Did I Just Read What I Think I Read?

side note before I get started – I think my title may give a hint as to why English may be so confusing for people trying to learn it. I used the word “read” twice, but hopefully, most of you you pronounced it two different ways each time. How would somebody not familiar with English know that? I was tempted to write “Did I Just Reed What I Think I Red?”, but that would probably be worse.

Anyway…

Two Saturdays ago, I featured Dan Ariely’s column from the Wall Street Journal. So some of you may know what that means. It’s time for another Dan Ariely post.

Today, Dan received the following email:

Dear Dan,

My partner and I are students, and we have very different approaches to dealing with money. My policy is to spend less than I earn and invest my savings for the long term. But my partner feels that since we will both be earning more money after we graduate, we should spend freely now and enjoy the moment. Is there any way to avoid fighting about this issue? —Mathieu

Dan gave some good advice:

Try setting up a joint bank account in which you can both deposit your paychecks. Use that account to pay shared expenses such as rent and utilities. In addition, you should each have individual accounts for discretionary spending, into which you can transfer a fixed amount from your joint account every month. That money can be used for spending or saving as you see fit.

But it was the next part of his answer that shocked me:

You may still disagree, but this way you’ll only be arguing about the smaller amounts in your individual accounts, which limits the size of the problem. And remember, the goal of money is to buy happiness. If you keep fighting about it, what’s the point?

Did Dan, a behavioral scientist, really say that the goal of money is to buy happiness?

Where did that come from?

I didn’t think money could buy happiness?

Here’s a quote from one of Dan’s earlier WSJ column:

“…these studies show that we need far less money than we think to maximize our emotional well-being and minimize stress. This means that accumulating wealth isn’t about the pursuit of happiness—it’s about the pursuit of what we think (wrongly) will make us happy.”

And the title of one of his previous blogs was, “Money doesn’t always buy happiness.”

And here’s a video of Dan, with the headline, “Why Doesn’t Money Buy Happiness? Dan Ariely Explains“.

I could go on and on, given that Google returned 220,000 results from my search:

“dan ariely” money happiness

The purpose of this post is to not get into the whole issue if money and happiness; I’ve written about it before, and so have many others, including Dan.

I just wanted to see if anyone felt the same way as Dan states in today’s column – is the goal of money to buy happiness?

I certainly don’t think so. I think the goal of money is to enable an individual to take care of his or her basic needs, which if you go by Maslow’s hierarchy of needs, is certainly a necessity if you want to move on to those higher levels, which I think is where happiness resides. But it’s not money that will get you to those higher levels, it’s more intrinsic things like love and esteem that lead to self-actualization, which could be roughly equated to happiness.

So I’m just baffled; why would Dan – someone much more well-read on the topics of money and happiness than I am – make such a comment?

Any thoughts?

*image from The Pursuit of Happiness

 

38 thoughts on “Did I Just Read What I Think I Read?

  1. It may be that, rather than devote time and space to the philosophical concept of money buying happiness, he simply used a more common and concrete, if erroneous, view in order to make a more obvious point about the futility of arguing about money. If the phrase had been “the goal of THIS money is to buy happiness”, I could then see at as a reference to the smaller individual accounts, which for one will ‘buy’ the happiness of spending and the other the happiness of saving. It does make for a confusing statement. Great post!

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    1. you make a valid point, Brad. There is no doubt that money is important, and if it helps you along the road to self-actualization, then in some respect, it does help you buy happiness.

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  2. Great post Jim! Money certainly can’t buy happiness. Happiness is not a commodity that can be bought and sold. It might bring temporary happiness of a sort, but that’s about it. Certainly it can’t buy permanent happiness. Oftentimes it does just the opposite and “buys” misery instead. We need money to live and we can use that money to give us a better living standard, but that won’t buy happiness either. Sorry if I’m going too long. Have a great day Jim!

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  3. Hi Jim,

    Of course money can buy happiness. Think of your own retirement and the balance in your TIAA/CREF account when you want to retire. You and your wife will be a lot less happy in retirement if the stock and bond markets collapsed before you make your deals — which is entirely possible if trillions are taken from those investment markets to pay for new social programs.

    You will be very unhappy if your retirement funds decline by more than 80% for whatever reason just before you retire — I discussed the reason that might happen in a recent blog posting —
    http://faculty.trinity.edu/rjensen/tidbits/2020/TidbitsQuotations013020.htm
    The reason is that 10% of the highest earning investors in the capital markets control 80% of the value that the are sustaining in those markets.

    Kobe Bryant was having great fun in retirement — especially when investing in new startups. He would’ve been much less happy if, like so many professional athletes, he’d wasted his savings before he retired. Joe Lewis, the famous boxer who retired destitute, once said: “I’ve been rich, and I’ve been poor — rich is better.”

    My own personal experience is that I’m happy, happy, happy that I retired when I did and not a few months later. I used almost all my TIAA/CREF funds to buy six TIAA fixed lifetime annuities when interest rates were still relatively high.

    A few months later, when the subprime real estate bubble burst and triggered an enormous recession, interest rates plunged after the Fed tried to recover the economy. In a few years the economy recovered, but interest rates remained, and still remain, at all-time lows. I could not have made the lifetime fixed annuity deals that I made a few months before I retired. I doubt that after 2006 retirees will ever be able to get the lifetime interest rates that I negotiated for my lifetime annuities.

