Why Money Can't Buy Happiness: Daniel Sachau (Transcript)

Here is the full transcript of Professor Daniel Sachau’s talk titled “Why Money Can’t Buy Happiness” at TEDxMNSU 2022 conference.

Listen to the audio version here:

TRANSCRIPT:

Money and Happiness

You’ve all heard the phrase, “money won’t buy happiness,” and it turns out it’s true. Research by psychologists, sociologists, and economists shows that while the absence of money (poverty) makes people miserable, once their basic needs are met, additional money does not translate into higher levels of satisfaction. Now at this point, many of you are thinking, “Put me in that study! You flood my life with cash; I’ll get back to you on whether I’m happy or not.”

Well, strangely, that study’s been done a few times. There’s a number of researchers who’ve looked at lottery winners, and what they find is, immediately after somebody wins the lottery, they’re happy—they’re ecstatic. One year later, they’re only slightly happier than the average person.

The Role of Expectations

The question I’ve been asking over the last 20 or so years is, why? It sure feels like money should make us happy. Why doesn’t it?

I think there’s a variety of reasons, but one of the key reasons has to do with expectations. Our satisfaction depends on expectations. Basically, for any kind of material possession, or income, or status, when we have more than we expected, we’re happy. When we have less than we expected, we’re unhappy. When we get what we expect, we’re just kind of comfortable.

The Ratchet Effect

Now that’s not the reason money won’t buy happiness. The reason money won’t buy happiness is, our expectations escalate. And once they do, they don’t easily de-escalate.

Some people call that a “ratchet effect.” You know what a ratchet wrench is? It’s one of those wrenches you put on top of the bolt, and it clicks, clicks, clicks one way, and you pull against it the other.

Examples of Escalating Expectations

There’s a ratchet in our expectations.

Let me give you some examples. I think it’s best to illustrate it.

Think about that first car you were ever able to drive. For me, it was a 1962 Volkswagen Beetle, and all that car had to do was get me away from my parents’ house. And I was happy with it, and I polished the rust on it, and it was great—until I rode in my friend, Johnny Meyer. He had a 1968 Volkswagen Beetle, and his car started on a regular basis, and it had heat.

And as soon as I got in Johnny’s car, I’m like, “You know what? My 1962 Volkswagen’s not maybe the greatest thing ever. Maybe I need a little nicer car.” And then, of course, I had a chance to ride with other friends, and the pinnacle from a high school kid in the 70s was another friend who had a Trans Am, like that big bird on the front.

And if you ride in a Trans Am, there is no going back to a Volkswagen. And that’s the problem of escalating expectations. Now, maybe cars aren’t your thing.

The Lake Minnetonka Story

Let me show you another example. A few years ago, I took a group of students, and we went up to Lake Minnetonka. Now, Lake Minnetonka is this gorgeous lake on the west of the Twin Cities, and it’s home to rich people, and celebrities, and record producers, and regular folks.

It’s a great place. And we all went up there. We rented a boat. We drove down the way a little bit. We saw this first place. And I thought, “Wow, wouldn’t it be great if I could have a cabin on Lake Minnetonka? I’d come up here any weekend I want, and I’ve got to have a dock. I think if you look closely, there might even be a grill there. That’s all I need. If you give me this cabin, this dock, this grill, I will be perfectly happy. I will not need more.”

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Upgrading Aspirations

Okay? Well, we float a little further, and I’m like, “Ooh, wait. I think I would rather have a house with a roof that’s been redone, so I don’t have to fool around with that. And look, it’s got windows that are solid, and ooh, it’s got a criss-cross, an old antique inboard. And if you’re going to be on schmancy Lake Minnetonka, that would be a very cool boat to have. And it’s got Adirondack chairs. I need those.”

