This is exactly what I need in order to answer that one question: can money buy happiness? Well, can you answer it already? I guess not! A scatter chart is obviously much more suitable for the presentation of these two sets of data. This graph shows every single week of my data as a point, plotted on two dimensions. If money would unconditionally buy me happiness, then you would expect to see a very positive correlation.
Well then Where is it? For the data analysts among us, the Pearson Correlation Coefficient is only 0. This graph obviously doesn't answer my question. It does not confirm whether or not money can buy me happiness. I am afraid the data is too distorted with noise. And with noise, I mean expenses that should not be taken into account in this analysis. For example, I don't think my health insurance should be included in this kind of analysis.
Sure, good health insurance is vital for happiness in some scenarios, but not for mine. Neither directly or indirectly. There are many other expenses like these, and I feel like they cloud my analysis.
There are also some expenses that might have influenced my happiness indirectly, instead of directly. Let's take my monthly phone bill as an example.
If I hadn't spend any money there, I would not have enjoyed the luxury and comfort of an online smartphone. Would this directly have influenced my happiness? I highly doubt it, but I think it would have influenced it indirectly in the long run. I would not have been able to call my girlfriend after a long day at work, or I would not have been able to avoid a traffic jam based on live maps.
You might think these are silly examples, but there is actually an endless list of reasons how a single expense could have influenced my happiness. Expenses with a direct influence on my happiness First things first: I don't spend my money on prostitutes and cocaine, as I joked before. That's not my kind of jazz. For one, I believe the money I spend on holidays makes me happy.
I also believe that a nice dinner with my girlfriend makes me happy. If I buy a cool new game for my PlayStation then that game is probably going to have a positive effect on my happiness.
Anyway, if I could only divide my total expenses into smaller subcategories, then I would be able to test the effect of these expenses on my immediate happiness.
Insert categorized expenses Well, luckily I have done just that! I have categorized all my expenses from the day I started tracking my finances.
However, there are two categories that I believe directly influence my happiness. Regular daily expenses can range from having a beer with my friends to buying lunch at the office and from a ticket for a concert to a new PlayStation game.
Holiday expenses are including anything that regards one of my holidays. I have created the same chart as before, but now included only the Regular daily expenses and Holiday expenses.
I have tried to include some additional context in this graph again. You can see the period in Kuwait that we discussed earlier. I didn't spend a lot of money during this period, and my happiness was way below average. Coincidence, or not? You tell me, since I don't know yet. For example, when my girlfriend went to Australia for half a year, I soon after bought myself a PlayStation 4. A long distance relationship sucks enough as it is, but being bored at the same time doesn't really help.
So I decided to splurge on the newest gaming console, and sure enough: it positively influenced my happiness! Gaming became a great happiness factor for me when my girlfriend wasn't around. There are a lot of other big expenses like these. My happiness was generally higher at the times when I bought a stage piano, a Garmin running watch and a tablet. It may sound silly, but these expenses seem to have directly increased my happiness.
The effect of these expenses seems to be even bigger. My happiness has been incredibly high whenever I was on holiday. My holiday in Croatia is a pretty great example of this. It sounds quite logical, right? Most people are usually happier on holidays, as it's something we all look forward to. That raises the next question: is more happiness the result of spending money on holiday, or just the result of being on holiday?
But in the meantime, it's pretty hard to go on holiday without spending any money, right? Spending money on holidays allows us to actually go on holidays. If you want to get textual, then these expenses - just like the others we discussed - do not have a direct effect on happiness.
You can tell by the comments in the chart that this was mostly because I booked tickets or accommodation prior to the holiday. Did these expenses directly influence my happiness? Probably not, but I've decided to still include them in this analysis. I don't want to mess with the original data set to skew the results. Correlating my happiness So how do these two categories correlate to my happiness, exactly?
Let's have a look at the effect of my Regular daily expenses on my happiness. Again, there is a slightly positive linear trend visible in this set of data. Even though it's higher than before, the Pearson Correlation Coefficient is still only 0.
I believe the results from this set of data are more interesting though. The amount of money I spend per week seems to mostly influence the lower bound of my weekly average happiness ratings.
Even though the correlation is not that significant, I do tend to be happier when my expenses get higher. The Correlation Coefficient is 0. These other factors are obviously distorting the results of this analysis. For example, I spent a weekend at a rock festival in Belgium, during which the weather was absolutely horrible. This weather had a huge negative effect on my happiness. I still spent some money on this "holiday", but the influence of these expenses on my happiness was clouded pun intended by the terrible weather.
