Why Wealth is not The Contributing Factor to Happiness for Millionaires

Money and happiness is a very broad topic with many different factors. People can have very different views about the subject, from facets in their life such as, expectations, social customs and ethnicity. The subcategory delved into in this essay is about a small population of people. Money can be beneficial, from the research below, it can be evidential that money is more trouble than it's worth when it comes to millionaires. Millionaires become locked in an endless grind and social pressure keeps them from backing out. This creates an environment difficult to grow happiness in.

The general population actually thinks that wealth does not substantially increase happiness. These predictions are true, wealth and happiness stagnates and does not increase until a large threshold is met. The odds of reaching that threshold are very slim. The paper by Jeremy Cone & Thomas Gilovich, professors in psychology at Cornell University, Understanding money's limits: People's beliefs about the income – Happiness correlation, was focused at looking at the general populaces perception with money and happiness. Participants were asked to predict fake two individuals wealth and correlate how much money each one has with said wealth. The study found that, “...participants’ estimates appear to reflect a genuine belief that income and happiness are only weakly correlated.” Now this is just what people think. So is there any real correlation to wealth and happiness? Another article aimed to prove this by Grant E. Donnelly, Tianyi Zheng, Emily Haisley, and Michael I. Norton, all college professors, The Amount and Source of Millionaires’ Wealth (Moderately) Predict Their Happiness. This paper looked at happiness’s association with money and they found that between 1 million to 10 million dollars there was not an increase in happiness, though beyond 10 million there was a large surge in happiness (Norton, Haisley, Donnelly, Zheng, 2018). According to an article by PK from DQYDJ the likelihood of reaching 10,000,000$ is One percent (PK, 2019). The general population seems to have a broad idea of wealth and happiness link. With the second article it is apparent that the general population predictions are correct. Happiness is substantially increased after 10 million dollars which carries merit, but the chance of someone reaching that said wealth in America is 1%. If an individual does reach said level of wealth what stops them from being happy?

Wealth is not the contributing factor to happiness for millionaires. Millionaires are concerned with those around them. What some millionaires do to feel better than the rest is brandish their wealth. To expand upon this claim is a series of interviews by Jason Pinsker a writer for the Atlantic Times, in his article The Reason Many Ultrarich People Aren’t Satisfied With Their Wealth. In this article he talks to Michael Norton, a Harvard business professor who studies the wealthy. Pinsket wrote, “Norton says that research regularly points to two central questions that people ask themselves when determining whether they’re satisfied with something in their life: Am I doing better than I was before? and Am I doing better than other people?” (Pinsker, 2018). With this information it can be speculated that wealth can bring about a kind of social awareness within its holder. Another quote from the article is from Brooke Harrington, a professor at Copenhagen Business School. She said this when asked about millionaires insecurities, ”The sensation of ‘being well-off, is not about fulfilling a childhood dream of buying a sailboat or something; feeling wealthy is about comparison with others in your reference group. So the question is not what individuals want to buy, but what they feel they must buy in order to keep up their status.” (Pinsker, 2018). What seems to be just as important to the wealth millionaires are gaining, is the social status that comes with it. With the more money they have the more opportunities arise to display that wealth through objects. Material possessions play into this game of hierarchy within the small community of the ultra wealthy.

Sometimes wealth is given either through inheritance or luck. While winning winning lots of money through smart business ventures, or being given it may make us all jump for joy it comes with problems. According to The Amount and Source of Millionaires’ Wealth (Moderately) Predict Their Happiness. They asked their participants who have around 1 to 10 million dollars how much money they had received from inheritance. With this data they collected, they found that on average unearned wealth lead to a decrease in happiness. With their findings they proposed that maybe earned wealth feels more valuable to the individual and therefore increases happiness (Norton, Haisley, Donnelly, Zheng, 2018). If what they’re saying is true then the act of earning wealth is an important factor. To further back this up is another interview from The Reason Many Ultrarich People Aren’t Satisfied With Their Wealth. In this interview Gary Shteyngart a novelist talks about his interaction with luck based millionaires. He said, “Managers of hedge funds can sometimes get rich from making one or two bets that had more to do with luck than anything else, which might make them feel like their intelligence is in question even if their money stands as evidence of their professional success”. It seems with this evidence that the problem that arises from unearned wealth is insatiable happiness. The money does not carry the weight that it does compared to if it was earned. Wealth may need to be earned in order to feel a sense of happiness and satisfaction. If wealth is not earned the individual could also feel less smart compared to their peers.

