Many people believe that money can't buy happiness, but a growing body of research shows that there are strong and varied connections between finances and psychological well-being.
Based on scientific data, we tell you how money affects our psyche.
SCIENTIFIC FACT 1
Poverty makes people unhappy
Scientists have long found a correlation between poverty and mental illness: job loss and reduced income increase the risks of depression and anxiety disorder.
Here are just a couple of examples: in agricultural areas of Indonesia, the loss of crops due to bad weather and the consequent loss of income regularly causes an increase in suicides and cases of depression. Factory closures in Austria have led to an increase in the consumption of antidepressants and mental health-related hospitalizations.
The mental problems of parents in need are passed on to their children. A major Australian study, conducted over 30 years, showed that those who grew up in poor families were three times more likely to suffer from depression and anxiety even after adulthood. Similar conclusions were reached by British researchers, who analyzed the fates of more than 6,000 children born in 2000.
Apparently, poverty is so dangerous to mental health because of chronic stress caused by increased uncertainty about the future. It makes the nervous system more sensitive: typical physiological reactions like increased cortisol, blood pressure, and heart rate are triggered even if there is no great threat. For example, because of an altercation in line or the loss of a small amount of money.
The longer a person is under stress, the more time they need to recover. The body is in survival mode, with no room for calm and happiness.
SCIENTIFIC FACT 2
Wealth does not always bring happiness
Nevertheless, a high income does not mean that one is happy. In the early 1990s, American psychologist David Myers published his book The Pursuit of Happiness: In it he examined how various factors, including financial standing, affect emotional well-being.
To demonstrate that money is far from being its main element, it was enough for him to graph two curves: the income of Americans since 1956 and their subjective level of happiness. Income has more than tripled in that time, while the number of happy people has only decreased.
Other studies conducted on very wealthy people have also demonstrated that a high income does not guarantee happiness. Harvard Business School professor Michael Norton asked about 2,000 people with a fortune of $1 million or more how much money they needed to be happy. The vast majority of millionaires responded that two to three times more than they have.
To explain why insufficient income guarantees dissatisfaction with life, and increased income does not guarantee the opposite, scientists suggested that there is an income bar after which money does not affect happiness. In 2010 Nobel Prize-winning economists Daniel Kahneman and Angus Deaton showed that Americans' level of life satisfaction stopped rising when income reached the $75,000 bar.
But that bar is controversial. Some studies confirm that it is there, while others do not find it. Apparently, this contradiction is caused by the fact that scientists define happiness differently: for some, it is a sense of meaningful life, while for others, like Kahneman and Deaton, it is psychological well-being based on the prevalence of positive emotions.
SCIENTIFIC FACT 3
It's not what your salary is, it's how much higher it is than that of your friends.
A meta-analysis of 357 studies with a total of 2.3 million participants showed that those who earn more than their acquaintances are more satisfied with their lives: it does not matter how much they earn.
If the level of income increases for all, it brings a person much less positive emotions than if earnings increase only at him. Norwegians have experienced it: in 2001 tax reports became available online - to find out how much a neighbor earns, it was enough to visit the website of tax authorities.
Over the next 12 years, this site became one of the most visited in the country. Researchers found that subjective level of happiness was more related to the amount of income in people who used a good quality internet and could find out about the salary of others, than in those who spent almost no time online.
As a result, there was a 29% increase in the happiness gap between the rich and the poor: comparing their income with someone else's, the former felt happier than before, while the latter, on the contrary, were less satisfied with life.
People are guided by the standard of living of those around them. If they cannot maintain it, they experience a sense of relative deprivation. It is what causes many to spend money not on meeting basic needs, but on things they can barely afford.
Millionaires are also subject to relative deprivation. Researcher Brooke Harrington, who studies the habits of the very rich, says they rarely ask the question, "Do I have enough money for the expensive things I want?" Another question gnaws at them: "Do I have less money than the people I compare myself to?" This affects consumer behavior: they buy very, very expensive things not for pleasure, but to maintain their status.
SCIENTIFIC FACT 4
Happiness levels probably depend on the source of money
There isn't enough research yet to state this for sure, but there is already work showing that the source of income is important to one's sense of self. A study involving 4,000 millionaires showed that those of them who made their own fortune were happier than those who inherited it or got it through marriage.
Experiments by psychologist Arber Tasimi showed that a dollar from a good guy is valued higher than a dollar involved in dubious transactions - and even five-year-old children are prone to such valuations. Moreover, the moral evaluation of money leads to different behavior: honest money encourages people to be generous and fair, while dirty money is exactly the opposite.
Most people would prefer a crystal-clear income, but if the amount becomes too attractive or if the environment often allows themselves too much, many people are willing to make a deal with their conscience. The brain then triggers reactions in the prefrontal cortex that allow the most irrational choices to be rationalized. But despite great effort, it is unlikely that this money will bring a person as much pleasure as money earned honestly or ethically.
SCIENTIFIC FACT 5
Saving money makes us happier
There are two extremes: to live for today and spend money on pleasures, or to save and periodically deny yourself pleasant things. It would seem that in the first case there are more chances for a positive attitude, but statistics tell the opposite.
Researchers interviewed 585 clients of a British bank about how satisfied they were with their lives. It turned out that having a decent amount of money in their account was much more important to that satisfaction than a high salary in and of itself.