    My lifetime annuities, consider them money, make me very happy in retirement — much happier than if I’d waited another year to retire. I am saddened that professors still on the job will never get such good retirement annuity interest rates that I got by sheer luck of the timing of my retirement. Even if CREF does not crash those retirees will probably have to go for such things as variable annuities that carry a lot more financial risk.

    Yeah, I know that fixed rate annuities have hyper inflation risk. The good news is that if you’re old enough today, like me, you probably don’t have to worry much about high inflation — especially since most of the 2020 Democratic Party candidates for President are promising free nursing home living if inflation kills our fixed incomes.

    If fairness to you, Jim, I’m willing to admit that there are differing circumstances and degrees to which money will make you happy. Winning a big lottery at this stage of my life (age 81) would not make me nearly as happy as it might have at 40 years of age. It would still be fun to give more money to worthy causes in retirement, but there’s not much else I can do at this point to enjoy the lottery winnings — my wife and I have traveled the world and are not interested in doing any more of that. We’d be bored to death on a yacht. We would not care to go anyplace if we had a helicopter on our acreage in these mountains —
    http://faculty.trinity.edu/rjensen/Pictures.htm

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    1. Hi Bob, Your answer would seem to suggest that people need money to be happy, and I would disagree with you on that. Yes, there is a certain basic level of income that is needed in order to get by, but after that, increases in wealth do not lead to increases in happiness. If it were that simple, we would just say there is a linear relationsip between wealth and happiness, meaning billionaires are the happiest people on earth. And great timing on those fixed annuities, I am sure they help lower the stress levels.

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      1. Hi Jim,

        The one thing that seems to be overlooked in this thread is the joy that comes from giving and the joy that comes from helping to better society in other ways, a satisfaction in money beyond having enough for basic needs. This joy is possible by having more than enough for basic needs.

        Firstly, there’s real joy in having serious money to help others be they homeless, sick, or ignorant. Exhibit A is the joy of Bill and Melinda Gates in curbing polio in Africa and educating underprivileged students in the USA.

        Secondly, there’s the joy of Kobe Bryant in investing in startups that help make a difference in society. Sure Kobe got joy from making money (he claims he got more pleasure from investing than playing basketball.) But I think he also go pleasure from seeing both the results of his contributions of philanthropy and contributions to businesses that improve society.

        Sure there’s a lot of greed and selfishness that we dislike in every nation on earth. But the wonders of capitalism is that this greed often becomes channeled into something good (like providing jobs, goods, and services) —

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      2. Hi Bob, there is no doubt that people with a great deal of wealth can have a major impact on bettering society. But I don’t think the happiness they derive from doing so is any more than a person earning the median salary experiences when they give to a cause that is important to them.

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      3. Hi Jim,

        I still think you miss the point that many investor like Kobe Bryant and millions of traders find great happiness playing “the game” of investment. And their joy is increased by having the money to play the game bigtime. Kobe said he enjoyed investing more than basketball and hoped he could be remembered more for his investing than his basketball.

        My point is that money can bring happiness playing the investing game more than the happiness of spending that money other things. History is full of examples where multimillionaires in the investing game live quite modestly. Of course there are others who enjoy both investing and spending.

        And there are extremes when the joy of gambling becomes an addiction. Money that brings this joy is often lost quickly when the game is played in a casino, race track, and poker games. Michael Jordan enjoyed golf much more when lots of money rode on each shot. This money apparently brought happiness even when he lost.

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      4. Bob, I agree that money spent on experiences/investments can bring great happiness. I just don’t think investing $10,000 necessarily brings more joy than spending $1,000.

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  4. Interesting, Jim. Historically, man’s basic needs are things like food, shelter and security. Presumably, these things bring happiness. Money is an invention that, used in the right way, might be one means of achieving them; it is a tool in place of barter. But to to say that the goal of money is to achieve any basic need, or happiness, suggests the guy is a little confused.

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    1. Experiences are much better at making us happy than things. As for joint back accounts, that is all my wife and I have had for 38 years of marriage. It’s worked great for us, but I know many financial planners recommend both joint and separate accounts.

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  5. As you usually do, your discussion ignites my mind to think at a deeper level. While money helps us purchase our basic needs, we certainly cannot buy our way into long-term happiness. As Maslow illustrates, there is much more to pursuing life’s happiness. If I die penniless, I know my life will still be filled with happiness from Jesus, family, and the interactions with so many others.

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      1. that’s the usual description of the habits of men and women; the letter to Dan Pink presented it in the reverse manner; the guy likd to spend, the woman liked to save. As long as both people are satisfied with their money management situation, and it works for them, then I see no problem.

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  6. I thought maybe he meant that if you are arguing over money, it’s not giving you any happiness, so what’s the point. Stop arguing. Be happy. It’s only money after all.

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  7. I disagree with his statement. I don’t think the goal of money is to buy happiness at least not for everyone. Yes money does allow us to have access to more things that will bring us happiness in some instances but people often forget that a lot of people are happy with things that money can never buy.

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  8. Is it possible Ariely was being sarcastic. That is the only explanation I can think of for his statement about money and happiness.

    Money can buy pleasurable experiences. It cannot buy happiness. I think Jensen is talking about buying pleasure not happiness.

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