Money Can Buy Happiness (in variable and diminishing quantities)

I grew up in a home where money was not plentiful. There was enough money to pay the bills but going out for dinner meant Ponderosa or Frank Vetere’s, and family holidays involved lots of driving and Super 8 motels. Sometimes my mom had to say “no” to a school field trip because it was too expensive. That kind of thing. My early experiences with scarcity (and exposure to financial abundance later in my childhood) are an important part of the adult I am today.

I recently came across some research by Matthew Killingsworth of Wharton which pushes back against conventional wisdom about money vs. happiness. You can read the full paper here. Or a brief summary article here. Here is the abstract:

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  1. @BrentDonnelly1 Really loved this piece. Spoke to me on so many levels. Early on in my career I was lucky enough to read the Paradox of Choice by Barry Schwartz and learnt about the Hedonic Treadmill.

    Great work, thanks for putting it out there!

  2. Great article. Self-awareness is often undervalued, but you more than excel in that area.

    I think you may have overlooked reporting on one critical but likely relevant fact.


    Ottawa is regularly -40 in the winter. Doesn’t matter if you measure in C or F. I lived there for 10 years. And my burning desire was always: have to get out to some place more welcoming to the human condition, meaning any place closer to the equator that to the North Pole. Perhaps a contributing factor to your initial motivation to be a trader was finding ANY source of funding that would allow you to escape from the inhospitable winter environment in Ottawa. Even NYC is an upgrade.

  3. Avatar for robh robh says:

    You are only as happy as your most unhappy child.

  4. The problem with evaluating your ‘success/happiness’ using a money ruler is that then you will likely evaluate others based on a money ruler. This is an inescapable side effect of money rulers, and so every interaction with others has the risk of becoming money rulerness. (These evaluations were typical in the primogeniture phase of the UK.) I suspect that, perhaps, then almost no one is immune from unhappiness when using moneyness. And perhaps those not unhappy with abundant moneys must be condemned to endless currency concerns?

  5. Fantastic article. Really captured much of my life as a trader. Money can buy comfort, it cannot buy happiness, which ultimately is a function of a relaxed and content state of mind. Thank you🙏

  6. Avatar for Tanya Tanya says:

    @BrentDonnelly1 Excellent piece, and wow, do I relate with the first paragraph. My experience was very similar, I never went hungry but there were no ‘extra’ funds. I knew as by osmosis not to even ask about “expensive” field trips.

    Thank you for introducing the concept of the hedonic treadmill, I had never heard that phrase before, but it’s something I intrinsically feel to be true.

    I think the best piece I’ve ever read about money is this blog post by Dave Winer (who I keep bringing up, but he’s such a great thinker imo, and also very formidable in technology, as a founder of blogging, RSS, and podcasting):

    I can’t speak as much to the trading part of the piece since I’m the George Costanza of investing (whatever I do, do the opposite!) – but I found it to be a great companion to Ben’s “Winner’s Tilt” post (or vice versa).

    Thanks for this!

  7. Hi Ben - great article, even for a non-trader. I find it very coincidental that our bible study last night centered around Hebrews 13:5 "Keep yourself free from the love of money, and be content with what you have, for he has said “I will never leave you nor forsake you.” Spirited discussion from the teens in the class: what constitutes the love of money? How can we be content when we don’t have enough of it? In response, one adult answered with this question - should we love money & use people, or should we use money & love people? A discussion for another day. Looking within is always a good thing, regardless of what we find. I’m leaning more & more to the prospect that happiness is a skill that some people never develop…

  8. LOVE this question. I’m mentally sorting a bunch of people in my head right now!

  9. For all of you who have never heard of the hedonic treadmill, might I recommend:

    This was a book that found me at a receptive time.

  10. And happiness too swiftly flies?
    Thought would destroy their Paradise.
    No more;-where ignorance is bliss,
    'Tis folly to be wise.

    A thorough treatise on happiness must include a discussion on cognitive range.
    Would a condemned criminal really enjoy their last meal, if it was expensive (Michelin-star chef) enough?

  11. The Hedonic Treadmill is such a good combo phrase. The Landfill Economy is another. They are related (but opposite in tone). The Hedonic Treadmill requires the Landfill Economy. These excesses (of the Boomers) will not persist for much longer.

  12. I have found that being comfortable with satisfactory along a number of axis in my life allows me to be a disruptor on the things that matters.

  13. “wholesale mediocrity”
    I wanted to like this post because my grandfather from Poland was Anatole, but I have a problem with the concept of mediocrity. I certainly understand the idea of meritocracy, but ‘mediocrity’ is so judgmental, I could not help but think of my financialization friends in the Upper East Side, always about the special Amish butter or the labels on their most recent consumption. NGMI !

