- Increased income does correlate to an increase in "day to day happiness," up to around $75,000 per year. Beyond that, there's no link between more money and more happiness.
- However, "life satisfaction" does go up with increased income, no matter how much you were making to start with, because getting a raise makes people feel more successful. This is a pretty startling conclusion when you think about it: beyond the $75,000 cutoff, more money doesn't actually make people happier, but it makes them think they must be happier. Thus, people may continue to pursue ever-increasing incomes, even beyond the point when working longer hours to earn more money actually starts to impair their quality of life.
- While people may increase their "life satisfaction" as a result of making more money, they won't increase it by spending more money on material goods. Humans' amazing ability to adapt to new situations means that we quickly adjust to any change in our standard of living, for better or worse. This is good, because it means that when we suffer a financial setback, we get used to it pretty quickly and our reduced circumstances don't seem so bad. But it also means that when we buy a new toy, the pleasure we get out of it is pretty short-lived. Then we adjust to the new situation and start taking it for granted. Or, as my favorite financial guru, Andrew Tobias, puts it, "A luxury once sampled becomes a necessity." (Well, if it's a luxury you actually like, at least. No matter how many times I sample fine wines, they all just taste to me like grape juice that's gone off.)
- However, people can get long-lasting pleasure by spending their money, not on stuff, but on experiences. That's because, first of all, they can get pleasure out of recalling and discussing them with friends in a way that they don't tend to discuss, say, a new TV set; and second, it's harder to make direct comparisons between your experiences and someone else's. If you've bought a new large-screen TV and your neighbor goes out and gets one that's even bigger, you may no longer feel as happy with yours—but if you went backpacking in Utah while your neighbor went surfing in Malibu, who's to say whose experience was "better"? It's easier to enjoy looking at each other's vacation photos without seeing it as a competition, so your satisfaction is enhanced by sharing, rather than diminished.
(Postscript: talking of the downstairs bathroom, the final piece that was missing—a threshold for the door—finally fell into place last weekend. Well, it didn't so much fall as Brian put it there, with the help of his new power saw and some cement screws. But the point is that we now have one entire room in our house that is actually, totally done—after being "almost done" for more than nine months. Yay! Only eight more "almost done" rooms to go...)