Money: The Real Truth About Money

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

By Gregg Easterbrook Sunday, Jan. 09, 2005

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    Paradoxically, it is the very increase in money--which creates the wealth so visible in today's society--that triggers dissatisfaction. As material expectations keep rising, more money may engender only more desires. "What people want in terms of material things and life experiences has increased almost exactly in lockstep with the postwar earnings curve," Diener notes. As men and women move up the economic ladder, most almost immediately stop feeling grateful for their elevated circumstances and focus on what they still don't have. Suppose you lived in a two-bedroom house for years and dreamed of three bedrooms. You finally get that three-bedroom house. Will it bring you happiness? Not necessarily. Three bedrooms will become your new norm, and you'll begin to long for a four-bedroom abode.

    That money never satisfies is suggested by this telling fact: polls show that Americans believe that, whatever their income level, they need more to live well. Even those making large sums said still larger sums were required. We seem conditioned to think we do not have enough, even if objectively our lives are comfortable.

    Then again, if we think our lot is improving, happiness follows. Carol Graham, an economist at the Brookings Institution in Washington, found that people's expectations about the future may have more influence on their sense of well-being than their current state does. People living modestly but anticipating better days to come, Graham thinks, are likely to be happier than people living well but not looking forward to improvements in their living standards. Consider two people: one earns $50,000 a year and foresees a 10% raise, and the other makes $150,000 but does not expect any salary increase. The second person is much better off in financial terms, but the first is more likely to feel good about life.

    And guess what? The U.S. hasn't had a decent raise in two decades. Income growth has almost come to a halt for the middle class. In real terms, although median household income is higher than ever, median household income has increased only around 15% since 1984. That means most people have never had it better but do not expect any improvement in the near future. People tend to focus on the negative part and ignore the positive.

    Living standards, education levels and other basic measures of U.S. social well-being have improved so much so quickly in the postwar era that another big leap seems improbable. If the typical new house is more than 2,300 sq. ft., if more than half of high school graduates advance to college, if there are more cars and trucks in the U.S. than there are licensed drivers--all current statistics--then the country may need stability and equality more than it needs more money. But because we are all conditioned to think there's something wrong if we don't make more money each year, high standards of living in the U.S. may, paradoxically, have become an impediment to happiness. Fixated on always getting more, we fail to appreciate how much we have. Of course, in the grand scheme it's better that there are large numbers of Americans who are materially comfortable, if a bit whiny about it, than who are destitute. And never forget: 1 in 8 Americans are poor. Poverty remains a stark reality amid American affluence.

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