C-Suite Agenda

Does Money Buy Happiness And Meaningful Success?

You probably assume that when you see multi-millionaires with their yachts, exotic holidays and luxury houses, that they are supremely happy. However, you might be surprised to hear that this is not necessarily the case. The American psychologist, economist and author Daniel Kahneman, and his co-authors, were part of team from Princeton University which conducted a study entitled ‘Would You Be Happier If You Were Richer? A Focusing Illusion’.

But Kahneman’s study challenged that assumption. The team found that although people with high incomes are more likely than others to say they’re generally happy with their lives, this difference virtually disappears when they make a moment-to-moment assessment of how happy they really are.

The study was published in the ‘Science’ magazine. Their findings described a phenomenon known as the “focusing illusion” which misleads people into believing that more money can—or does—make them happier. The more narrowly an individual focuses on a particular aspect of our lives, the greater its apparent influence.

“When people consider the impact of any single factor on their well-being—not only income—they are prone to exaggerate its importance,” said Kahneman and his team. So, when survey respondents are asked, for example, whether wealthier people are happier than those less well-off, they tend to focus on financial status as the root of happiness. Perhaps seduced by thoughts of plasma TVs and seaside resorts, they make too much of the effect wealth can have on one’s well-being.

In reality, according to the study, higher income does little to improve life satisfaction, and may even cause more anxiety and stress. “In some cases,” explain the authors, “this focusing illusion may lead to a misallocation of time, from accepting lengthy commutes to sacrificing time spent socializing.”

Indeed, in the results of a national survey the authors analysed, people with an income above $100,000 reported spending more time at work and commuting. This may help to explain why so many people with relatively high incomes reported in the survey that they’re generally happy with their lives, but don’t actually experience as much happiness in their daily lives as they say they do. “People do not know how happy or satisfied they are with their life in the way they know their height or telephone number,” the authors write.

Overcoming the focusing illusion is key to helping you to you discovering meaningful success. It will enable you to avoid making stupid decisions. When you compare things like cars, careers, holiday destinations, you tend to focus on one aspect particular closely, neglecting the hundred other factors. You assign this one this one inordinate significance because of the focusing illusion.

In his brilliant book ’The Art of The Good Life’ Rolf Dobelli shares details about another study, ’How do you feel while driving your car?’’ that Kahneman carried out with psychologists Norbert Schwartz and Jing Xu. They asked motorists this question – on a scale between 0-10, how much pleasure do you get from your car?

They then compared their responses with the monetary value of the vehicle. The findings were that the more luxurious the car, the more pleasure it gave the owner. A BMW 7 Series generates about fifty percent more pleasure than a Ford Escort. Their conclusion: when somebody sinks a load of money into a car, at least they get a good return on their investment in the form of joy.

But here is the really interesting point. They then asked this question: how happy were you during your last car trip? They then compared the motorists’ answer with the values of their cars. The outcome – absolutely no correlation. Whether they were driving a top end luxury car or a second-hand banger, there was no correlation to the car they were driving to how happy they were feeling.

Question one showed a definite correlation between the perceived pleasure it gave its owner and the monetary value of the car. But the second question saw no correlation at all – a luxury car didn’t make the drivers any happier. You see the first makes you think solely about the car, while the second question directs you to think of other things, for example getting very stressed that you are going to be late for a meeting, receiving a urgent demanding phone call when you are driving or getting stuck in a traffic jam.

That is the effect of the focusing illusion – a car makes you happy when you are thinking about it but not when you are driving it. Thinking about your purchase of the car in a forced way makes you happy but the more you use it, this fades to the back of your mind, and that minimizes the effect on your happiness.

Enriching your life

Think about other purchases you have made. For example, if you are a house owner, think back to when you first bought it. The initial delight of having your offer accepted gradually wanes over time as daily events involving managing the house take over: perhaps costly expenditure for example, mending the roof, painting the rooms and sorting out the garden; Or a less convenient location.

Rather than walking to the shops when you had your flat in the city, you have to drive to the supermarket resulting in your buying ready-made meals, confectionery and fizzy drinks – no of which are great for your health. Like driving your car there is a net loss of happiness when you really examine and think about it. Same with technology, same with holiday homes.

Importantly all of these things can distract you from finding and harnessing sources of inspiration. How can you spend your time doing things that would definitely enrich and benefit your life from these sources, when your thoughts are consumed by purchasing material goods? You are conned into the illusion that these will make you happy but actually all the evidence shows they do not.

Everyone overestimates the impact of material purchases on their wellbeing and underestimates the impact of experiences. Experiences like watching a great film, reading a good book, going out for dinner with you family, or going on a long walk with your dogs. Yes, some experiences require money, but these activities are far better investments for being the best that you can be than buying a new top of the range car.

How many times have you asked yourself how much better life would be if you had a different job, or lived in a different location, a different house, and different car? I accept that it might make some people happier in the short term, but you need to get everything into an overall perspective.

A great analogy to help you do this is imagine that you are viewing your life through a camera’s lens.  When you look through a lens, depending what type of lens you are using make things look differently. A narrow-angle lens makes things appear closer together and you will only be focusing only on a few things. A wide-angle lens gets more things in the view allowing you see far more things.

Try and see your life in that way, by not focusing on a few things that you might thing will make you happy but take the longest view of your life. By doing this you will realise that those things that once seemed so important for the state of your happiness have actually become irrelevant when compared to what other rewarding and satisfying you could be doing

Meaningful success and genuine happiness is about trying to see life through the ‘wide-angle lens’, and not the ‘narrow-angle lens’ ones.

—- Written by Neil Francis.

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Neil Francis
Author of Inspired Thinking, Positive Thinking (LID Publishing, 2019) and The Entrepreneur’s Book (LID Publishing, 2018), Neil Francis has extensive experience as a chairman, CEO, and director of many companies. Currently he is the Chairman of a digital agency, director of an internet company, as well as a consultancy and a social enterprise. Neil Francis is an opinion columnist for the CEOWORLD Magazine. He can be found on LinkedIn and via his website.