Whether we admit it or not, we always have conflicting beliefs when it comes to money and happiness. One thing we may agree upon is that money can buy certain material things that can make us happy yet we all know that money is the root cause of all evil.
The question is how much money do we have to spend to achieve a level of contentment and happiness? Let's rephrase it directly - does real happiness have a price tag?
Money = Happiness?
We all want a better life but we have to determine what degree of life satisfaction can be considered a "happy" life in actual numbers. Just imagine this scenario - 50 years ago, most people may need $100 a day to make themselves happy but that same amount of money may not even cover the basic necessities these days.
In a 2020 research by Matthew Killingsworth of the University of Pennsylvania, happiness increases linearly with reported income. Coupled with the rise of living costs and inflation, achieving "happiness" with money is becoming more and more unattainable.
It is interesting to point out that it's not just the money in your bank account that matters, you also have to meet your basic needs, enjoy life experiences, and expand social ties to achieve life satisfaction and happiness.
Happiness also varies from country to country across different cultures. You may expect people from countries with the highest GDP per capita income will have the greater financial freedom to achieve a higher level of happiness and those on the bottom scale would have greater barriers to achieving. But it's not necessarily the case.
The Sustainable Development Solutions Network has recently published its 2022 World Happiness Report based on these key factors: healthy life expectancy, GDP per capita, social support, low incidence of corruption, high social trust, and generosity in a community where people look after each other and freedom to make key life decisions. The happiness scale is from 1-10 with the latter as the perfect score for "happiness."
Let's compare the happiness index of the top and bottom-ranked countries with their GDP per capita income.
Based on the figures above, the Finns are the happiest people in the world yet they achieve it without having the highest per capita income. The Swiss are both in the top ten in the happiest index and per capita income. Many people consider Filipinos as one of the happiest people in the world yet they rank 60th just behind the South Koreans and ahead of the Thais. The Afghans, Lebanese, and Zimbabweans are the least happy people in the world.
What if we weigh "happiness" based on the average income of people? So let's divide the per capita income by the happiness index to determine how much a single point costs and multiply it by 10 as the perfect happiness score. The result would be the hypothetical cost that people have to reach to achieve "happiness". The results would be like this:
By Cost (Most Expensive)
In this table, people from Luxembourg would have to spend $172,437.87 in order to be "happy" but Hong Kongers have to shell out 84.33% more than their annual income to achieve that same status. The top five countries are among the richest countries in the world.
By Cost (Cheapest)
In this table, you will see most countries are from Africa with the lowest happiness index and per capita income. Achieving that hypothetical perfect "happiness" score would mean that Mozambique has the cheapest cost of happiness at $1,073.69 where an average citizen will have to earn 98.10% more than the average. Sierra Leone and Malawi stand out as both have to spend 179.80% and 166.67% more than the average.
By Percentage (Highest)
In this table, wartorn Afghanistan tops this list as the country with the most unequal level of happiness as an average Afghan would have to earn a mind-boggling 315.97% more than the national per capita income just to achieve "happiness." Other prominent countries on the list are Lebanon and Zimbabwe, both suffered tremendous hyperinflation.
By Percentage (Lowest)
It's not surprising to see the United States top this list as an average American will only have to earn a quarter more than the average to achieve "happiness." On the other hand, the Finns are more cost-efficient as they only have to earn $30,000 less than the average American to achieve the same status.
Cultural Context in Numbers
The figures have shown that people from richer countries tend to be much "happier" than people from poorer countries yet there is no cultural context to the figures above. Some say that money matters even more in poorer countries as they have a lot of barriers to overcome in their pursuit of happiness.
According to a 2018 study conducted by the National Institute of Health, poorer Zambian women who are given cash transfers unconditionally have a higher sense of emotional well-being and satisfaction than those who didn't. An average Zambian earns $1,348 per year and will have to earn 165% more or $3,585 to achieve "happiness."
Happiness may mean different things than those with different cultural beliefs, practices, and value judgments. Money can be used to buy basic needs to reach that bare minimum of emotional well-being. Anything more in excess is already a luxury. Some people only need a little bit less to reach that goal but some want more. Other factors include access to proper healthcare, nutritious foods, and a secure home that would boost someone's physical and mental health thereby increasing happiness.
The Way You Spend Matters
There are things money can't buy, "experiences" can help others achieve happiness. A 2011 research in the Journal of Consumer Psychology has shown that experiences and giving to others unconditionally produce greater feelings of happiness than material goods. There is what you call the appraisal-tendency framework where your emotion and decision-making are affected by your subjective value judgment.
In Killingsworth's study, money is correlated with happiness no matter what your income levels. However, there's a difference between day-to-day happiness and overall life satisfaction because not everyone started on the same level. Some people are born poor while there are those who already have millions of dollars in their trust fund when they were born.
Rich people spend money differently than average joes because they want something money can't buy to make them happy. In our case, just having our basic essentials matters even more than Elon Musk buying Twitter for $44 billion!
It's a Matter of Time
Of all the things that people have difficulty controlling is time. Once you lose valuable time, it's already gone. That's what stresses everyone out. You always dream of having valuable time for someone special or experiences you always wanted to do. You may be the richest man in the world but you can't achieve full happiness when you don't have the time to do meaningful things. That's the thing money can never buy.
Even if you're filthy rich, it will come to a point when you're no longer happy as expenses go up to sustain that level of self-satisfaction. As mentioned above, if $100 can make you "happy" 50 years ago then it can no longer do so today. It's what you call "lifestyle creep," when you make a lot more money, you spend a lot more.
On the flip side, you stress out on the effort you make to sustain it just to blow it away in an instant. What's the whole point of money-making when you end up dissatisfied?
Final Thoughts
The correlation between money and happiness varies across different cultures and societies. People from different walks of life have their own definition of it because not everyone is the same and started differently in life.
With that being said, it all boils down to survival and self-satisfaction. People, who worked hard to survive, think more about getting all the basic necessities to achieve that level of happiness. That means, they tend to spend the bulk of their income to make it happen. If it means getting more side jobs to do it, they will do it. Seeing their family happy will make them happy.
On the other hand, people who already have a lot tend to spend more on experiences and things money can't buy in order to be happy.
What about you? What makes you happy? How much it will cost you to achieve it?
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