The Link Between Money and Happiness

Host: Not a lot of folks these days are jumping for day, and you only need to read the business news to know why. But psychologists are more confident that we'll bounce back emotionally than economists are that we will rebound financially. The reason lies in the link between money and happiness. More and more evidence suggests it's not as strong as you might think. Increases in wealth don't make you glad, at least not for long. And decreases in wealth don't make you permanently sad. One reason is that people are status-conscious social animals. You keep score by how you're doing compared to others. So it doesn't matter so much that your 401K has hit an iceberg, as long as everyone you know is in the same lifeboat. Then there's something called hedonic adaptation, the fact that you grow accustomed to just about any circumstances. You probably have already experienced how quickly you get used to luxuries. How long does it take, for example, before the thrill wears out on a flashy new car, and it starts to feel just like transportation. Well, it works that way when it comes to making due with less, just more slowly. Less eventually becomes the norm. Your happiness level resets. What you'll probably find in this recession is what you already knew deep down. The things that really make you glad don't have that much to do with money. Family and friends make you happy. So does a sense of belonging to something bigger than you, whether that's a religion or a cause or an organization. And if you want to spend less money to get more happiness, spend on experiences, on making memories, not on acquiring things. If this crash taught us anything it's that things depreciate over time. Memories only get better.

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==== Transcribed by Automatic Sync Techologies ====