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Does money REALLY buy happiness?

2021-01-10 · Long video (solo, talking head or whiteboard) · Ali, John O'Nolan · recording, 12:13 · watch on YouTube

Topic: Money and investing (also: Mindset, motivation and happiness) · mode: Explanation and tutorial · tags: Evidence-based framing

Ali answers whether money buys happiness: drawing on Casey Neistat and a 2018 study of 1.7 million people in 164 countries, he says it does, but only up to a satiation point (about $85,000 for life evaluation, $55,000 for emotional wellbeing, varying by country and household size), and names hedonic adaptation and comparison as the reasons more money stops helping.

What is said

The parts of the video and what is said in each (★ — how much it matters to the video).

00:00:00 — Money and the myth that more money brings more happiness

  • ★★ Ali calls the belief that more money leads to more happiness one of the biggest myths about money. — 00:00:00
  • ★ Ali says he has been thinking a lot about how much money matters to happiness, especially since he started making money as a junior doctor. — 00:00:00

00:00:58 — Part one: yes, money buys happiness (Casey Neistat on life problems and money problems)

  • ★★ Casey Neistat (quoted): Casey Neistat says everyone, rich or poor, faces life problems such as finding happiness, love, fulfilment and purpose, and money won't solve them. — 00:00:58
  • ★★ Casey Neistat (quoted): Casey Neistat says that when you are broke you also have money problems: how to pay rent and food, affording a doctor, getting to work, clothes for a job interview. — 00:01:44
  • ★★★ Following Casey Neistat's point that money problems drown out all other life problems, Ali concludes that if you have no money, money literally does buy happiness by solving them. — 00:01:44

00:02:18 — Part two: to what extent money buys happiness, by definition of happiness, country and household

  • ★★ Ali cites a 2018 study he says was published in Nature, which looked at data from 1.7 million people in 164 countries to find how much money people need to be happy. — 00:02:18
  • ★★ Ali says social science studies of happiness call it subjective wellbeing, because the definition of happiness changes depending on who you are. — 00:02:54
  • ★ One way of measuring subjective wellbeing is life evaluation: people rate their life on a ladder from the worst to the best possible life, Cantril's self-anchoring striving scale. — 00:03:23
  • ★★★ In the 2018 study of 1.7 million people, Ali says, life evaluation stops rising with household income at about $85,000 on average across the countries studied. — 00:03:52
  • ★★ The other measure of happiness, emotional wellbeing, is scored from questions such as how often people laughed, smiled or felt gratitude in the last week and whether they were unhappy, stressed or anxious yesterday. — 00:03:52
  • ★★★ In the 2018 study of 1.7 million people, Ali says, emotional wellbeing stops rising with household income at about $55,000 per household. — 00:04:21
  • ★★ Ali suggests emotional wellbeing depends less on career success or salary than on relationships, hobbies and the things that bring enjoyment and fulfilment, while imagining your best possible life usually means a higher standard of living. (hedged) — 00:04:50
  • ★★★ Ali says the life-evaluation satiation point varies by region: about $100,000 to $105,000 in Western Europe and North America, about $70,000 in Southeast Asia and about $35,000 in Latin America and the Caribbean. — 00:05:20
  • ★★ The satiation figures are for single-person households; for larger households the income is scaled by the square root of household size, so a household of four in Western Europe reaches it at about $200,000 rather than $100,000. — 00:05:49
  • ★★ Ali stresses the satiation points are population averages: doubling a $100,000 salary might still make you happier; on average, people on $200,000 are simply no happier than people on $100,000. — 00:06:24

00:07:03 — Part three: hedonic adaptation, the lottery studies and his Tesla

  • ★★★ Ali's overall answer: yes, money does buy happiness, but only up to a certain point. — 00:07:03

    “yes, money does buy happiness, but only up to a certain point.”

  • ★★ Ali names hedonic adaptation, the tendency to return quickly to a similar level of contentment even after major positive or negative changes, as a big part of why more money stops bringing more happiness beyond the satiation point. — 00:07:32

  • ★★ Ali says famous studies of lottery winners found that they very quickly returned to more or less their baseline levels of happiness. — 00:07:32
  • ★★ The Tesla Model 3 Ali bought in September 2020 thrilled him for the first few weeks but has become the new normal and gives him less pleasure; he does not regret buying it and knew he would adapt. — 00:08:01
  • ★★★ Knowing hedonic adaptation is a fundamental part of human psychology, Ali makes a point of being more grateful for what he has, for example thinking "this is a pretty sweet car" as he gets into his Tesla. — 00:08:25
  • ★ John Stuart Mill (quoted): John Stuart Mill, as Ali quotes him: men do not desire to be rich, only to be richer than other men. — 00:08:25
  • ★★ Ali says studies confirm relative deprivation: our happiness from income depends less on the money itself than on how it makes us feel compared with our friends and colleagues. — 00:08:54

00:09:24 — Comparison is the thief of joy; John O'Nolan on rich, unhappy people

  • ★★★ Ali calls comparison the thief of joy: comparing ourselves with anyone makes us feel superior, which is bad, or inferior, so the way forward is not letting ourselves make comparisons. — 00:09:24

    “comparison is the thief of joy.”

  • ★★ When Ali speaks with someone who has a $10 million business he is tempted to feel a little jealous, but consciously reminds himself that comparison is bad and pointless. — 00:09:53

  • ★★ Over the last few months Ali has interviewed many people with huge, financially successful businesses, and also people who could have big businesses but choose to keep them small and manageable. — 00:09:53
  • ★★ Ali's friend John O'Nolan, CEO of Ghost, the company Ali uses to host his website, has deliberately kept Ghost small and is not optimising for growth at all costs. — 00:10:23 · Ghost
  • ★★ John O'Nolan says he evaluates people by how happy they are more than by how much they make. — 00:10:23
  • ★★★ John O'Nolan knows many rich, unhappy people who sold companies they loved, bought Lamborghinis and found the thrill wore off much faster than expected, leaving them asking what to do now. — 00:10:49
  • ★★ John O'Nolan says he cares more about the freedom he has than about money; freedom is what he really optimises for. — 00:10:49
  • ★★ John O'Nolan advises trying not to compare yourself and going for the goals that feel meaningful to you rather than the goals you see other people going for. — 00:10:49

00:11:22 — Your Money or Your Life and his Book Club episode on it

  • ★★ John O'Nolan says the worst thing you could do in life is strive to achieve someone else's definition of success, only to arrive there and realise it is not yours. — 00:11:22
  • ★★ Ali says Vicki Robin's Your Money or Your Life really helped him change his relationship with money, stop focusing so much on making more of it and think about meaning and fulfilment instead. — 00:11:22

In the description and comments

  • ★ Ali Abdaal (channel): The channel agrees with a viewer that the study of money and happiness Ali cites appeared in Nature Human Behaviour, a sister journal of Nature. — creator comment

Threads in this video

Mentioned

Central: hedonic adaptation · John O'Nolan

Also: People: Casey Neistat · John Stuart Mill · Vicki Robin

Projects: Book Club

Works: Your Money or Your Life

Concepts: Relative deprivation

Places: Southeast Asia

Products: Ghost · Tesla Model 3

Also centred on hedonic adaptation: Motivation, Stress & Time Management - Exam Revision Q&A with Cambridge students · How I Gained 1 MILLION Subscribers

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