And then I’m thinking, “Well, that first place I looked at wasn’t so great. This is what I need.” Well, I see this, and my thought is, “All right, a brand new place, not very big, made of bricks, and then a great big dock so I could have a boat, a giant cabin cruiser, so that I could spend, you know, the evenings in the little cabin and the great big cabin cruiser and the dock. This would just be great. This is exactly what I need, okay? This is what it would take to make me happy.”

The Biggest House on the Lake

Well, here comes the next one. Wait a minute. I don’t need just a cabin. I need a move up here. I need this big house. I need, you know, I want to, you know, be honest to the log cabin lodge feel with this.

And that’s what I need, and it’s got both the outboard, the criss-cross, and I’m going to need a fishing boat, and it’s got a striped yard, and I really would like that striped yard, okay? And I’m happy with that. I said, “Wow, imagine the fun I would have, the people who would come to visit, who would hang out here. We would have a great time. This is what it would take to make me happy.”

Well, you can probably guess what’s coming next. It’s this house. Here’s a brand new house made to look old, and it is awesome.

Now, I’ve got to be honest with you. You know where this is going. These houses are getting bigger, and they’re getting so big now that it’s hard to get them in the full frame, right? So just find a door, and that’s about the height of a person, and this place is magnificent. It’s got its own swimming area, and it’s got all the boats. It’s got the cruiser.

It’s got the ranger, the bath boat. It’s got jet ski, a little fleet of jet skis, and if you look closely, I think there is like a guest house in the back of it, and I thought as well, “That’d be great. I could have people come visit my closest, dearest friends and then not have to stay in the same house as them.”

That’s what I want. This is what would make me happy until I see this house, and I’m like, “Okay, I don’t need anything that looks old. I want something that’s new and pretentious.”

The Torn-Down Mansion

I’m going to tell you it’s pretentious because, get this, it’s been torn down so that somebody could build a bigger place, okay? But it’s wonderful. Look at it. It’s a beautiful house. It’s in the better part of the lake, because apparently it’s not just living on Lake Minnetonka. It’s the best neighborhood on Lake Minnetonka.

It’s the cleaner water, the deeper water. There’s all this other stuff that factors into it. And I think, “Okay, whoever lives there must be ecstatic. They must love their life, how happy they must be.”

And then I see this. Now, I can’t get it all in the frame. It is enormous. It’s three full floors. If you look closely, you can see one of those umbrellas that they put out over a picnic table. Imagine a person could fit under there. And there it is. It’s magnificent. Seven smokestacks. And it’s got certainly guests. I’ll bet it’s called a “compound.” And I want a compound.

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From Cabin to Compound

Now, think about this. Early in the morning of that day, I just wanted a little cabin, a place I could go hang out. But by later in the day, I needed the biggest house on Lake Minnetonka. I don’t know, 15,000 square feet. I think my wife and I could live in, we could be in separate counties, right? People call each other in this house.

Now, did your taste escalate? Here’s the test. Remember this little place right here? It would have been the dream cabin with just a big boat and that house? Well, I’ve been a little bit deceptive. It’s actually the boathouse for the mansion. That’s where they store inner tubes.

That’s the inner tube house, right? Now, you can have your taste escalate for cars and for mansions, right? And I got to thinking about this, and I thought, “I wonder if there’s any product that’s not aspirational—that you think, if I just have this next thing, then I’ll be really, really happy.”

Searching for the Finest

So what I did is, yesterday morning, I just turned on television and Googled a couple things on the YouTube channel there. And I said, “All right, I’m going to search under the terms ‘finest’ or ‘nicest’ or ‘best.'” And here’s what came up. Just from yesterday. Cars, tons of cars, lots and lots of cars. Not just the finest cars, the finest Rolls Royces.

So think about that. You get enough money to buy a Rolls Royce, and suddenly there’s a YouTube video that says you don’t have the best Rolls Royce. You need an even better one.

Of course, there was an unlimited number of houses like this, and if you think about it, there is a network channel that’s dedicated to making you unhappy with the current house you live in. I mean, isn’t that what happens on House and Garden TV? It just keeps getting nicer and nicer, and you think, “Oh, gosh, my ceilings have that popcorn stuff on them,” and apparently they hate popcorn ceilings.

