Why money can’t buy happiness

Money can incentivize us to work long and hard, but it may not always give us job satisfaction or even enjoyment.

We need a certain amount to meet basic needs, but thereafter, peer respect, personal autonomy, a sense of purpose matter more.

Pay increases are often weaponized to keep employees in line, but these are not guaranteed to work for long due to four factors, according to psychologists Ian McRae and Adrian Furnham in “Myths of Work.”

One, when we get a raise, we experience a high, but this may last just a week or so.

My friend was thrilled when her aunt left her a million pesos after her demise, and was promptly upgraded to business class for her European trip.

“I am forever grateful to my aunt,” says my friend, “but the pleasure was literally short-lived, and sometimes I think I should have invested the money in stocks.”

“Any amount of money is surprisingly easy to adapt to and once it becomes normal, its effect on motivation wears off,” say McRae and Furnham.

This additional money does not necessarily lead to intrinsic motivation to work better.

Two, envy often is a spoiler.

In 1998, Sara Solnick and David Hemenway asked employees to choose between two options: an income of $50,000 for you and $25,000 for your peers; or an income of $100,000 for you and $200,000 for your peers. Objectively, the second option is better.

Surprisingly, half the participants chose the first option. They would rather earn half of what they could as long as others earned even less.

Sadly, “often the money people make, the more aware they are of other people who are richer, more powerful or more influential than them,” say McRae and Furnham. “Wealth is a competitive sport where it is almost impossible to come out on top.”

Three, money cannot buy everything, something that the rich know far too well.

In 2010, Timothy Judge, Ronald Piccolo, Nathan Podsakoff, John Shaw and Bruce Rich did a meta-analysis of pay and job satisfaction, and found that for the uber-wealthy, or those with a net worth of $25 million and up, their main aspiration is not to safeguard their wealth to pass down to their children—in fact, they fear that too much wealth may end up causing harm.

Their main wish? To be better parents, more attuned to their children’s needs.

“Extra vacation time, closer relationships with friends or colleagues, freedom from work and the responsibilities that come with greater income and work responsibilities all become scarcer commodities at the same time as personal wealth builds up,” say McRae and Furnham.

Four, more money frequently means more anxiety.

The names of lottery winners are kept secret to keep criminal elements at bay—and in our country, kin and acquaintances who will not stop pestering these hapless people until they receive what they feel is their due.

“Of course I am happy that the boss tripled my salary,” says the manufacturing head in a family business. “This showed that he and the family have faith in me. But suddenly I worry about how to maximize these new funds, and how to restrain myself in buying things we don’t need. Now I also stress out about meeting the expectations of the family, whereas before, I used to be more chill. Last month I got hospitalized for panic attacks, diarrhea, headaches—the first time in my life. My boss was really concerned, but how can I explain to him that I am overwhelmed?”

To alleviate this, I guided him on stress management.

“Paradoxically, since money can help solve some problems, its presence can shift the attention to other problems that are more difficult or impossible to solve, such as interpersonal conflict, family or health problems,” say McRae and Furnham, “and this can leave one feeling out of control or helpless when personal financial resources can’t seem to solve the problems that seem the most important.”

Money can be an effective way to attract and keep good employees, but wise leaders create a workplace that also values respect, interdependence, fun and shared purpose.