Quantity of Cash Required for Happiness: Insights from Research Studies
In a world where wealth is often equated with happiness, a recent study sheds light on an intriguing paradox - the "hedonic treadmill." This concept suggests that people, regardless of their income level, can become accustomed to their newfound wealth and the luxuries it provides, requiring more to feel content.
A 2022 experiment conducted across various income levels, including Australia, yielded interesting results. Participants, particularly those from lower-income countries, experienced happiness gains three times larger than their high-income counterparts when given $15,000. The majority of this sum was donated to family, friends, strangers, and charities, indicating a strong emphasis on social connections and giving.
The pursuit of wealth, as suggested by Aristotle's philosophy of eudaimonia, should not be life's sole focus. In fact, decades of international research have consistently shown that materialistic goals, such as acquiring wealth and possessions, can undermine wellbeing.
In the United States, CEOs earn 265 to 300 times more than the average worker, a trend that is also visible in Australia, where the CEOs of the top 100 companies earned 55 times more than the average worker last financial year. This growing income inequality is particularly affecting young Australians, as housing becomes less affordable.
Research from the UK suggests that as inequality increases, social outcomes can worsen, including increased crime, drug and alcohol abuse, obesity, and reductions in social trust. In an ideal Australia, the wealth of the richest 20% would be more equitably balanced, potentially closer to an even distribution where extreme concentration is reduced to foster greater social cohesion and economic opportunity for the lower wealth percentiles.
However, the work needed to acquire wealth can mean less time focusing on hobbies and loved ones. The concept of "time affluence" and "experiential buying" can help counterbalance this. By maximising free time through delegating tasks and focusing on experiences like meals out with loved ones and holidays, people can develop new skills, build relationships, and create lifelong memories.
Interestingly, other findings suggest that wellbeing may continually increase with growing wealth, but the increase from $1 million to $10 million is less significant. Deep, meaningful relationships with others, as supported by Harvard research, are key to mental and physical wellbeing. Materialistic striving, often borne out of low self-esteem or negative self-comparison, can hinder these relationships and, consequently, overall wellbeing.
In the realm of the extraordinary, Elon Musk's Tesla board proposed a potential $1 trillion compensation plan. Meanwhile, Jayne Hrdlicka, the departing Virgin CEO, will receive nearly $50 million in shares and other benefits. While these figures are impressive, they raise questions about the balance between wealth and wellbeing, particularly in a world where social cohesion and opportunity are increasingly dependent on income equality.
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