With money on the forefront of most millionaires minds you might be asking by now how much is enough? From The Amount and Source of Millionaires’ Wealth (Moderately) Predict Their Happiness’s data, they found that happiness between one million and ten million dollars does not increase happiness. The researchers also asked participants who make between 1 to 10 million dollars, how much money they would need to be satisfied. In order for the millionaires to be a perfect 10 in happiness 23.2% said they needed a 100% increase, 24.5% said they needed a 500% increase and 26.8% said they needed a 1000% increase in their wealth. It seems that even with all that money they still are not close to being happy. One reason could be because they do not feel financially secure. To back up this statement is an interview from the article In Silicon Valley, Millionaires Who Don’t Feel Rich by Gary Rivlin a writer for the New York Times. David W. Hettig a planner for Menlo Park said this, “People around here, if they have 2 or 3 million dollars, they don’t feel secure.” another interviewee, Gary Kremen the founder of Match.com said, “You’re nobody here at $10 million,” Kremen also said “Everyone around here looks at the people above them” (Rivlin, 2007). So how much is enough? Short answer a lot, long answer, happiness lies not in the number but somewhere in their status. If said millionaires are always looking above them at the richer. Then it is logical that they would want an ever higher number than those above them. They determine this number most likely based off the people around them or the ones they look up at. That's why we see such large figures such as a 100% to 1000% increase.

Once someone is at a higher level of wealth (top 9%), living a lavish life continues to drain the funds of millionaires due to social customs of the communities around them. This mindset is captured perfectly from Tony Barbgallo who is a product manager with a net worth of 1.5 million, He talks about how “fancy resorts, vintage wines and country clubs” they used to partake in are no longer good enough because of other people living around them bragging about more lavish experiences. To put it simply Barbgallo said, “...the cost of living bloats” (Rivlin, 2007). Another example of this is from Michael Norton, a business professor at Harvard, he described what he called the “...ever shifting goal post.” What he means by this is when a family with lots of money moves to a new community with even richer people it knocks them down a peg. They do not feel as wealthy compared to if they stayed behind in their old neighborhood (Pinsker, 2018). Obtaining happiness from wealth is a hard goal to reach. It seems that millionaires like Barbgallo are always looking at the next hurdle to overcome to prove to others that their better. Millionaires are looking to increase their status through material possessions and fancy trips. This drains them of their funds and requires them to always keep working because of the people around them. Every country has it’s wealthiest and many of us dream of reaching the top breadwinners for the country. While most never achieve that goal we idelly let the upper class grow richer every year. This is the fault of countries checks on the rich but most of all peoples unawareness to how large the class divide really is. Economic unfairness or inequality is a problem that slowly grows larger every year. From the exploration below it is apparent that inequality is a problem that needs attention. Economic inequality doesn’t just affect money it plays a larger role in the lives of citizens in every country.

What makes a country appealing to the rich? A logical factor would be tax breaks and standard of living. How important are these aspects to the extremely upper class? An extensive research paper written by Vladimir Popov, a reacher at Russia’s Academy of Sciences, looked at the effects of income inequality and what makes a country appealing to the wealthy. In the first paper by him titled, Why do some countries have more billionaires than others? Explaining variations in the billionaire-intensity of GDP, He found there to be a few factors. One obvious thought would be that the rich go to countries with the biggest tax break. Vladimir actually disproves this by showing that the most important factors are standard of living, rate of crime and life expectancy. Vladimir found that in most countries with high taxes, the standard of living was averagely better. Using data from the World Happiness Report by the GDP, Vladimir determined that the country with the most amount of rich people was Hongkong, China with Cyprus behind it. He also found that countries with little to no personal income tax, such as Oman and Bahrain do not attract the rich because of their low standard of living (Popov, 2018). Lisa Kiester, a professor of sociology at Duke University wrote about another factor that could play a role in why the rich go to certain countries. In her paper tilted The One Percent, she said “...we tend to spend most of our time with people like us. Even those who are extremely rich or extremely poor spend most of their time in the company of other very rich or very poor people…” (Kiester 2014). With these factors standard of living, rate of crime and life expectancy play the largest roles for appealing to the rich. It seems the rich also like to stay with one another to create a like minded community. Taxes would be a logical factor but they are easily outshined by other more appealing factors such as life expectancy and crime rate. A perfect country for the rich is one that is developed with already rich inhabitants and a high standard of living. It is almost impossible to balance standards of living and taxes with one another. With that said, how does this affect the people below them?

