Money and happiness | Inquirer Business

Money and happiness

“Money does not buy happiness,” says the third-generation heir of a retail family business.  “I don’t want to keep on working to the bone the way my father and grandfather did. I have enough money to last me a lifetime.  I think it’s enough.  More money won’t make me happier.”

“Or would it?”  he asks me.


Conventional wisdom agrees with the so-called Easterlin paradox.  In 1974, US researcher Richard Easterlin found that beyond a low threshold, more money does not necessarily make us happier.

This threshold varies among social classes and among countries.  For example, an American may be satisfied with a half a million dollars, and would not be much happier even if he had more; while for a Filipino, the threshold would be half a million pesos.


Whatever the amount, Easterlin believed that all of us have our own threshold, above which more money could not buy us more happiness.

However, with the advent of more cross-cultural studies, psychologists and economists made some refinements to the Easterlin paradox, the most notable of which is that it appears to be true only across generations in a particular country.

This means, for example, that many of us in the middle class are probably a lot wealthier than our parents, and certainly, our grandparents.  But we are probably not any happier.  In this case, Easterlin’s finding holds.

But when countries are compared with each other, the idea that money does not buy happiness rings hollow.  Despite the influence of religion or political system, several studies agree that people in wealthy nations are happier, on average, than those in poorer countries.


Perhaps this is one reason many Filipinos dream of working abroad.  Once, while in a foreign land, I chatted with a waitress, a Filipino whom I will call Nora, in a fast-food chain.  Nora dreamed of becoming a surgeon, but shifted to nursing in the Philippines, thinking this was more lucrative.  Nora went abroad, intending to work in a hospital or a clinic.

However, nursing jobs were scarce then, so Nora took the first job that opened up.


“I look at my hands,” Nora said.  “When I wanted to be a surgeon, I took care of my hands.  I did not go into sports, because I needed my hands for medicine.  In nursing, my hands were still important, I needed to care for people, especially the elderly.  Now that I am a waitress, look at my hands!”

Nora’s hands are callused, with splotches of red, minor burns from frying fries and washing glasses.  “In fastfood outlets here, there are only a few staff members,” Nora said.  “Four of us in all, two per shift.  Unlike in the Philippines, there are managers, assistant managers, several crew, etc.”

“Here we do everything.  We are the cashier, the waitstaff, the cook, the electrician, the cleaner, the dishwasher.  My hands are different now.”

But when I told Nora to return home, I was surprised by her immediate reply.  “I am not complaining!  I am happier here.”

Really?   “I don’t earn a lot, but what I have is enough.  This country is nicer than the Philippines:  less traffic, better public transport, more social services, less corruption.  I am content.”

Unhappy growth

Nora is not earning much more than she used to, but if she were, then perhaps she would not be as content.  The 2005 Gallup World Poll revealed that at any income level, economic growth comes hand in hand with lower life satisfaction.

Researchers Eduardo Lora and Carol Graham call this the paradox of unhappy growth, and in her book “Plutocrats,” US business journalist Chrystia Freeland gives several examples.

Peasants in China who move to the city amass more money but become more frustrated with their income than they had been back in the province.  Villagers in India who migrate to urban slums “have a better chance of finding work, but little social security comes with it.”  The unhappy-growth paradox holds even for workers in “tiger” economies like South Korea and Ireland:  “the moment when the tigers take their first leap is also the time when their people are unhappiest.”

Reasons range from personal attitudes toward money to generational differences toward work, from rapid economic change in a society to uncertainty in a volatile world.

So, can money buy happiness?  Up to a threshold, yes, but economic growth comes at a cost.

Next Friday:  A reader needs money to start a business

Queena N. Lee-Chua is on the Board of Directors of Ateneo de Manila University’s Family Business Development Center.  Get her book “Successful Family Businesses” at the University Press (email [email protected])  Email the author at [email protected]

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TAGS: Business, column, happines, money, queena n. lee-chua
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