It’s not what you have, it’s how you spend it
New studies on the link between happiness and wealth turn up some surprises — and some old truths, writes
IS being as rich as Croesus the route to enduring happiness? This question has been debated through the ages. Now it’s the subject of several authoritative studies, including a big survey on the happiness of millionnaires.
Four studies released at a symposium on “Happy Money” in California yesterday found:
How rich people spend their money matters as much as how much money they have;
Money spent on experiences contributes more to happiness than money spent on possessions;
Even the enjoyment of experiences, for example foreign travel, can diminish with frequency; and
Overcoming adversity can enhance people’s appreciation of everyday pleasures.
Professor Michael Norton of Harvard Business School, who led the first study, said: “Even at very high levels of wealth — from $1-million [R11-million] to $10-million — it seems to be not how much money you have but what you do with that money that relates to your happiness: whether you give it to charity, buy a big house or a hot-air balloon.
“Most people spend the vast majority of their income on stuff for themselves, but these purchases do not seem to be related to happiness.
“Instead, two key areas offer a better source of happiness — buying experiences for yourself and spending on others.”
More than 2 000 millionnaires participated in the research conducted by Harvard, Yale University and the University of Mannheim in Germany, the first of its kind — because “really, really wealthy people do not tend to fill out surveys”.
“In general it does not look MONEY MUSCLE: DJ Fresh finds fulfilment in showing his children the world like there is a positive effect to amassing wealth,” said Norton.
The millionaires estimated they would need three to four times more money to score a “perfect 10” for happiness.
Previous studies have found that people with modest household incomes are generally as happy as those who are richer.
Rising wealth in developed countries had not boosted happiness levels in the past 50 years, said Norton, co-author of Happy Money: The Science of Smarter Spending.
People often think it’s better to buy possessions, which last, as opposed to experiences, which are over in a flash, said the lead author of the second study, Professor Amit Kumar of Cornell University. “The irony is that although this is true in a material sense, it is not true psychologically.”
DJ Fresh said his greatest fulfilment in life was offering his three children a step up from the comfortable life his parents gave him.
“Every year we go on holiday. We’ve been to Thailand and in a year or two want to go to Disneyland. When I was a kid I always wanted to go to Disneyland. My parents were business people who worked hard and we went to the best schools, but we weren’t going-overseas kind of kids,” said the 5FM DJ.
Fresh, who packed shelves at 12 to earn money for extras such as Nike takkies, said his children had learnt to save for items such as cellphones.
The third study presented at the psychology convention found that people with an abundance of experiences may become jaded and lose their ability “to savour ordinary pleasures”.
Self-denial, giving something up temporarily, can restore an appreciation of that thing.
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Yet another study, involving 15 000 adults, found that overcoming adversity could enhance people’s appreciation of small, everyday things.
The researchers concluded it was possible that “the worst experiences in life may come with an eventual upside, by promoting the ability to appreciate life’s small pleasures”.
An increasing awareness that money is only one element of happiness is shaping the wealth management industry and lifestyle choices.
Andrew Bradley, an author and financial adviser in Cape Town, said people’s investments must be based on their values to promote happiness.
“When we started having these conversations with clients, it was awkward, talking about touchy-feely stuff like ‘What are your values? How can your money serve your purpose?’ ”
“Enough” would never be enough for people caught up on a consumption treadmill, whose goal was accumulating money for its own sake and outshining the Joneses, he said.
But the focus on wealth and wellbeing was paying off for most people, he said, even if “a few clients thought we had lost our marbles”.
Event manager Edith Venter said: “If you are wealthy, the best thing you can do is share GREW UP POOR: Businesswoman Cheryl Carolus says she won’t forget where she came from that wealth — it really is the greatest reward to make a difference in someone’s life.
“Because of all the work I do with charity organisations, I see this every day. Some of the most amazing people I know live very humble lives but are so appreciative of everything they have.
“The saying that wealth does not buy health or happiness is so true.”
Businesswoman and social ac- tivist Cheryl Carolus said seeing the lives of young people changed through time and money invested in them with mentoring was joyous.
“I am fortunate that I have a very comfortable life, but I will never forget where we came from, the family and neighbours who gave us support. I grew up desperately poor and there is nothing romantic about poverty,” she said.
“The level of inequality in our country is shocking. We have to draw a line in the sand,” said Carolus.
“Life is about more than money. Those of us who are successful in life and have financial rewards must keep a sense of ‘enoughness’ and give back.”
Every year we go on holiday. We’ve been to Thailand and in a year or two want to go to Disneyland. When I was a kid I always wanted to go to Disneyland If you are wealthy, the best thing you can do is share that wealth Life is about more than money
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