When it comes to the relationship between money and happiness, the frequent reference in psychology and economics is to a study that claims earnings and happiness are positively correlated up to $75,000. After that point, the study proposes happiness flatlines. Although this is merely an average and not reflective of everyone, the general result is believable when both the $75k and a $150k have hopped on the proverbial hedonic treadmill, ceteris parabis. The $150k earner will live a far more lavish lifestyle which likely has done little for his happiness, but life doesn’t have to be this way.
The level of perceived autonomy felt at work (for those of us with a traditional job) is a significant determinate of happiness. Imagine that you earn any amount in the range above; if you have every second of your work dictated to you, your interactions with others follow a predictable script, or you feel like your job is pointless, then you are likely to be unhappy regardless of earnings. The difference when it comes to making more money in the above scenario is that the $150k earner has the opportunity to save far more money than the lesser earner giving him far more autonomy to quit the job that makes him miserable and find something else. I believe by hopping off the treadmill and saving can lead to far greater happiness and life satisfaction. While this is another harp on savings for me, I do not believe this means that we should pursue more earnings just for the sake of miserly preservation, as with everything in life, returns are diminishing.
Trying to earn more and more just for a status number can even produce unhappiness. In Skin in the Game, Taleb describes the extreme situation in which a person becomes rich and loses control of his preferences. Instead, the newly rich person substitutes constructed preferences making their lives needlessly complicated. He describes a scenario of eating at a Michelin-starred restaurant instead of a more casual joint. At the acclaimed restaurant, most men are wearing ties, the portions are small, the meal is far more expensive, and he even received a lecture on the artistic dimension of his food. Even independent of the price tag, he finds it difficult to imagine that the majority of people prefer the “nicer” restaurant.
Further, the rich may even start to use “experts” or “consultants” whose entire purpose is to make life more complicated. For example, financial advisors generally exist to make relatively straightforward concepts far more complex, and many try to sell unnecessary products or services. Another example of unnecessary complexity is the training pushed by most personal trainers. These trainers will often focus on making their clients do an extensive range of exercises and work them overly hard to make sure they are sore, so they “feel” as though they had a good workout. The truth is that a more moderate approach and focusing on improving at a few exercises will produce far better long-term results. I can see the argument that the rich do not have time to worry about these things, but we can derive a significant amount of satisfaction from researching and figuring things out for ourselves. Although an expert may make you feel as though you have more choices, you have essentially ceded control of a certain area of your life when you hire an expert.
Taleb goes on to say that people are more cheerful in close-quarter neighborhoods rather than vast mansions. However, the super-rich tend to isolate themselves and have impersonal relationships with various types of servants. Imagine you were so wealthy that you were incredibly famous (read Jeff Bezos). For the average person, this would likely lead to a miserable life. You would be unable to have a close personal friendship without your money or status going to one of your heads tainting the relationship. People need to feel like equals in order be friends. When your friend has a billion dollars in the bank, one of your likely will feel superior or inferior. Taleb’s advice is that if you are rich, “you need to hide your money if you want to have friends.” Obviously, this may often be impossible for celebrities which may explain the string of recently publicized suicides, but less obviously, Taleb is also implying that you may need to hide your erudition to make connections with others.
Of course, we all want to earn more even if we don’t want to spend it, but make some careful considerations before accepting an upward job move and always striving upward. First, ensure your greater earnings do not isolate you. Becoming a manager can be very segregating if all of your friends at a company once saw you as equals. Consider the amount of stress you may have to endure while keeping in mind your levels will likely peak soon after assuming your new position. While a certain amount of pressure makes life worth living, and aspiration is healthy, too much stress can also lead to an early grave. Researchers noted rich people are more likely to be stressed than those with a moderate income. While in and of itself this is not a bad thing, make sure it is not too much for you to handle. Finally, ensure that your additional income does not reduce your optionality or the condition of having choices. If you are so wealthy that you now need a bodyguard, or you lock yourself into a career that makes you miserable, you are likely doing it wrong. While there is nothing inherently wrong with wanting to earn more, make sure it doesn’t make you miserable in the process.