Money Buys Happiness?

The role of money in creating or facilitating happiness is a subject of great interest to me. I find every individual has their own unique relationship with money. Here are some fascinating excerpts from a recent Wall Street Journal article on this topic:

"During the holidays, we will give thanks for the important things in our lives. For most people, money is not one of these things -- at least this is what we would like others to think. We are after all constantly reminding each other that "money doesn't buy happiness." Economists aren't so sure.

They note that people with a lot of money tend to express a higher subjective happiness than people with very little. According data from surveys by the National Opinion Research Center, for example, people in the top fifth of income earners are about 50% more likely to say they are "very happy" than people in the bottom fifth, and only about half as likely to say they are "not too happy."

There is, however, generally very little change in the average level of happiness in populations getting richer over the years. For instance, the percentage of the U.S. population saying it was "very happy" in 1972 was exactly the same as it was in 2002: 30.3%. Social critics of "consumerism" explain this by claiming that what makes rich people happy is not money per se, but rather the fact that they have more of it than others -- so if everybody gets richer, happiness remains unchanged.

...beyond earning, taxing and spending, there is an even clearer link between money and happiness: charity. The evidence is unambiguous that donating money (and time) is one of the best ways to buy happiness. People who donate to charity are 40% more likely to say they are "very happy" than non-donors. Psychologists have even tested whether charity makes people happy using randomized, controlled experiments -- the same procedure used for testing pharmaceuticals, except that, instead of administering a drug to one group and a placebo to the other, researchers randomly assign one group to act charitably toward another. The results are clear: Givers of charity earn substantial mental and physical health rewards, even more than do the recipients of charity -- empirical evidence that it is indeed more blessed to give than to receive.

The bottom line is that the old axiom about money and happiness, properly understood, is quite wrong."

(Mr. Brooks (the author) is an associate professor at Syracuse University's Maxwell School of Public Affairs)

So what do I think? When I was younger, I focused more on the negatives of money....and tended to notice when rich people were also unhappy. Over the years, after many courses on economics taught by compelling 'free marketers', after seeing the enormous positive impact economic liberalization has had on the India I am familiar with, and after getting practical experience making and spending it - I've come to view money as a powerful facilitator and enabler...and financial independence as a critical positive step in everyone's life.

I'm getting ready to write some checks for my favorite charities before year end. It's that time of year. Act now to get that tax break in the 2005 tax year....it can only help the way you feel.