed to give than to receive
There is another way how having money can make you happy: By giving it away. This even becomes visible in your brain. Giving money to charity activates the brain regions that are also responsible for pleasure and reward.
The Biblical sentence “It is more blessed to give than to receive” is actually confirmed by psychology. Spending money on others, research suggests, makes you happier than spending it on yourself. Take for example the experiment Michael Norton talks about in the following video. He and his team gave students money that they should either spend on themselves or someone else. On average, the purchases made only those happier who used the money for others.
So the elder village inhabitant who wanted to use some money to buy the unlucky Costis a present was also about to invest in her own happiness.
It seems that non-winner Costis does not really need pity. He is not poor, can savor the small things and, as a documentary filmmaker, does get to travel a lot.
But what about the happiness of Sodetos lottery winners? Well, the documentary Costis Mitsotakis is planning might reveal more about that. Let’s see if it also proves the findings that winning the lottery does not make people happy.