Escalating Tastes within the Home

And then within the house, everything is escalating. You can start with a little refrigerator, then you get the sub-zero refrigerator, you get the walk-in refrigerator, you get better stoves and better ovens, even towel bars. You can get heated towel bars.

I made fun of that, but I’ll bet it’s great. And I’ll bet it’s hard to go back to just good old room temperature towels once you had that. There’s no end to the handbags, the shoes, the designer stuff, the makeup stuff. And I mean no end. What’s, I don’t know, what does nail polish cost? Anybody? What’s a little bottle of nail polish cost? $8. Pardon? $8? Okay, $8. You know how much you can spend on nail polish if you want to? I’ll tell you: $267,580.

Expensive Commodities

Apparently, it’s got little diamonds in it that, I guess at the end of the day, you just throw them away because you’re that rich. I even asked the question, “All right, I get it for commercial products. What about commodities?” Like, the two most common things in the world are water and salt.

Right? Salt. Salt of the earth. It’s absolutely everywhere. I thought, “These have got to be the things. There’s no aspirational water, is there?” Yeah. Yes, there is. You can spend $1,100 on a single bottle of drinking water. Okay? It’s nothing special other than a crystal decanter, but it’s $1,000 for water. Okay? You’ve got a lot of money if you’re spending $1,000 for water.

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How about salt? Salt, if you get the fancy Morton salt, it’s 3 cents an ounce. Okay? But apparently, you can buy a special salt that costs $36 an ounce. Okay? Now, unless that’s made of salt extracted from the tears of Elvis, I can’t imagine why it would cost so much.

The Satisfaction Treadmill

Okay? So, the message here is, there’s no end to the escalation of our taste if we’re trying to find long-term life satisfaction from material things, from status. All right?

So you might ask yourself, “Is that discouraging?” And the answer is, well, it kind of depends. I think the message is both discouraging and freeing, depending on how you think about it.

So, you’ve really got a couple options. Option number one, stay on the treadmill. Try to find happiness by buying the next new thing, getting a job where you make more money, only to buy a more expensive version of the thing, only to find a bigger, fancier job. This just never ends. Okay?

You could stay on the treadmill, but the danger is, you start leading a lifestyle in service of this material stuff. You take a job you don’t like, because it pays a lot. You give up your hobbies, because you’ve got to go make a bunch of money to live with fancier things. You give up your friends.

You stay away from your family. So there’s a real danger to running on the treadmill. Daniel Kahneman, the psychologist and Nobel laureate, calls it the “satisfaction treadmill,” because you never get to the end of it. Alright?

An Alternative Approach

Second, the other alternative is to realize that there’s only so much you can get from money and material possessions. You know? And think of it this way.

Money can make you miserable, but there’s no amount of money that will make you happy, so maybe the goal is to just be comfortable, to seek security, not ecstasy. So what’s that mean? It means, if you’re living a pretty good life and you’re pretty comfortable, maybe you try to put a lid on your expectations.

Realize that you’ve got it good. Don’t try to find too much. Don’t sacrifice the job you love and the friends you have, just so you can have more money, so you can have nicer things. Live within your means, save money, and invest money so you can weather the financial storms that might hit your life, and be comfortable with it. Okay? So, to summarize, here we go.

Key Takeaways

There’s no amount of money that will make you happy. There’s no amount of status that will make you happy. There’s no jewelry where you’ll finally get the right piece of jewelry and go, “That’s it, I have achieved nirvana.” It isn’t going to happen.

You won’t find long-term happiness in the accumulation of material possessions. What you can find with money is security. You should look for the opportunity to not worry about money. So save enough that you can weather the storms, stay within your means, and you’ll be happier—well, you’ll certainly be more comfortable. Thank you.

Why Money Can’t Buy Happiness: Daniel Sachau (Transcript)