Customers with high salaries, who were spending money rather than saving, were less happy. Researchers believe it's a matter of free access to money: the idea that money is available at any time and you don't have to apply for a loan or sell your car to get it, frees you from anxiety.
The more money you have set aside, the better for your sense of peace. Though even small amounts will improve the situation. An American study with 12,000 participants found that even putting aside $500 increases your level of life satisfaction by 15% compared to a situation where there are no savings at all.
SCIENTIFIC FACT 6
It is better to spend on experiences and communication than on material things
Hedonic adaptation is a psychological phenomenon that causes people to get used to a new level of comfort and stop appreciating it. If you bought a new gadget, as a rule, pretty soon the joy of owning it will fade.
Studies show that money spent on new experiences brings much more joy. Retrospective gratification works-when memories of an event increase mood and life satisfaction. Spending in this case can be of different sizes - a trip to the sea or movie tickets: the main thing is that the new experience brings pleasure or reinforces a person's positive self-image.
Especially worth spending on new experiences that can be shared with family or friends: going to restaurants, exhibitions and other places with them will make our evolutionary mechanisms work for a positive attitude. Humans are social creatures; throughout most of human history, good connections with others have increased our chances of survival.
Today, loneliness is not a threat to survival, but still all the actions that help us improve contact with others bring the most happiness.
True, there is an important exception to these rules. People with low incomes - below $2,500 per household per month in the U.S. - are still more satisfied with material purchases. Most such respondents would rather get a TV or a new pair of shoes than a free weekend trip. So it only makes sense to invest in new experiences when basic needs are met.
SCIENTIFIC FACT 7
Saving time is more important for happiness than saving money
A few years ago, an experiment was conducted in Canada with 60 working adults. Each of them was given $80. Half of the amount was to be spent to save themselves time, such as ordering lunch delivery instead of cooking yourself, and the other half on any tangible item. It turned out that on those weekends, when respondents saved time, their mood was significantly better.
Researchers attributed this to reduced time pressure, because lack of time is a common stress factor. But, as you can see from the surveys, very few people realize this. The same researchers found that only 2% of respondents would prefer to spend $40 to save time, the rest wanted to buy something tangible.
The psychological value of time saved is also evidenced by larger studies. In 2017, researchers surveyed 6,000 people from different countries. They were asked questions about how satisfied they were with their lives and whether they had time-saving items to spend.
It turned out that those who ordered home-cooked meals, hired cleaners, and used other services to save time felt happier. An important detail: this conclusion is true not only for rich people, but also for those whose incomes are below average.
SCIENTIFIC FACT 8
Money is better spent on others
Sometimes the desire of billionaires to give most of their fortune to charity may seem strange, but Harvard Business School research shows that it helps them increase their level of happiness.
And this applies not only to people with very high incomes. A famous study involving 632 Americans showed that those of them who spent money on charity or simply on other people rated their level of happiness higher. The more was spent, the more noticeable was the result. At the same time, the amount spent on oneself had no effect on the level of happiness.
Even a single expenditure can have an effect. At the University of British Columbia, a group of students was given different - not very large - amounts and instructed to spend them on themselves or on others by the end of the day. In the evening, the students were tested. Those who spent all the money on others were in a better mood. And it didn't depend on the amount spent.
Why does spending on others have such a positive effect on us? When we donate money, the striatum and orbitofrontal cortex are activated in the brain, the same areas that work when we receive a reward.
These areas are also activated when money is mandatorily transferred to charity, for example along with taxes, and when it is a personal choice. But in the second case, the activity of the zones is significantly greater.
Psychologists explain it this way: when we show sincere concern for others, we are convinced that we can make the world a better place. The feeling that we can control and influence the situation improves our emotional state.
SCIENTIFIC FACT 9
Big lottery winnings can bring good luck
There is a stereotype: winning big at the lottery is more of a challenge than luck. The stereotype was created by stories in the tabloids about lottery players who suddenly became rich and ended up in drug addiction clinics, and by contradictory research results. Some of them showed that lottery winners have sharply deteriorating health and increased risk of depression, while their level of happiness did not change.
But all of these studies were conducted on single cases and are not confirmed when looking at larger samples. In sweden, they selected 3,362 lottery winners who won between $100,000 and $2 million.
Researchers followed them from 5 to 22 years after they won. Throughout this period, they maintained high levels of happiness, life satisfaction and psychological health. The only indicator that declined over time was financial satisfaction.
Similar findings were made by researchers in germany: people who have won significant amounts of money tend to be satisfied with their lives.
SCIENTIFIC FACT 10
Meaningful work is more important than a high salary
Work greatly affects the psychological well-being of modern man. Meaningless work, or rather the perception of it as such, is one of the main factors in the development of depression. In this case, a high salary will not help to keep life satisfied.
Work with meaning is not only the sphere of medicine or charity. Researchers describe its characteristics as follows: the possibility of discovering your potential, the positive effect on society and the possibility of high career advancement. So when choosing a job you should pay attention not only to the salary, but also to these criteria: it is possible that an offer with a low salary will make you happier in the end.
90% of Americans are willing to sacrifice 23% of the income they will earn for the rest of their lives, just so their job would be meaningful. Ultimately, a meaningful job has a positive impact not only on mental health, but also on physical health: at the very least, people who find their work meaningful are less likely to take sick leave.