That's why I think a correlation of 0. I have also analyzed the influence of arguably my biggest happiness factor: my relationship. This analysis showed me that the correlation between my relationship and my happiness is 0.
That's as high as it gets, in my opinion. What these scatter charts reveal to me is that money does indeed buy me happiness. The true effect is hard to determine, as the influence of money on my happiness is almost always indirect.
However, I do tend to be happier as I spend more of my money. To wrap this analysis up, I have combined my Daily regular expenses and Holiday expenses to create the chart below. This chart is a combination of the two previous scatter charts, where each point is now the sum of both these categories.
This is also the same chart that I animated in the abstract of this article. The Correlation Coefficient within this combined set of data is 0.
Quite impressive, if you ask me. This chart clearly answers the main question of this analysis. Yes, it can. But the effects are mostly indirect. At the very least, it's clear that I tend to be happier when I spend more money on expense categories that have a big influence on my happiness. What can I learn from this analysis? Well, one thing's certain: I should not go berserk and spend my money on anything imaginable.
As I've discussed at the start of this article, I want to eventually become financially independent. This mindset is about focusing on getting the most value out of my money. In other words, I try not to voluntarily spend my money on things that don't make me happy.
I want my expenses to improve my happiness as much as possible. So do I succeed in this mindset? Does my money actually buy me happiness? Yes, but I need to actually spend it on the best expense categories! I should not feel bad for spending my money on holidays, instruments, running shoes, games or dinners with my girlfriend.
Hell no! These expenses make me a happier person. All this data will obviously be different for any other person.
Just start tracking your happiness. Any subject. Any type of essay. Happiness is a hard word to define. Everyone has different viewpoints on happiness from their own past actions. Some say money gives you strength, power, clout, and all other abilities, while on the other hand, some disagree. In my opinion, I do not believe money can buy external joy in our life. Money is a basic need in our lives to purchase our everyday necessitates.And I'm hoping this number will only grow more! To wrap this analysis up, I have combined my Daily regular expenses and Holiday expenses to create the chart below. Lifestyle inflation? I will try to find the exact answer to this challenging question by looking purely at my data. The fire remains: can money buy psychology. A person might value being accepted with their children while they are switching, or peace of fear about their retirement; more information makes these possibilities easier. They briefing us how they would give anything to global in our home. Clean, I've added a linear trend line to my life expenses.
Now, when you hear the word money, what does this make you think of?
Based on research I found that money does not increase the happiness because as income increases the person behavior of preferences or satisfaction changes and will result is diminishing income. Economists use the term utility to represent a measure of the satisfaction or happiness that individuals get from the consumption of goods and services. Well, if I ever want to become financially independent, I should try my hardest to protect myself from lifestyle inflation. Correlating my happiness So how do these two categories correlate to my happiness, exactly? I don't mind spending a lot of money, as long as I spend it on something I know will bring me value.
There was a study done where they took several GIP areas across the country and charted them since the end of World War II to present or present being two thousand and twelve. It is agreeable that money is not everything but with money, we can live the life the way we want and afford all the luxuries in life Economists use the term utility to represent a measure of the satisfaction or happiness that individuals get from the consumption of goods and services. I would not have been able to call my girlfriend after a long day at work, or I would not have been able to avoid a traffic jam based on live maps. So it really depends on how much money you make and how you spend it.
Others might involve themselves into one life only because the person has money, but they are expressing their love none the less.
Remember: This is just a sample from a fellow student. This graph shows the weekly sum of all my expenses in red and my average weekly happiness rating in black. Would lifestyle inflation really be a bad thing?
What none of these studies have done, however, is to use quantitative analysis to answer this critical question. This is a wide graph, so feel free to scroll from left to right! It's the phenomenon of increasing expenses when your income goes up, according to Investopedia. Neither directly or indirectly. I am very conscious about spending my money. Again, there is a slightly positive linear trend visible in this set of data.
Regular daily expenses can range from having a beer with my friends to buying lunch at the office and from a ticket for a concert to a new PlayStation game. This graph obviously doesn't answer my question. Well, one thing's certain: I should not go berserk and spend my money on anything imaginable.
As a year old dude, I believe my expenses can look very different from yours.