We have all heard the old saying that money can’t buy happiness. And we’ve seen the touching stories of poor people living joyously without material wealth and rich people who are completely miserable. Does this mean that money is not important to living the good life?
Don’t quit your job and rid yourself of material possessions just yet. Money is important for happiness. Perhaps a better way to describe this relationship is to say that a lack of money contributes to unhappiness. Studies show that people in poverty are less happy than those who are not. In addition, for many who may not be in poverty but are struggling to make ends meet, financial stress is a barrier to happiness. Seems like a no brainer to anyone who has ever been poor or worried about being able to pay bills. Yet, the claim that money has nothing to do with happiness persists. But why?
One reason is that money only matters to a point. Once people are able to meet their basic needs, the amount of money they have becomes less predictive of their psychological wellbeing. The issue does become more complex when you consider other social, cultural, and personality factors. For example, people who care about money and material possessions more than other goals and values are vulnerable to poor wellbeing if they are not wealthy, and thus unable to afford the lifestyle they desire. And research from my lab suggests that people high on the personality trait of narcissism gain psychological benefits from the pursuit of material wealth because they find this pursuit to be a personally meaningful goal.
That being said, for most people, the relationship between money and happiness appears to primarily be about economic security. A lack of economic security causes great uncertainty and anxiety. Once basic financial needs are met, people are able to pursue the activities and interests that give them personal fulfillment. They can focus on family and friends, helping their community, and pursuing self-improvement goals. Without economic security, it is difficult to find psychological security.
Based on this idea, my lab recently conducted a series of studies to more specifically examine the relationship between economic security and meaning in life.
Why meaning? Perceiving life as meaningful is an important component of healthy living. People who view their lives as meaningful, compared to those who lack a sense of meaning, are at lower risk of having mental health problems, better able to cope with stress, quicker to recover from illness, and generally physically healthier. Low meaning is a major risk factor for depression, alcohol and drug abuse, problematic gambling, and suicide.
Since the “Great Recession of 2008” journalists and social commentators have been discussing the American meaning problem, a discussion that has become much louder since the widely unexpected election of Donald Trump. Though the economy has recovered in many ways, for many Americans, economic insecurity is the new normal. As Nicholas Eberstadt recently pointed out in his outstanding piece, Our Miserable 21st Century, “The plain fact is that 21st-century America has witnessed a dreadful collapse of work.”
Unemployment numbers only represent people who are actively looking for work. For every prime-age male counted as unemployed, there are another three not working and not trying to find work. Many have given up.
Giving up on work may also reflect giving up on meaning. And meaning derived from the economic security that work helps provide may be especially important considering that other sources of meaning have also diminished in American culture.
Religious faith, which has traditionally been a major source of meaning, has been in decline for decades. Social bonds are also a powerful source of meaning but many Americans report having few or no close relationships. Up to 20% of Americans suffer from persistent loneliness. Marriage is in decline. Without faith, family, or work, many Americans are not meaningfully engaged in their community.
Economic security likely contributes to these other sources of meaning. As noted, once people are able to meet their basic financial needs they are better positioned to focus on other personally-fulfilling goals. But does economic security directly contribute to meaning in life?
In our research, we considered the role of economic security in finding meaning by first conducting a survey of American adults. We asked questions about income, financial security, and perceptions of meaning in life. We found a significant positive relationship between household income and the feeling that life is meaningful. More money was associated with greater perceived meaning.
However, this relationship was explained by perceptions of financial security. Income predicted perceptions of financial security, which in turn predicted meaning. When we statistically controlled for perceptions of financial security, household income no longer predicted meaning. It is the feeling of economic security provided by money that ultimately affirms meaning.
In the remaining studies, we examined the relationship between economic security and meaning experimentally. If economic security provides meaning, giving people reasons to doubt they will have economic security in the future should jeopardize meaning.
In one study, we used a procedure created by other researchers in which participants view one of two slideshows. One slideshow consists of photographs with captions related to economic instability, such as pictures of empty office buildings, unemployment lines, and home foreclosure signs. The other slideshow (the control condition) features a range of architectural buildings. After viewing one of these slideshows, participants completed a questionnaire assessing perceived meaning in life.
In the other study, instead of viewing a slideshow, participants read one of two news articles. One article painted a bleak picture of the future economy. The other painted a more optimistic picture about economic recovery and prosperity. In this study, there was a third condition in which participants received an error message on their computer screen and therefore did not read an article. All participants then completed the meaning questionnaire.
In both experiments, participants who were exposed to information that threatened economic security reported lower levels of meaning in life compared to those in other conditions. Further suggesting that it is economic security and not wealth that contributes to meaning, in the final study we found no difference between the optimistic economic news story and control condition on meaning in life. Giving people information that the economy will worsen decreased meaning but giving them information that it will recover did not boost meaning relative to a control condition. Of course, it is possible that participants simply did not believe the news story suggesting an economic recovery. Future work is needed to determine if actual economic success boosts meaning. I suspect it could, to a point.
As our society faces increased automation and other changes in how we live and conduct business, we will need to address the growing concern of economic insecurity. It is not just a matter of money. It is a matter of meaning. The evidence is clear. Deficits in meaning contribute to many personal and social ills. Without meaning, a society loses hope and the motivation to better itself. And then we are in real trouble.
Abeyta, A., Routledge, C., Kersten, M., & Cox, C. R. (in press). The existential cost of economic insecurity: Threatened financial security undercuts meaning. Journal of Social Psychology.
Abeyta, A., Routledge, C., & Sedikides, C. (in press). Material meaning: Narcissists gain existential benefits from extrinsic goals. Social Psychological and Personality Science.