HANDS up if you honestly think you'd feel down about winning
R1 000 000 – or getting an unexpected bonus the same size? Or bigger?
I'm sure there are some readers whose sense of social
justice would be outraged. But most of us would be wearing a monster grin all
over our faces.
Just sitting at my desk daydreaming of being in either of
those two situations brings splash-that-cash thoughts floating to the fore.
Holidays, cars, education, good deeds...lovely...yes please.
And that tells me when I focus on the money, it feels good.
No surprise to read recently that money thoughts follow the same neural
pathways as food within the brain – no wonder we can't seem to shake those
But is money truly motivating? As part of a five-year
research programme into happiness at work, the iOpener Institute in the UK
looked at the role money played.
Right at the start, it was revealed that money didn't seem
to matter at all in building happiness at work. In fact, there was no
correlation between happiness at work and pay. Meaning: no role for money.
Can that really be the case? Unfortunately, there's lots of
Back in the 1980s Ed Diener, one of the grandfathers of
happiness research, asked 100 members of the Forbes list of richest Americans
about their overall happiness.
Amazingly, 49 people took the time to reply. Out of those 49
responses, 47 reported that they were more satisfied with their lives than a
similar non-rich group.
Not enormously so, but enough to write about. Since then,
the research connecting money and happiness has been stacking up. It's not
always clear, but it is interesting.
For example, Gallup's world survey in 2006 showed an
amazingly high correlation between money and happiness (for anyone who
understands statistics, it's an incredible .82 – which is just about as good as
it gets in numerical terms).
And Gallup also found that in the USA 90% of people earning
at least $250 000 call themselves very happy, while just 42% of those earning
under $30 000 say they are.
In fact, this finding about income and happiness is so clear
that German researchers are suggesting that it should be used as an overall
happiness measure. Because virtually everyone, monks and nuns excepted, would
prefer more money to less money.
What's interesting about this recent work is that it defies
the folklore that money doesn't make you happy. When you ask people to rank
order a list of 32 items that contribute to overall happiness (including things
like being loved, a good social life, close relationships, self-confidence,
etc) money only comes in at number 26.
That's probably because it's not socially desirable to admit
to anyone – especially a psychologist – that money matters. We can know this
because economists who've looked at tons of data retrieved over decades
conclude that when everything is bundled together and then analysed, there's a
clear association between increasing wealth and increasing happiness.
Of course, it goes without saying that if you don't have
enough to live on you'll definitely be unhappy. Freedom from financial worries
is one of the two most important sources of happiness.
But as you achieve and exceed this sum of money, your
happiness will also rise. And rise even further once you hit a much higher
level of wealth. That's because you can see what you have over and above
everyone else; you're likely to be happy because you're well ahead of the
So does money really make you happy?
What Diener found in his Forbes study was that good
relationships, fulfilment, pride in achievements and work made these Forbes
list members happy - not their money.
Money is a means to an end, rather than the end in itself.
And it gives you additional perks too. For example:
• Additional status and respect – people look up to you;
• More control – you can avoid or delegate unpleasant tasks;
• Increased fun – like shopping, travelling and other
• Special moments – especially with others; and
• Unique opportunities. If you're wealthy you can help
others and achieve amazing things. Like Bill Gates, Warren Buffett and James
And here are some of the things that actively detract from
your happiness in relation to money:
• Aspirations that don't match your means;
• Perceptions about wealth which are untrue in relation to
your real situation. For example, thoughts like "I don't have enough
money" when you do; and
• Materialism – expecting extrinsic things like status,
possessions or money to boost short-term happiness rather than intrinsic things
like a sense of purpose which builds happiness long term.
In short, having money and using it to buy experiences
boosts happiness, while wanting stuff detracts from it.
But does it make anyone actually work harder to get it?
Well, recent findings by Kathleen D Vohs suggests that
handling cash gives people inner strength to keep going both in the USA and
Cash is in fact king. And it makes you act like one too:
people seem to become more aloof when their screen saver is a pile of cash.
On the other hand, experiments at MIT also show that money
actively reduces performance for any job which requires thought and
And what was our final conclusion about money?
Well, at iOpener the consultancy looked at pay and general
happiness. And what they found is a strong correlation between money and
happiness with life.
It's not associated with happiness at work because that's
not where you generally get to spend it. Just remember that spending it well is
what counts most.
* Jessica Pryce-Jones is CEO of the iOpener Institute for
People and Performance. She is the latest guest columnist taking part in Fin24's
Women's Month campaign celebrating women in business.
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