When Money Is Not The Answer

Why Money is not the Panacea we assume it to be

Most people believe that the more you have of money, the merrier it is! What if someone was to tell you that more money not only may not lead to more bliss or happiness, but can even detract from your ability to really enjoy life?

Some of you may be familiar with the research by Daniel Kahneman and Angus Deaton whereby they had come to the finding that making more money does lead to more happiness, but only up to a point. In the US, if a person was making up to $75000 in annual income, there was an association between how much money they made and how happy they were. However, if you made a lot more money than $75000 per annum, the increase in happiness thereafter was minimal.

The exact number is not important, what is important is to understand that more money does not necessarily lead to greater happiness, once you have crossed a threshold. On similar lines, we think that money is a great motivator, but research in psychology, especially in self-determination theory tradition has made it clear that people are more driven by the need for autonomy, competence and relatedness. Money is a hygiene factor and if you are not well-paid you will be dissatisfied ; however if you want to be satisfied in your work life you need to rely on other motivators that are tied to basic psychological needs fulfilment. That is why some people claim money is indeed important as it enables one to buy other things like freedom to do what you want to do.

But can money ever be a bad thing? Jordi Quoidbach et al found that people having more money were less able to savour positive emotions and experiences. In a clever experiment, they exposed a few participants to images of currencies while they were eating chocolate, while to another group the same images were shown but blurred. Those who were exposed to or primed about money were less able to savour and enjoy the chocolate. Now, this example may appear trivial, but it makes an important point that the more you focus on pursuit of money, the less you are able to enjoy every day nice things happening. Besides, by trading money for time, you may indeed be limiting your ability to smell the roses.

Another way in which money hurts is by decreasing ones empathy and moral behaviour. Those who are wealthy are less able to read emotions in people’s faces as compared to those from low socio economic status; luxury car drivers, it has been observed in psychological studies, are more likely to jump traffic lights or cut off other drivers that drivers of normal cars. Also in another clever experiment it was shown that the mere thoughts of money (that is being primed sub-consciously by financial terms) can make one more likely to lie or make unethical decisions subsequently.

So if only moderate amount of money may be good for us why do we still clamour for more and more money? Oftentimes psychological factors come into play- we are not happy and satisfied by what we need - a decent income in absolute terms, but are also driven by comparison and relative income. We are always trying to keep up with the joneses and indulging in a zero sum game that leaves everyone psychologically exhausted and unhappy.

I am speaking from personal experience: I had traded my well-paying job for a life of freelance working that reduced my annual earning to less than tenth, but never regretted the decision as giving up on money opened up a whole host of newer vistas. I wish more people had the courage or the insight or the luck to be driven to earn the basic minimum money as per their needs and not fall into the trap of assuming that more and more money will make them closer and closer to their goals of happiness and peace.

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