Yes, we all know that people are happier in wealthier countries, that a nation gets happier as its GDP grows, and that high income people report being happier than their less well paid counterparts. Yet, there is a certain hollowness to the wealth equals happiness equation that psychologist Abraham Maslow understood.
Maslow and Money
Maslow did not think of money itself as a need. Rather, it could be used to satisfy some of the needs that are lower on the hierarchy and get satisfied earliest but do not add up to happiness. In fact, money is critical only for the two lowest tiers in his seven-tier hierarchy of needs that are satisfied on the road to self-actualization and fulfillment. With money, we can buy food, shelter, and protection from physical threats such as crime and earthquakes.
The Beatles claimed that money can't buy you love but this is debatable. For instance wealthy men in most societies find it a lot easier to marry than vagrants do. High earners also have larger social networks according to research on social capital. Rich people also get fawned over as celebrities and their egos are massaged by honorary degrees, and titles, thus toying with Maslow's contention that we need to develop competence in some chosen field in order to really feel good about ourselves.
Penetrating further up Maslow's hierarchy, money may help people to know, understand and explore some field of study if only by paying their college tuition. It is also hard to escape the fact that rich people often live in beautiful homes, situated in beautiful places, and surrounded by beautiful objects, speaking to their esthetic needs.
In our society, entrepreneurial success is often held out as a desirable means of achieving one's deepest potential. If that were true, then money plays a key role in self-actualization, Maslow's highest need.
Paradoxes of the Wealth Happiness Connection
If money plays a key role in all levels of Maslow's hierarchy, then it would explain why wealthier people are happier: they have more tools available to satisfy all of their needs and are therefore more likely to achieve self-fulfillment, or self-actualization. Is that what is really happening? I doubt it.
In my own journeys through life, some of the happiest people I have ever met were close to penniless if adequately housed and nourished. They had a capacity for living in the present and enjoying everything that life brought. Property owners are forever worrying that their multiple properties will be damaged in a storm, or that their stocks will take a drubbing because the Greek government doesn't want to pay its debts. Only a person unencumbered by property worries can contemplate a completely blue sky.
Financial worries of the rich may pale before the challenges of the poor, of course, but this is another example of many discontinuities between wealth and happiness. Another is the fact that comparatively poor people in a social democracy are happier than much wealthier individuals in a highly unequal society beset with social tensions because they feel part of the community.
Another seeming contradiction concerns the emptiness of retirement when money is no longer much of a concern to many, freeing them up to concentrate on personal fulfillment, whether by going fly fishing, taking up painting, starting a business, or any other project put on hold for lack of time. The sad reality is that many people begin retirement feeling aimless, disoriented, and a little frightened.
Like it or not, their job gave a focus, discipline, and sense of purpose that is now missing. Work life can bring contentment even if it postpones self-actualization. In retirement, there is an opportunity for addressing higher needs in the Maslow hierarchy but this may not bring happiness, or a sense of fulfillment, especially if too little was done to develop creative outlets earlier in life.
Wealth sometimes appears to be a ladder allowing a person to scale the Maslow hierarchy and achieve self-actualization with relative ease. Yet, it is made of rubber. I would not trust it.