A large effect the rich have is through economic inequality. It is an inevitable factor that comes with appealing countries and unappealing countries. Inequality leads to economic stagnation and an ever growing divide between the upper class and everyone below. The One Percent by Lisa Keister found that the top 10% of people in the world hold onto more that 74% of the world's financial assets (Keister 2014). Keister determined why most people are not concerned with this is because, “Even as inequality worsens, most people have tended to fare better. Some segments of the population have fared worse over time, but people are largely faring better than prior generations. This creates individual well-being even in the face of growing inequality” (Keister 2014). Vladmir Popov in his essay Billionaires, millionaires, inequality, and happiness. Found that rich living in undeveloped countries leads to economic stagnation. He also found that when inequality in countries is higher the children of said upper class tend to have wealth at the same levels as their parents (Popov, 2019). With wealth lasting for generations it creates an economic divide that does not go away in one generation leading to longer stagnation times. The problem is that people do not notice this in developed countries because the standards of living have risen over time. The only time this is a concern is when it is in underdeveloped countries where it has the harshest effects. Vladimir stated a harsh fact when it comes to how underdeveloped countries would stop the stagnation. He said, “It may take a revolution to break this vicious circle and to exit the bad equilibrium”.

How does economic inequality affect the most poor? High income inequality in poorer countries has in some cases, had a positive effect. Vladimir found in Billionaires, millionaires, inequality, and happiness, that poor South American countries such as Bolivia and Honduras with large income inequalities have very high happiness indexes according to the GDP. Vladimir spculated saying this, “It may well be that a certain degree of inequality is necessary to keep alive a kind of ‘American dream’: a future oriented belief in getting rich and achieving success in life” (Popov, 2019). Another perspective on the lower class is from Carol Graham a college professor for the University of Maryland that focuses in the Global Economy. Carol wrote a summary of a few of her papers titled Happy Peasants and Miserable Millionaires: Happiness Research, Economics, and Public Policy. She talked about how it is hard to gauge happiness when comparing a CEO and a peasant in India. She says that the peasant has never known more than what they have and therefore has a “...cheery character...” due to ignorance. Economic Inequality can be a problem as stated previously with growth stagnation but it seems like somewhat of a necessity in poorer countries. If a peasants expectations are very low from ignorance then a dream of wealth is a motivator. It seems that a certain degree of inequality is needed so people can always have a desire to shoot for the top.

One of the biggest incidents of the late 2000’s was the housing crisis in 2007. After 2012 lots of studies have been conducted to see what affects the economic downturn had. The housing crisis led to the general population learning to live with less, while the top 1% grew the economic divide through housing assets. Carol Graham collected data about happiness from 1,000 Americans during the housing crisis. After monitoring their happiness levels she found that even though the families had lost income and assets after the housing crisis they were more happy than before. She concluded that they adapted to the situation and learned to live with declining standards of living. In The One Percent, Kiester found that during 2007 the top 1% increased they’re household assets by a whole 1%. Compared to the top 9% after that who only increased their household assets by .01% (Kiester, 2014). What can be taken from here is that during the housing crisis the top 1% bought 1% of the houses in America. This created an even bigger gap because now the top rich own more in real estate. While this happened the families that persevered and adapted learned to live with less. The outcome of all of this is that inequality between the richest and the rest grew wider because they bought up more houses.

The GDP or Gross Domestic Product is a way to track how many goods a country produces every year. It is used to gauge how well a country's economy is doing. Countries are always looking at one another and comparing stats. The elite play a crucial role in a country's GDP which can also have an effect on happiness. According to Popov in Why do some countries have more billionaires than others? Explaining variations in the billionaire-intensity of GDP, he found that in 2018 4.7% of the world’s GDP was owned by only 423 people. Popov described how in the 50’s when GDP was high it was shared through salary increased and social security. Now GDP is rising in countries but the profit is all going to a select few (Popov, 2018). Popov in Billionaires, millionaires, inequality, and happiness said that “...wealth distribution at the very top of the pyramid – the billionaire and millionaire wealth as a percentage of GDP – is one of the most important determinants of happiness index scores in all countries...” (Popov, 2019). In the past a rise in GDP has been beneficial for everyone. It seems in today's times with economic unfairness rising that a minute few hold onto the profits. Not only does this lead to the majority being at a loss financially. GDP has a large influence on average happiness levels. It seems very concerning that an elite few hold onto the economy of a country and can influence people's happiness with said economy.

Countries will always have classes and people with more advantages than others. The rich hold lots of power through GDP and their assets. As the modern world continues to raise the standard of living, so does the gap between the rich and everyone else. It is apparent that the rich hold more power every year, yet people lose themselves in their own personal bubbles. Getting rid of the class divide is impossible, but simple checks on the top 10% through taxation then investing that into the people is fair. Popov as stated earlier, described in the 50’s how wealth was distributed more equally. A change like that could benefit more while keeping a check on economic inequality.