Can Money Buy Happiness?

Many Americans are plagued by the “if-only” syndrome. Data show that most people believe if they could only get a raise, a new house, a new car, or some other material possession, they would finally be happy. Not surprisingly, studies demonstrate that buying things does not lead to happiness.

To be sure, it is much easier to find happiness if your basic needs are met. Two Nobel-prize-winning economists conducted a famous study where they found that Americans improve their emotional well-being by earning more money up to a point – specifically an annual salary of $75,000.  Beyond that, people may feel more accomplished, but they don’t reap any emotional benefits from their higher salaries.

But a growing body of evidence demonstrates that you can buy happiness – essentially by buying time. A large chunk of this data comes from Ashley V. Whillans, a business professor at Harvard University, who studies how people navigate trade-offs between time and money.

In one study, published in 2017 in the Proceedings of the National Academy of Sciences, Whillans and her research team surveyed more than 6,200 adults living in the United States, Canada, Denmark, and The Netherlands. The data showed that people who chose to spend their money on time-savings services – such as meal delivery, a house cleaner or a lawn service – reported greater life satisfaction compared to those who did not.

The researchers also conducted an experiment where they gave participants – 60 adults living in Canada – $40 on two consecutive weekends and directed them to spend it on a time-saving purchase or a material purchase. At the end of the day, they asked the participants how much time they saved or what they purchased, and then questions about their mood and stress levels.  Participants who spent their money on time-saving purchases felt less stressed and reported higher levels of well-being compared to those who purchased material items.

What’s going on here?

It’s not that people living in our modern society have less time. Data show that people across the world who live above poverty levels have more free time than ever before, yet they feel more stressed about a lack of time. But there is some evidence that people with more money choose to spend time on stressful activities, such as commuting and shopping. And because they perceive their time as economically valuable, they feel pressure to make the most of it.

Whillans research demonstrates that buying time can serve as a buffer against those stressful feelings by helping people feel like they have more control over their time.

In addition, the evidence shows that valuing time over money promotes social connections, which leads to a host of benefits. People who prioritized time over money were more likely to make new friends and socialize with work colleagues. And research shows that couples who use their money to save time feel more satisfied in their relationships.

Our cultural perceptions of time and money are at play here because Americans tend to put a premium on busyness. People who have extra money are considered successful and well-off, but those who have extra time might be considered lazy. But in reality, having free time to enjoy leisure activities and spend time with loved ones is a key component of well-being.

The take-home message: Forgo those designer shoes or that new gadget. Instead, pay someone to do a household chore that you don’t enjoy. The evidence shows it’s actually good for you!

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