Can money make you happy? Of course it can

Money may not buy happiness, but what it can buy is security. And with security comes peace of mind. And with peace of mind comes happiness.

Are you happy? Do you think you could be happier? And if so, is money the thing you think might do the trick? Most people will answer 'yes' to this one. The government thinks they are wrong to do so.

Happiness doesn't come from money, or so their theory goes. Instead it comes from doing things for others; from being part of a community; from "having close personal ties"; having a goal; and from managing a reasonable work / life balance. It isn't such about standard of living but about quality of life, as David Cameron likes to put it.

It is hard to argue with this stuff: obviously good relationships are going to make us happier over time than larger and larger flat screen TVs. And obviously past a certainly limit, more money isn't the answer to most people's problems. But focusing on the idea that money can't make you happy is to miss a more basic point one that makes the idea that we shouldn't concentrate on economic growth look silly.

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Sure, money alone can't make you happy. But lack of it can make you very unhappy indeed. That's not just because poverty brings cold and hunger in its wake. It is because it brings uncertainty and that is the thing that humans hate most of all.

Consider an experiment by researchers at Maastricht University in the Netherlands. They gave subjects a series of 20 electric shocks. Some knew they would receive an intense shock on every trial. Others knew they would receive 17 mild shocks and three intense shocks, but they didn't know on which of the 20 trials the intense shocks would come.

The results showed that subjects who thought there was a small chance of receiving an intense shock were more afraid they sweated more profusely, their hearts beat faster than subjects who knew for sure that they'd receive an intense shock. That, says the New York Times, is "because people feel worse when something bad might occur than when something bad will occur".

Money won't buy you love and it might not buy you joy. But it will buy you stability and certainty. Most people can use that to build happiness without too much bother. The point? I'll leave that to John Stepek who doesn't really approve of all this fluffy stuff. Tell him that "the meaning of life is a life with meaning" and you'll get pretty short shrift. Nick Clegg and David Cameron, he says, should stop with the "pathetic, creepy, Orwellian obsession with happiness" and "start looking at things the government can make a difference to instead".

The fact is that we would all feel a great deal more secure and hence happy if we didn't have to worry about just how on earth we are going to get our children properly educated; how we can pay for our parents to manage their final decades with dignity; when the next banking crisis is going to be; how we can make a real return when inflation is over 5% and savings rates are under 3%; and whether our local GP surgery is ever going to have a free appointment that isn't ten days away.

Sorting out all that should be enough for the government to be getting on with, surely.

Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.