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  • Brendan Stec

Can money buy happiness?

We’re all familiar with the trajectory of every lottery winner: months after cashing in, their newfound fortune is now a new curse: more problems to attend to, more friends to fend off, and more taxes to pay. The initial euphoria wears through, expectations adjust, and the reality that money can’t buy happiness sets in.

How often does this happen to us? The excitement after a new promotion, car, or award lasts a few days before we adapt to the new environment - and hey, then another promotion or bigger car becomes the new goal. Psychologists Danny Kahneman and Angus Deaton document this effect of money on happiness in a 2010 study. After certain baseline needs are met, additional income does little to improve our happiness because individuals adapt to their new environment and their expectations about income change.

Why are we built this way? One answer lies in evolutionary psychology. This competitive world is full of endless hardships, starvation, deadly predators, and the challenge of reproducing. The ancestors who survived this environment were likely the most persistent, restless, wealth-accumulating individuals and also the most likely to pass their persistent genes forward. By contrast, your ancestor’s fat cousin, who was content with tanning in the sun all day once he stored up some food, probably didn’t survive too long on the African savannah.

Because we're built to survive such a harsh, random world where everything we own could be obliterated at any moment, no matter what, there will always be more to learn, conquer, and accumulate to insulate ourselves. More titles, more money, more power. Many people drown in the endless greed and passion. Think about Richard Nixon, who probably would've fairly won Presidential re-election in 1972, but was instead driven by power and greed to orchestrate the disgraceful Watergate scandal. There are real risks to always wanting more.

Conditional happiness - I'll be happy when I get X or my life would be perfect if I looked like Y - is an endless trap. That's why so many philosophers and leaders throughout history preach acceptance instead. It sure isn't easy to do, especially when society preaches that "more is merrier", but acceptance of our fortunes is the best way to be content with what we have. Until then, we'll be singing the same old song.


Further Reading:

The Origin of Wealth (especially chapter 14, pages 312 - 319) by Eric Beinhocker

Link to the 2010 Kahneman and Deaton study:

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