Does money make you happy
18 June, 2011
New research by CACR Fellow Dr Ron Fischer, and CACR Alumna Dr Diana Boer, has received global attention with media coverage in the Times of India, Time.com, and other venues.
Ron and Diana looked across 63 societies for how money and freedom related to well-being and happiness. Shortest possible answer: happiness comes from freedom, but money is still useful because it can buy you more freedom.
The link between money and happiness is the focus of most of this attention. Money and happiness are always a major subject of interest, but particularly so in 2011 since the publication of Richard Wilkinson and Kate Pickett's The Spirit Level: Why Equality Is Better For Everyone. Their book had everyone talking about the relationship between money and well-being. It was fantastic to see that Diana and Ron have added some important new knowledge to this discussion.
Diana Beor talks about why there has been so much interest in this research:
"We are also quite surprised about the media attention that our research received. I believe that this attention is based on two main points. First, our research question is simple, yet highly relevant for everybody.
Although our research focussed on the impact of societal autonomy values and wealth on citizens’ wellbeing, most people can relate to the research question, because it is applicable to the personal life as well as to organizational and institutional processes.
In many situations we have to make decisions that involve choosing between money vs. conditions that provide more freedom and self-determination. For example, when deciding which subject to study after high school, or which job to take. Often there are two alternatives, one maximizes the monetary outcome, and the other provides fulfilment of interests and passion. Which one to choose is a major decision that everybody faces at various life stages, and these decisions determine our future wellbeing.
The second reason why this research seized so much attention is probably the clarity and consistency of the results. It is not money that ultimately influences happiness, it is autonomy and self-expression. This result challenges so many common-sense assumptions, which motivate many of our personal decisions, but also our economic and political systems.
Particularly developed societies have gone beyond the stage of economic development where increases in wealth affect wellbeing of citizens. Instead, the importance of money moves to the background and other things are more important, such as freedom, creativity, self-expression, and enjoying life. This challenges the current economic systems of many societies. More precisely, it challenges the selection of outcome variables that organizations try to maximize, which are mostly short term cash returns.
Theoretical economists have argued that this economic system is long out-dated: the monetary outcome orientation should be replaced by outcomes that actually matter to the people in order to create long term stability of moderate levels of monetary returns while maximizing the life quality of employees.
Our findings indirectly support such new economic theories. The findings also point out that more is not always good: there is a saturation point where too much autonomy and freedom is no longer beneficial. Instead, we should strive for a balance between nurturing social relationships and personal autonomy – this balance is the path to happiness.
The research was just published in vol. 101(1) of the Journal of Personality and Social Psychology, one of the most respected psychology journals.