  14. It can buy Golden Retreivers. Have you ever seen a Golden owner unhappy?

  15. I disagree. I think the Paradox of Choice was about not letting other people set the bar for you. For understanding the difference between “the best” as other people want you to see it and what is actually good enough for you personally.

    The “best” is an elusive concept and one that is very much prey to the 80/20 rule. To get to the best you have to put in that 80% of effort to get that last 20% and since people keep moving the bar on “the best” its an exponential nightmare.

    It is why Peloton is wrong in saying that they can raise the price because they are delivering “tons of content” and “premium service”. Yeah - except you are adding a ton of shit that no one needs that is gilding the lily and not adding substance.

    It is why I cancelled Typeform despite them offering “terrific value for the price” because it was a useful tool during Covid but its now so bloated with “premium” features that its getting harder and harder to use.

    It is why its so hard to convert people from free tier to premium tiers in SaaS models. Because by and large most people find that they don’t need the best, they just need to get on with their lives and get the job done.

    When you call our ambulance corps - you are not going to reliably get one of the “best” EMTS out there, but you will reliably get a reasonably competent one who knows how to quickly get you to the hospital without killing you.

    The “best” is a language trap, y’all.

  16. And, as you point out when the firm does overkill additional features trying to be the “best” they lose customers who get annoyed that they have to keep relearning/retooling all the extra features.

    Saw this at work endlessly.
    “New system coming in, going to make you so much more productive”
    “But I just got the old system down pat and am now getting some productivity out of it”
    move to new system and productivity drops while retooling.

  17. I think you’re correct in calling my comment judgemental. It was meant to be judgemental. Not so much in the consumerist sense… but it’s hard to distinguish what is consumerist and what is not. What’s wrong with judgemental anyway?

    I think that these times are becoming defined by a tyranny of mediocrity (the long now?). Meanwhile, the Stephen Pinkers are right. Today’s mediocrity, in aggregate, is better than anything else we’ve ever had. Same as your investment advisor is right that the market always goes up. But better than ever doesn’t mean that it’s good (or that it’s sustainable).

    Facing the tyranny of mediocrity are the haters and the optimists. The judgemental haters just complain about the status quo. The judgemental optimists at least try to forge new, alternative paths. The tyranny is annoyed by the former, but absolutely detests the latter. And it’s right to do so. Because the latter want to shove the tyranny’s failures down its throat.

    This morning I went for a jogn’chat with a friend. During our conversation, I was lamenting that these days I can’t say the statement “I want to develop better people” without being called a judgemental Nazi. My friend, who’s a much less antagonistic person, could relate in his own way. His example was coding classes. He’s teaching his brother to code and auditing some coding classes from a variety of institutions including Harvard. He finds them all to be deeply lacking to say the least. But he feels that he can’t say that, because he doesn’t want to be seen as insulting those who have completed the courses.

    It’s a bit of a bizarro world where wanting to make things better is met with an unnamed, negative force. As I’m writing this, the whole MAGA slogan comes into new light. I’ve made fun of it as moronic, like many others… but now I find myself on similar footing. The status quo has become so complacent, so protective of our mediocrity, that it effectively banned innovation.

    For all the focus on the toxicity of “polarization”, I think that the “never negativization” is a more dangerous trend.

    I’ve been increasingly coming across the “good ideas are getting harder to find” argument. I think it’s one of the main symptoms of the tyranny of mediocrity. “We’ve made it guys. We’ve figured it all out!” To me this seems massively pessimistic and bleak.

    So what is the converse? For me, it’s: everything sucks. “Everything sucks” is a mine of optimism. Because if everything sucks, there’s so much of “better” around the corner. A few hundred years ago all medicine sucked. All doctors sucked. Yes, people were trying to practice medicine for millennia, but they still sucked. And look at what fertile ground all that suckage proved to be over the last few hundred years.

    Today, there’s plenty that’s analogous to medicine in the dark ages. But am I allowed to name these things? Suggest these things? No. I will be banished if I do. Everything sucks is pure judgemental, isn’t it?

    On the one hand, you related my comments on mediocrity to snobbism about butter. And my first reaction is to say, “no, I meant it about big, important things, like parenting and cognitive development”. But I have a feeling that if you thought I was an asshole for being judgemental about butter, you’ll think that I’m a monster if I’m judgemental about how people choose to parent their kids.

    Perhaps Schwartz was right within a narrow definition of consumerism. Too much choice = diminishing returns. No duh. “Good enough” versus “the best” in such a case means that good enough is the equilibrium. But then his model still just reinforces the tyranny of mediocrity, because it has “good enough”, it has “best”, but it lacks “better”.

