Does Money Buy Happiness and Meaning?

We are conned into the illusion that material purchases will make you happy, while all the evidence shows they do not.
Neil Francis, does money make you happy, does being rich make you happy, does money bring happiness, Daniel Kahneman Princeton, consumerism, how to be truly happy, what is the key to happiness, consumer psychology, the art of the good life

© Dudarev Mikhail / Shutterstock

August 04, 2020 12:15 EDT

When you see multimillionaires, with their yachts and luxury houses, you probably assume that they are supremely happy. However, you might be surprised to hear that this is not necessarily the case. In 2006, Princeton University psychologist, economist and author Daniel Kahneman and a team of researchers conducted a study entitled “Would You Be Happier If You Were Richer? A Focusing Illusion.” Kahneman and his co-authors found that although people with high incomes are more likely than others to say they’re generally happy with their lives, this difference virtually disappears when they make a moment-to-moment assessment of how happy they really are.

The study was published in Science magazine. Their findings described a phenomenon known as the “focusing illusion,” which misleads people into believing that more money can — or does — make them happier. The more narrowly individuals focus on a particular aspect of their lives, the greater its apparent influence.

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“When people consider the impact of any single factor on their wellbeing — not only income — they are prone to exaggerate its importance,” the researchers explain. So, when survey respondents are asked, for example, whether wealthier people are happier than those less well off, they tend to focus on financial status as the root of happiness.

In reality, according to the study, higher income does little to improve life satisfaction and may even cause more anxiety and stress. When you compare things like cars, careers, holiday destinations, you tend to focus on one aspect particular closely, neglecting the hundred other factors in your life. You assign this one inordinate significance because of the focusing illusion.

In his book, “The Art of the Good Life: Clear Thinking for Business and a Better Life,” Rolf Dobelli shares details about another study that Kahneman carried out with psychologists Norbert Schwartz and Jing Xu. They asked motorists how much pleasure they got from their car? Their conclusion: When somebody sinks a load of money into a car, at least they get a good return on their investment in the form of joy. But here is the really interesting point. They then asked this question: How happy were you during your last car trip? They then compared the motorists’ answers with the values of their cars. The outcome — absolutely no correlation. Whether respondents were driving a top-end luxury car or a second-hand banger, there was no correlation between the car they were driving to how happy they were feeling. Question one showed a definite correlation between the perceived pleasure it gave its owner and the monetary value of the car. But the second question saw no correlation at all. A luxury car didn’t make the drivers any happier.

That is the effect of the focusing illusion: A car makes you happy when you are thinking about it but not when you are driving it. Thinking about your purchase of the car in a forced way makes you happy, but the more you use it, this fades to the back of your mind, and that minimizes the effect on your happiness. You can apply this to any other material purchases.

How can you spend your time doing things that would definitely enrich and benefit your life from these sources when your thoughts are consumed by purchasing material goods? You are conned into the illusion that these will make you happy, but, actually, all the evidence shows they do not.

Everyone overestimates the impact of material purchases on their well-being and underestimates the impact of meaning in your life through rewarding experiences. The evidence points to these experiences can increase your well-being significantly.

*[Neil Francis is the author of “Inspired Thinking” (LID Publishing, 2020).]

The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy.

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