Money: The Real Truth About Money

Why we remain keen for green even though it often gives us more social anxiety than satisfaction

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If you made a graph of American life since the end of World War II, every line concerning money and the things that money can buy would soar upward, a statistical monument to materialism. Inflation-adjusted income per American has almost tripled. The size of the typical new house has more than doubled. A two-car garage was once a goal; now we're nearly a three-car nation. Designer everything, personal electronics and other items that didn't even exist a half-century ago are now affordable. No matter how you chart the trends in earning and spending, everything is up, up, up. But if you made a chart of American happiness since the end of World War II, the lines would be as flat as a marble tabletop. In polls taken by the National Opinion Research Center in the 1950s, about one-third of Americans described themselves as "very happy." The center has conducted essentially the same poll periodically since then, and the percentage remains almost exactly the same today.

(In a December TIME poll on happiness that phrased the question differently, 17% of respondents said they were brimming with happiness "just about about all the time," and about 60% said they were frequently happy.)

Yet if you charted the incidence of depression since 1950, the lines suggest a growing epidemic. Depending on what assumptions are used, clinical depression is 3 to 10 times as common today than two generations ago. A recent study by Ronald Kessler of Harvard Medical School estimated that each year, 1 in 15 Americans experience an episode of major depression--meaning not just a bad day but depression so debilitating that it's hard to get out of bed. Money jangles in our wallets and purses as never before, but we are basically no happier for it, and for many, more money leads to depression. How can that be?

Of course, our grandmothers, many of whom lived through the Depression and the war, told us that money can't buy happiness. We don't act as though we listened. Millions of us spend more time and energy pursuing the things money can buy than engaging in activities that create real fulfillment in life, like cultivating friendships, helping others and developing a spiritual sense.

We say we know that money can't buy happiness. In the TIME poll, when people were asked about their major source of happiness, money ranked 14th. Still, we behave as though happiness is one wave of a credit card away. Too many Americans view expensive purchases as "shortcuts to well-being," says Martin Seligman, a psychologist at the University of Pennsylvania. But people are poor predictors of where those shortcuts will take them.

To be sure, there is ample evidence that being poor causes unhappiness. Studies by Ruut Veenhoven, a sociologist at Erasmus University in Rotterdam, show that the poor--those in Europe earning less than about $10,000 a year--are rendered unhappy by the relentless frustration and stress of poverty. But you knew that.

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