You’ve heard that money doesn’t buy happiness, but you probably haven’t heard of the wealth-happiness nexus. While money alone doesn’t buy happiness, it definitely makes you feel more secure—and can empower you to buy things that facilitate happiness, too. The idea of the wealth-happiness nexus takes things a step further, exploring not only how wealth can or cannot make us happy, but how happiness can positively impact our bottom line.
What is the wealth-happiness nexus?
Lots of research has shown that there’s a link between overall satisfaction and economic growth. While you don’t need a bunch of scientists to tell you that you feel happier when you have a robust checking account, it’s worth considering these conclusions: The relationship, it turns out, is bi-directional, meaning happiness not only comes from economic growth, but can “be an engine” for it, too. Happiness can help you make more money. Again, even on a common-sense level, this makes sense. When you feel happy and like your needs are met, you are less stressed and can get more done.
What else plays into this nexus?
Having money doesn’t automatically make you happy, of course. Like any emotion, happiness is subjective and depends on all kinds of personal factors within you. Just like there’s research on the link between happiness and money overall, there’s also been research on the little elements at play.
In this research, it wasn’t income that seemed to impact a person’s wellbeing so much as the following two concepts: subjective socioeconomic status and something called “Comsim.” Subjective socioeconomic status is an individual’s perception of their own social and economic standing, which isn’t determined by income, education, or job, but rather that person’s own feelings and beliefs about how they compare to others around them. Comsim is the practice of comparing your current socioeconomic situation with individuals from similar backgrounds, based on the idea that it’s easier to draw comparisons with someone who had the same upbringing you did than it is with your immediate peers. Both of these factors seem to be significant predictors of subjective wellbeing, and if you focus on them too much, you can reduce your own happiness, no matter how much money you actually have.
The objective, then, is to focus more on personal goals, progress, and accomplishments. Avoid comparing yourself to others and instead consider your financial position in a purely personal way. Consider whether you have enough for the budget you’re setting for the new year, not whether you have enough to compete with your childhood best friend. Celebrate any financial gains you make and don’t think about the ones you see other people make.
To start, assess your finances using a checklist before the year is over, then set a resolution to make more if you want, but also to celebrate your successes and spend money on things you enjoy. Your goal isn’t actually to be rich and happy, but self-satisfied and above the urge to compete with everyone else. There’s the real wealth-happiness nexus.