Money can make you rich, but can it make you happy? For decades economists have been obsessed with investigating the connection between money and happiness, according to psychologist author Matthew Lieberman.[1] Psychologists have also shared this obsession. The pursuit of financial wealth is according to Lieberman a primary life goal of the vast majority of people. Yet, as Lieberman asserts, study after study reaches the conclusion that more money will not improve happiness; this is known as the “Easterlin Paradox.”
At the individual micro-level the advantages of having money is summed up well by one of Vance Packard’s interviewees in his book The Ultra Rich, as: “you don’t have the bother of worrying about paying bills. You don’t have to put up with someone giving you a hard time because of your shortage of money. You don’t have to worry about losing a job because of the financial bind the loss might create. You don’t have to worry about being a burden about when you get old.” More pointedly, however, is the interviewee’s conclusion that “you don’t need hundreds of millions of dollars – or even one million – to have that kind of peace of mind.”[2] This is what is meant in this chapter by the Inner wealth.
Another psychologist author to make a significant contribution to understanding happiness is Sonja Lyubomirsky. In The how of happiness, Lyubomirsky affirms the Easterlin Paradox, writing “as people amass more money their overall happiness remains the same.” Why? Happiness “is not out there to be found because it’s inside us.”[3] This view draws the distinction that the philosopher Aristotle made; as we are reminded by Angela Duckworth (former fellow student to Lieberman of Positive Psychology). Duckworth, points to the early philosopher Aristotle and his recognition of “eudaemonic” (intrinsic) and “hedonic” (extrinsic) happiness.[4] Inner wealth, therefore, is principally concerned with the eudaemonic happiness.
How do eudaemonic reasons primarily drive happiness? From an economist’s perspective human “wants” are viewed as limitless as opposed to “needs” which are limited. Maslow’s often quoted hierarchy of needs is not a hierarchy of wants. It transcends five stages beginning with those physiological such as food and shelter, through the safety of those needs, family and belonging, to the final stages of self-esteem and self-actualisation. Of these needs, self-actualisation encompasses creativity, morality, and problem solving. The inverse of this hierarchy would be that self-actualisation [Principal success] is the foundation and not the eventuation. How might this be possible?
E. F. Schumacher, an economist, made the following observation of businesspeople. “It is no accident that successful businessmen are astonishingly primitive; they live in a world made primitive [read simplified] by the process of reduction. They fit into this simplified version of the world and are satisfied in it.”[5] In his autobiography, Wal-Mart co-founder Sam Walton confirms this perspective in his autobiography, when he wrote: “If we had enough groceries, and a nice place to live, plenty of room to keep and feed my bird dogs, a place to hunt, a place to play tennis, and the means to get the kids good education – that’s rich.[6]
[1] M. D. Lieberman, Social (New York: Random House US, 2013), 242-5.
[2] V. Packard, The Ultra Rich: How Much is too Much (Boston: Little, Brown and Company, 1989), 312-3.
[3] S. Lyubomirsky, The How of Happiness: A New Approach to Getting the Life You Want (New York: Penguin Books, 2008), 40.
[4] A. Duckworth, Grit: The Power of Passion and Perseverance (London: Penguin Random House, 2017), 146.
[5] 3. E. F. Schumacher, Small is Beautiful: A Study of Economics as If People Mattered (London: Vintage, 2011), 215.
[6] 1. S. Walton, and J. Huey , Sam Walton Made in America: My Story, (New York: Bantam Books, 1992), 9-10.