Ritholtz on Money != Happiness

I’m happy to see Mr Ritholtz take on one of my pet/favourite topics: the connection between wealth and happiness.  His review of the latest Pew research is worth perusing: the findings of the recent survey agree with what’s been said before.  That is:

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Who’s the happiest of them all? Source: Pew Research via Bloomberg View.

  • More money = more happiness, until basic needs are met.  Then there is precious little correlation between the two.
  • Despite having very high relative incomes, Western Europe/US/Japan just don’t seem as happy as several developing countries, particularly religiously-devout Latin American ones.
  • Beyond basic needs, money spent on items gives less happiness than money spent on experiences.  The latter includes charitable donations.  So ‘bang for buck’ goes to buying better experiences.
  • An interesting angle here: Ritholtz quotes another survey, showing the wealthy get considerable pleasure from saving/investing.  Maybe part of the reason they’re wealthy…?

This all agrees with my interpretation of the ‘extreme retirement’ movement.  Spending little on items, but enjoying experiences such as travel.  Enjoying saving/investing, with the intention of creating a passive income.  Instead of working for a fancier house/car/stereo, minimising expenditures to allow more time for those valuable experiences.  Sounds like a way to maximising happiness, frankly.

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