    “Better” is the thing that’s outside the system, waiting to be discovered/developed. Instead, Schwartz assumes Fukuyama - that there’s no better – all the good ideas are used up.

    Incidentally, I think this is why I reacted against Ben’s “old stories” narrative. Because it’s giving up on the future.

  18. On the innovation tip, space tourism springs to mind as an example of “better”.

    Telling the stories about the outrageous parties in space, to awestruck audiences, who are mighty impressed with the intrigue of avoiding the aftermath of zero G and way too much alcohol.

    Are you ready for it?

    Whilst worrying about keeping the lights on. It is a peculiar mixture of emotions.
    ‘Better’ is something that needs moral accordance. Without approval in the common knowledge realm, it is ‘worse’.

  19. The future is an illusion. An old story that is used to soothe your anxiety about the present. It is how I sell you sacrifice and how the long now is perpetuated. The future is simply prisons we build in our mind that take us away from today. There is only now.

    You treat “better” as an absolute. You define better as “not here yet”. You don’t allow for the -possibility that Schwartz’s way of looking at the world might be perfectly suited to some, and not others.

    Having judgment about life is essential. Not in the “I judge you good/bad” sense. More in the sense of making thoughtful choices about things that matter. We all need to decide what works for each of us while we remember that what might be good for you may not be good for me.

    I share this perspective with you not because it is the absolute path for everybody, but because it has been the path which has freed my mind and let me see the system in a different light. i woke up and realized that it is not the system that victimizes me, it is me that is willingly become a victim of the system in an effort to soothe my anxiety about the present.

  20. So, actually, I really do think there is only now. I don’t believe in the future or in the past other than as abstractions and ideas that I have come up with to try and make sense of living.

    Hierarchies, organizational structures, crystal formations, tree trunks becoming branches becoming twigs becoming leaves, patterns are everywhere. I don’t just see them - I love them. Its life being itself. I just don’t believe in dominant patterns or best patterns or absolute ideas. It’s all relative for me.

    I can’t imagine being a rationalist in the 1700. The 1700s, rationalism, the history of medicine are all abstractions and stories from the past that are likely to be extremely incomplete descriptions of what it was like to be in that now. Anything I imagine about that will simply be projections of my own ego into the past.

    I am not trying to convince you that my view point is right or better than yours. I am simply sharing the way I see things in the hopes that it helps you gain perspective on your own way of looking at things. I have rejected absolute and better. They don’t work for me. They seem to work for you. I’m cool with that.

  21. Lot of truth there. My daughters are 27 and 29. Both in serious relationships. One about to get married. I spent a lot of time striving for the best for them only to find that whatever I thought was going to be the future turned into a now that looked nothing like it. Also turned out they had a lot of difference of opinion as to what was best for them.

    So I gave up on the best thing. Maybe we are just at different stages in the abstraction we call the journey of life.

  22. Zenzei,

    My daughters are 52 and 54, grandsons are 19, 22, and 25. In the process of ‘striving for the best for them’, I may have learned more about myself than they learned from me. Each of us came of age in different generations.

    May it be, in the words of Maya Angelou, “People won’t always remember what you said, but they will remember how you made them feel.”


  23. Thank you for the opportunity to reply and not calling out the self-immolating irony of ‘mediocrity is so judgmental’.
    Good, bad, better, worse, best, worst are not words in every language (e.g. Native American). These words have fairly clear meanings when there are metrics. (I would argue that if there are metrics, the negative side effects of the better are usually individualized, whereas the better is a statistical average for the greater good, e.g. vaccines.)
    When there are no metrics, then these words become experiential quantifiers (EQ). Assuming that we are not going to use physical measures such as endorphin blood levels, which can also be altered with better living through chemistry, EQ then express a mental process which requires a certain preset notion of what these words mean: cue marketing, especially marketing directed at children. Do I think marketing at children is about selling?; maybe 20%-ish. I think marketing at children is about grooming future consumers in materialistic cultures. Try going through a day without using EQ in a sentence.
    As far as mediocrity or complacency, both of these words have a judgmental and derogatory aspect (average and lazy, respectively). Every equal set of minutes is exactly the same percent of one’s life. Do we really want to say that some sets are better than others?
    Amish butter is better, ‘because better is better’ (Nexium, an antacid)!

  24. I appreciate your lofty ideal to make the world a better place! If one knows that the entropy of the Universe is always increasing, locally entropy may be static or even decreasing (extropy as per Terence McKenna), but overall entropy must always increase (second law of thermodynamics). And so we do have a metric: can we minimize the increase in entropy going forward? Is that better?

  25. Personally, once I stopped worrying about the consensual hallucination that we call the world and it’s future, and started to be more concerned with my local community and it’s now…I found myself where you aspire to be…my world became a better place and I found a tribe to keep me company.

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