Does Money Buy Happiness

The subject of this paper is the age-old question, “Does Money Buy Happiness”. On the surface, this question appears to be an easy one. Happiness however, is a subjective item. To better answer this, several points must be analyzed such as, “What is happiness? ”, “How is it measured? ” etc. To better streamline this process, a research question was developed: * “Does an increase in personal income cause individuals to have a change in their level of well-being? In an effort to answer this question, several conflicting views were examined and several individuals were interviewed who had financial windfalls to determine the effect that an increase in income had on their well-being.

The findings initially appeared to suggest that money buys happiness to a degree. Upon further review however, the results are mixed. Several people who came into money due to lottery winnings or inheritance have gone broke because they didn’t have a plan in place to deal with the money. Others had more fun giving away most of their fortune to those they felt needed it more than they did.

This paper will note the details behind these interviews and articles to better determine if there is actually an answer to the initial question, “Does Money Buy Happiness? ” Statement of the Problem Background and Introduction The question of “Does Money Buy Happiness? ” has been around for about as long as there has been money. The idea that great wealth brings great joy is almost universally shared, but rarely true. The individual who has acquired wealth suddenly usually has neither the training nor the self control to make it last and use it to the fullest benefit.

Examples abound, but those presented here reflect the results of several individuals who received a windfall and their struggles to make it a worthwhile gift. In addition, an investigation is made into whether or not money does buy happiness using examples of polling, well-being indexes, and a variety of surveys. Hypothesis H0: Lottery Winners are no happier than other income groups. H1:Lottery Winners are happier than other income groups. It is hypothesized that increasing one’s personal income will have no effect on the degree of personal well being.

The following research will illustrate that in most cases, the null hypothesis is true, with certain exceptions. Variables Defined To better understand how money affects happiness, happiness itself must be defined. Happiness, according to Webster’s dictionary, is defined as “The state of being happy; joyousness. ” (“Happiness,” 1966). Being happy is defined by Webster’s as: “Enjoying life, contented…” (“Happiness,” 1966). The inference might be taken that to be contented requires more money, or to enjoy life requires more money. Literature Review

Several examples of an increase in personal wealth have indicated that it brings no increase to the degree of well being an individual experiences. In fact, it sometimes illustrates the exact opposite. Take into consideration the stories of Arnim Ramdass and Denise Rossi. Both won large sums in the lottery and both decided that keeping the proceeds for themselves was the best action they could take. After winning $19 Million in the South Florida lottery, Mr. Ramdass subsequently left his wife and disappeared, refusing to pay the house payments and bills.

His wife, Donna Campbell, a former beauty queen, started having problems when Mr. Ramdass “bought the winning ticket in a pool with his co-workers, mechanics at the Miami International Airport, in June 2007. The jackpot was worth $19 million, but they collected a lump sum of $10. 2 million and, after taxes, each got about $450,000” (Bhatt, 2009). In this instance, while the husband might have experienced a momentary increase in his personal well-being, the overall effect of the increase in personal wealth led to a dramatic downturn in the well-being of his family.

Denise Rossi was married to her husband John for 25 years, so close they even shared an electric toothbrush. Their marriage was torn apart by the introduction of money into the relationship. Just 11 days after winning $1. 3 million in the California lottery, Denise filed for divorce. In addition to that, she hid her winnings from her then-husband, hoping to keep it all herself. Denise was quoted as saying she didn’t want her ex-husband “getting his hands on” the winnings (O’Neill, 1999). The story doesn’t end there.

Two years later, after going bankrupt and losing his business, Thomas happened upon a piece of misdirected mail that let him on the fact that Denise had won the prize. After legal proceedings, the Judge in the case awarded all the winnings to Thomas. Again, one party might have had a temporary increase in their well-being, but it didn’t last. In contrast to these examples, not all articles that have been researched end badly. Take, for example the stories of Joe and Lisa Johnson, Joan Ginter, and Adeline Angelo. All these individuals won lotteries and have found ways to share their good fortune.

Joe Johnson won $10 million in the National Lottery in 1998, but the acquisition of a lifetime wasn’t what he expected. Joe says “In many ways, winning the Lottery had been one of the loneliest things that had ever happened to me” (Cable, 2009). After a couple of years, Joe found that the women that he dated “were more interested in my money than me” (Cable, 2009). After one memorably bad relationship, Joe decided that the next person he dated would not know that he had money so he could judge the true nature of the person. He met his current wife, Lisa, when she was working in a cafe.

Over the course of their relationship, he intentionally withheld the fact that he had money. He went to elaborate ends to mislead her such as wearing old clothes on dates, driving an old car, and going dutch on dates (Cable, 2009). These efforts had the desired effect, as Lisa grew to love him even though she believed he had no money. Lisa said “I remember telling him that we wouldn’t have much money, but I was happy to carry on working. I just wanted us to be together” (Cable, 2009). Adeline Angelo and her husband Eugene won a $2. 5million jackpot 11 years ago and just recently hit another win, netting $5 million.

