What explains happiness in life? I don’t have all the answers. But, as a review of both my books and blogs, happiness in life has little to do with the brand/price of the watch one wears, the stores one patronizes, the make of car one drives or the brand of vodka one consumes. One’s overall happines in life has nothing to do with the overall price one pays for wine, the size or market value of a home, not even the price one pays for a haircut.
To shed more light on this issue, I examined the relationship between happiness in life and more than 200 characteristics, behaviors and attitudes of 1,574 high income/high net worth respondents from one of my national surveys. Note that correlations do not necessarily indicate cause and effect.
Beyond health, family and job factors, why are some people more satisfied with life than others? In terms of statistical significance, the higher one’s level of happiness the more likely he/she is to agree with the following statements [by rank order of variation explained]:
1. I have more wealth than most people in my wealth/income group.
2. We are financially better off than our neighbors.
3. I donated 5% or more of my income last year to charity.
4. I live well below my means.
5. I was raised in an atmosphere filled with love and harmony.
6. My parents taught me how to invest and manage money.
7. Politically, I am more conservative than liberal.
8. I inherited less than 1% of my net worth.
9. My spouse is more frugal than I am.
10. I invested 10% or more of my income last year.
Also note that both net worth and income are associated with happiness. Statistically, net worth is the more important of the two. But even more important than net worth is relative net worth (as suggested in Item 1 above). Relative net worth is all about how productive one is in transforming his/her income into net worth compared to others in one’s income and age cohort as well as within the context of one’s neighborhood environment.
Those who can easily afford their consumption lifestyle tend to be significantly happier than those who struggle to make ends meet by acting rich. I have consistently found that those within the same income/age cohorts who were raised by loving and nurturing parents tend to spend less and save more of their incomes than those who are not raised in this type of atmosphere.