Money & Happines

I'm sure you're familiar with the title above. This topic has quite often been discussed in various publications. A lot of surveys have been conducted to find out the connection between money and happiness. How are money and happiness correlated? People often give numerous answers with different perspectives to this question.

Money and happiness are two of the most talked about subjects. "Can money buy happiness?" is the most asked question concerning this matter. The answer could be "yes" and "no". Whether money really can buy happiness depends on a number of factors.
According to Harvard psychologist Daniel Gilbert, who has explored the relationship between money and happiness, studies show that all we need for happiness is to have enough money for the basic necessities of life. If we have enough for food, clothing and shelter, we have enough money to be happy. In other words, when it comes to basic living standards, studies show that money has a great influence on happiness.

In this sense, for people living on salaries that don't meet their basic needs, money can buy happiness. An increase in wealth in a year most likely makes a tremendous difference to the quality of their lives. Simply stated, money makes a significant contribution to the lives and happiness of people who have little of it. Once these basic necessities are met, however, money doesn't seem to help a whole lot when it comes to happiness. After basic needs are met, any additional wealth usually has little effect on your happiness.

Another interesting survey result comes from Pennsylvania State University. Sociological researcher Glenn Firebaugh tried to find out whether the income effect on happiness results largely from the things money can buy (absolute income effect) or from comparing one's income to the income of others (relative income effect).
Firebaugh argues that, in evaluating their own incomes, individuals compare themselves to peers of the same age. Therefore, a person's level of happiness depends on how his or her income compares to others in the same age group.
Using comparison groups on the basis of age, the researchers found evidence of both relative and absolute effects, but relative income is more important than absolute income in determining the happiness of individuals in the United States. While income is important in determining happiness, Firebaugh's data found that physical health was the best single predictor of happiness, followed by income, education and marital status.
The researchers found a relative income effect tells us the richer you are relative to your age peers, the happier you tend to be.
That was a very interesting survey result. How about you? Do you use the relative income effect to gauge your happiness level? At times, you possibly apply it unconsciously but it's normal and only human. I personally agree with Firebaugh's data that physical health is the best single predictor of happiness. Health is everything. Correlating money with happiness is a very personal equation as people have different levels of happiness and happiness paradigms. There are lots of indicators in which money can help with happiness. The most important thing is our beliefs and attitudes to value money and happiness.

-- Sumber : Johnny Djohari/banking practitioner – The Jakarta Post Nov.27.2006