Lottery director Gardner Gurney said “The Angelos are living proof that lighting, or in this case, random luck, can strike twice” (Schapiro, 2007). The Angelos are sharing their winnings with their three children and extended families, using their good fortune to help others. Their main goal is to allow the new fortune to “but us good health and longevity” (Schapiro, 2007). Joan Ginter of Bishop, TX has won not one, not two, but four prizes. One could rate her as one of the “luckiest lottery player” (Collins, 2010).

While being lucky doesn’t actually instill appiness in a person, the increased confidence it brings might lead to an increased level of well-being. It has seemed to cause her to lead a double life. Moving to Las Vegas, NV, from Bishop, TX, Ms. Gitner, a math professor, has purchased a van for her hometown church, donated money to the family that runs the Days Inn of the interstate and donated her home to charity when she moved. She remains a recluse though, not allowing messages to be left on her answering machine or granting any interviews. In several cases the ability to give has only changed the amount people give, not their desire to give.

Curtis Sharp was earning $29,000 per year when he won $5. 6 million in the New York lottery. Curtis said “I always had champagne tastes. Until this win, I just couldn’t afford them” (Martinez, 2002). After winning a $5. 6 million jackpot in 1982, Curtis began a spree of spending and giving that has left him broke today. Curtis says “I felt sad when it was all gone, but this money came from nowhere, and it was there to be spent” (Martinez, 2002). Curtis eventually founded a church which allowed him to avoid paying taxes on his income, while ministering to the needy in New York.

This has angered some, but Curtis says “” had all this money, and yet there was still something missing and that something was God” (Martinez, 2002). But for every Curtis Sharpe and Joan Gitner, there are examples of those who just refuse to make wise decisions about their sudden wealth. Jack Whittaker is considered to be the “unluckiest lottery winner” (Schoonover, 2004) and Michael Carroll is referred to as the “Lotto Lout” (Salkeld, 2010). These two winners are examples of what not to do with lottery winnings. Jack Whittaker won $113 million in the nation’s biggest undivided lottery.

He originally started out by donating $7 million to three churches, started a charity to help the unemployed, set up scholarships, and helped build parks. But Jack was a frequent visitor to strip clubs and was known to carry large sums of cash in his car. Since that time, he has been robbed numerous times and has suffered several personal tragedies, not to mention the number of brushes he has had with the law. Mr Whittaker says of his situation “if I had to do it all over again, I’d be more secluded about it. I’d do the same things, but I’d be a little more quiet” (Schoonover, 2004).

Michael Carroll is back to relying on unemployment after spending all of his $9. 7 million winnings in just 8 short years. Over that period of time, Mr. Carroll lavished several million dollars on family and friends and hundreds of thousands on drugs (Salkeld, 2010). His wife left him, and he was deep into drugs, spending at times over $2,000 a day on crack cocaine. He is now reduced to unemployment or occasionally works as a trash collector, the same job he was doing prior to winning the prize. These examples illustrate what can happen to individuals who come into large sums of money, but what of the public at large?

Several studies have been done that indicate happiness is not the result of money in general, but how one reacts to it. Three different studies indicate that mere money won’t buy happiness (Goudarzi, 2006; Herper, 2004; Goodwin, 2010). These studies all indicate that an increase in personal wealth doesn’t make much of an impact to the degree in personal well being an individual experiences. Goudarzi cites a 2004 study conducted by a Princeton University study team including Alan Kruger, an economist, testing their hypothesis that the amount of income correlates with the mood each participant reports during testing.

The primary study group was female in an effort to study a homogeneous group. In revisiting the data, researchers found that this correlation was not what was expected, with individuals who had low incomes (less than $20,000 per annum) reporting much lower incidences of bad moods than expected. Herper, Senior Editor at Forbes, attempts to make the distinction in the relationship between money and happiness by citing several sources such as Peter Ubel, professor of medicine at the University of Michigan who speculates that people may be protected from negative circumstances by the extra cash.

Herper also cites George Loewenstein, an economist at Carnegie Mellon University, who states that “people aren’t very good at figuring out what to do with the money” (Herper, 2004). Herper states that “the human brain becomes conditioned to positive experiences” (Herper, 2004), so winning the lottery may temporarily raise your level of happiness, if done over and over, the excitement wears off. The conclusion he appears to reach is “while money may not help make people happy, being happy may help them make money” (Herper, 2004).

In correlation, Ms. Goodwin’s article indicates while money can buy happiness, its ability to be the only thing that matters diminishes as household income nears the $75,000 level. The author suggests that “while people with incomes of more than $75,000 won’t feel a boost in happiness if they earn more, losing a substantial amount of their income would have an adverse affect on their emotional well-being” (Goodwin, 2010).

Timothy Noah (1999) of Slate magazine uses serious data originally produced by the University of Chicago’s National Opinion Research Center. This data, while “a few years old”, seems to indicate that the amount of money a person makes correlates to whether they are “Very Happy” or “Pretty Happy”. He refers to Robert Samuelson’s 1995 book The Good Life and Its Discontents several times and cites calculations that indicate that “you’re nearly four times as likely to be miserable if you make less than $15,000 as you would be if you made more than $35,000”.