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For years I’d been relying on the World Values Survey data that showed that when one is poor more money increases happiness, but only up to a point — relatively low level of income ($10,000). After that more money got one very little in terms of happiness. In a recent talk, a question was raised about the point since the data I relied on was “old.” (in 1991 dollars, $10,000 was where the leveling off took place, which is about $21,000 in today’s dollars – yep, not much!) Fair enough. And to my surprise, I came across several pieces recently suggesting that seemed to contradict that money does not buy happiness [link]. One argument in particular distressed me, where it was pointed out that the happiest countries in the world, generally in Northern Europe, are relatively rich [link]. Thus, rich = happy, right? Well, not exactly. Correlation does not equal causation.
Let’s look at this from the values perspective. As mentioned above, when one is poor, typically with traditional values, the data show more money leads to happiness. As one becomes more economically secure, it often triggers a shift to modern values with an emphasis on growth, achievement, and material goods. But then the happiness problems start. The associated growth in happiness from more money begins to slow – literally, less bang for the buck. And then one is on the hedonic treadmill working harder for less return. Eventually, it stops altogether. Think of an addict who needs more and more drug to get high, and by the end is just maintaining. Since modern values are not delivering happiness anymore, we see a shift to postmodern values fueling a new search for happiness in which material goods become less important and experiences, community, and self-expression are among the new routes to happiness.
Northern Europe is the most postmodern geography on the planet. I would argue that they are happy not because they are rich, but because there are fulfilled by their shift to postmodern values. It isn’t the money. Again, money definitely increases happiness at levels of meeting basic needs (traditional values), leads to diminishing returns aiding belonging (modern values), and by the team of self-actualization needs (postmodern values) is adding nothing to our happiness. – Andy Hines
Great job Dr. Hines!