MONEY AND HAPPINESS Can money really buy happiness? Surely there is some link between money and happiness. But perhaps the better question is how you can transform your hard-earned money into the “good life,” as you define it. Happiness researchers conclude that money can help you find happiness, but only if you have realistic expectations about what money can and cannot do for you. We believe that a little bit more money will make us happier. But the more money you make, the more you want. And research shows that the more you get, the less happy it makes you. Since World War II, inflation-adjusted income has nearly tripled and the size of new homes has more than doubled. Yet polls show that the wealthiest Americans aren’t any happier than those with less money. After basic human needs are met, more money doesn’t seem to add much happiness. For example, a recent poll shows the happiness curve flattens out at an annual income of about $50,000. So making $100,000 a year will not make you twice as happy as when you only made $50,000. Simply put, we overestimate how much more money will add to happiness. In order to feel happy and secure, Americans need enough money to retire, to buy some of the things they want, and to cope with possible financial setbacks. There is a tendency to compare ourselves with the family next door. The American journalist H. L. Mencken once remarked that the happy man earns $100 more than his wife’s sister’s husband. Happiness researchers find that how you compare to others has a bigger effect on your happiness than the absolute amount of money you make. If you want to understand how money can make you happier, you must understand what makes people happy in general. A recent University of Chicago poll shows that people with five or more close friends are 50% more likely to consider themselves “very happy” than those with fewer friends. Even more important to your happiness is your “significant other.” And being actively engaged affects happiness more than acquiring things. Humans are addicted to challenges. Indeed, we are often happier while working toward a goal than when we actually reach it. So what do happy people do differently? They don’t waste time stewing over unpleasant things. While they focus on interpreting life positively, they don’t let the successes of others bother them. They just don’t compare themselves with others. Happy people say that they spend less and appreciate what they have more. Critical Thinking Questions 1. What, if any, is the correlation between income and happiness? 2. What are some common financial concerns of Americans today? 3. What do happy people do differently?