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Money (and friends) can buy you happiness

Over the years I have developed a keen interest on studies about happiness.  Partly because we all naturally strive to be happy and partly because of my job as an economist and a money manager.  If economists can define happiness better, then better policies and econometric models could be constructed and implemented to help society.

While it is generally understood that money alone can’t buy happiness, and in many case in fact it can be detrimental to one’s psychological well-being, it is generally better to dig a little deeper in what mix of elements can contribute to our happiness.

An interesting study from Harvard University started tracking the health of 268 of its sophomores in 1938 and continued the study to this day where it now follows 1300 of the original participants off-springs.  In the 1970s, Harvard added 456 Boston residents from the inner-city.

Based on the study’s on-going findings, it turns out that relationships are one major factor for achieving happiness. This result is validated by other unrelated studies (such as the ones presented last year by the American Psychological Association) which confirmed that loneliness is a major public hazard. 

New studies are also stressing the importance of real relationships and not just digital interaction.  A 2014 study published on the journal Computers in Human Behavior has identified how young children that spent five days at a summer camp without technology revealed much improved emotional cognition.

However, the importance of money in the mix toward one’s well-being cannot be diminished. Researchers from Purdue University and the University of Virginia studied data from 1.7 million people in 164 countries.  They cross-analyzed their earnings and their life satisfaction and realized that the ideal income for individuals was $95,000 a year for life satisfaction and between $60,000 and $70,000 for emotional well-being. This result is also not surprising because a solid income above pure basic needs allows for better medical care, less stress and provides a validation of one’s professional effort.

In summary, it would seem that a good mix of friends, a good portfolio of investments and reduced dependence on digital gadgets might be the right recipe for a balanced state of mind. 

At THALASSA, we do our little part as we strive to help with your portfolio and we certainly work hard to earn your trust!

 

Sources:

Fottrell, Quentin, “An 80-year Harvard study claims to have found the gateway to happiness,” April 24, 2018, Marketwatch

Uhls Yalda et al., “Five days at outdoor camp without screens improves preteen skills with nonverbal emotion cues,” 2014, www.sciencedirect.com

Waldinger, Robert, www.robertwaldinger.com