A Flawed Relationship

The relationship between money and happiness has been constantly interpreted and debated in numerous ways. This correlation is such an essential part in the formation of one's character. Happiness is a mental and emotional state of well-being, and not a materialistic item. Therefore, money cannot physically buy happiness, but there are some conditions that can prompt this pleasant emotion. Studies have shown that money can play a significant role in happiness up to a certain degree, and that is if fundamental needs, such as financial stability, are satisfied. Once these needs are met, its role becomes less obvious and other factors, such as personal relationships and health, determine happiness.

The relationship between money and happiness seems to be very limited in that money only grants temporary happiness. The Easterlin paradox states that "happiness and income are correlated over short-term periods, [though] the relationship disappears over the long run". Other internal feelings, such as expectations, diminish the value of happiness. For example, one would feel more successful from a raise in salary, but would soon set higher expectations for himself or herself and therefore would feel less joyful. People who make an abundant amount of money are never satisfied because of the constant desire to achieve more. "So for every ten percent rise in income, people gain the same amount of satisfaction, whether they're making $50,000 or $500,000". Having more money offers financial stability which can make it easier to prevent stress and depression. However, psychologist Daniel Kahneman and economist Angus Deaton used data from the Gallup World Poll to conclude that happiness does not increase over an income of $75,000 a year. This is because humans are instinctively adaptable to situations and surroundings, making it easier to adjust to life's problems. Also, since there is no quantitative way to measure "happiness", people tend to use competition and comparison to fuel his or her needs to strive for more. The U.S. has economically grown tremendously since the late 1900s but happiness has not increased as much. University of Michigan professors, Wolfers and Stevenson, created a graph that compared happiness to income in the U.S. resulting in insignificant changes in income with people who made above and below the average amount over the past forty years. This proves that there were other factors to the economic growth of America and that "income has actually fallen for those at the lower end of the scale". Due to the miniscule changes in average income, it is unlikely for "happiness" to increase.

Money cannot physically buy happiness, but materialistic items can substitute temporarily. Gilovich, the author of How We Know What Isn't So, says that "possessions give us short-lived pleasure because we're amazingly adaptable." This relates to the concept that humans can easily adjust to his or her surroundings. The value of material things eventually decreases over time. The happiness or "pleasure" people take in flat-screen TVs, iPads, or video games quickly fade away due to the instinctive ability to constantly adapt and change. People who buy material items end up on a hedonic treadmill meaning that the "happiness feeling" will eventually "revert to a normative level [despite] undergoing major positive or negative life changes." Psychologist Philip Brickman and Donald Campell developed this term in a 1971 essay, which claimed that there is a linear increase between income and expectations. Thus, concluding that the feeling of being happy does not last forever.

Spending money on experiences or on other people leave a greater impact than material items. Experiences, such as vacations or small trips with friends, does not decrease the value of happiness as easily because it coincides with the "adaptive abilities" that humans possess. Gilovich says, "You get a lot more social value out of your experiences." This is because money is not the only active factor in terms of one's happiness. Social skills, relationships, and health play a crucial role as well. Experiences cannot be compared as easily making it unique and precious for each individual. It "fosters a sense of togetherness and connection" between the people that take part in one's experiences. Comparing material items degrades its worth because one could be better than the other. For example, one's car could have more mileage and look more pleasing than another person's car. This causes competition and an unhappy result. Personal experiences and interactions, on the other hand, cannot be compared because the value of its worth is different for each individual. One person could discuss his or her vacation in the Philippines and the other in Amsterdam and it would not oppose one another. The difference in personal value is what keeps the two individuals from comparing. Harvard University researchers conducted experiments and concluded that spending money on others "boosts people's emotional and physical well-being". It activates regions of the brain that is associated with pleasure and social connection, creating a "happiness" effect. Studies have shown that spending money on others also relieves stress, which improves physical health and longevity. Rachel Piferi of Johns Hopkins University and Kathleen Lawler of the University of Tennessee discovered that people who gave back to others had lower blood pressure than participants who did not, which suggests a "direct physiological benefit to those who give."

There is a strong relationship between money and happiness, but it is not enough to say that money will achieve eternal happiness. In fact, satisfaction is temporary due to the human capability of constantly adjusting to situations and surroundings. Money can fabricate happiness up to a certain extent or up until fundamental needs are satisfied. It is not the only factor, because other aspects, such as personal relationships and health, are critical to the development of "happiness".