A friend of mine, Steve Moeller, did research on the science of happiness. The information to write a book about what was gathered really makes people happy. He gave me permission to share with you some excerpts from an article he wrote for Investment Advisor magazine. I found his thoughts very interesting about him, and I hope you will too.

The assumption that more money will make us happy is etched into our consciousness. Happiness is something that we all want; it is the holy grail of western civilization. Biologists have recently shown that all higher species, from lizards to humans, are biologically programmed to pursue pleasure and positive emotions. It’s a basic subconscious drive that all creatures have. Everything we do, we do because we consciously or unconsciously believe that it will make us happy.

That more money will lead directly to more happiness is such a basic assumption that most people never stop to question it. When researchers at the University of Michigan asked research subjects what would improve the quality of their lives, the majority of respondents said “more money.”

The assumption that more money will bring us more happiness is etched into our consciousness, championed by our culture, promoted with billions of dollars in advertising each year, and institutionalized in our public policy. And it remains the number one profit promise that many investment advisers focus on. But it is true?

“Happiness” researchers have conducted more than 150 surveys worldwide with more than 1 million participants. Let’s take a look at what they have learned.

Since the end of World War II, the purchasing power of American households has tripled. New houses are twice as big now as they were after the war, we have twice as many cars per person, and we eat out more often. The average American now lives much better off than most kings and queens throughout history.

So are we happy? Not!

This spectacular increase in wealth has had almost no positive effect on the happiness of our society. In fact, from 1957 to 1996, the proportion of people who told the National Opinion Research Center at the University of Chicago that they were “very happy” decreased slightly (from 35% to 30%). During the same period; divorce doubled, the prison population quintupled, and major depression increased tenfold, making it the fourth most common debilitating illness. The United States is not alone; Europe and Japan have experienced the same basic trends.

One of the most notable findings from happiness researchers came from a survey of the Forbe 400 richest Americans. These hundred millionaires and billionaires were asked to rate their life satisfaction from “extremely dissatisfied” (1) to “extremely satisfied” (7). Surprisingly, the average rating from respondents was 5.7, just slightly above the average rating.

But here is the really interesting part. Members of the Kenyan Masai tribe in East Africa also participated in the life satisfaction survey. Although they live in huts made of earth and cow dung, graze cattle for a living, have no electricity or running water, and no money, they also rated themselves a 5.7 on the life satisfaction scale. .

Quite a few studies now show that believing that money is more important than other values, such as relationships with loved ones, spirituality, the feeling that your life is contributing to the greater good, is actually detrimental to happiness. Clearly there is more to happiness than wealth, luxury, and material comforts.

So how much is the right amount of money to maximize our happiness? This is the conclusion of scientific research on happiness: once we have enough money to pay for the basics of life, like food, clothing, and shelter, more money has very little impact on our happiness.

More money buys more happiness and well-being if you’re poor, and it builds up pretty quickly until you achieve a solid middle-class income. But research shows that once your household income reaches the middle-class range, rising income has a diminishing positive impact on your happiness and well-being.

The point is that above a certain income level, which is by no means “rich,” the additional income alone has almost no impact on our happiness. And depending on the price you pay to earn it, more income could even lower your quality of life.

In fact, a large and growing number of studies support happiness researcher Ed Diener’s comment that “materialism is toxic to happiness.” But most Americans don’t seem to believe this.

Why, if we tell researchers that more money doesn’t make us happy, do we go after it so hard? We could blame advertisers and the media, two giant institutions that have a vested interest in making us consume more and more stuff each year. But there is another, more subtle villain; the subconscious functioning of our brain.

Psychologists have developed a term “hedonic treadmill” to describe the human adaptation to more wealth and material goods. So if you get a new car, you’ll be happy for a while, but then you’ll adjust and think it’s normal. To maintain the same level of happiness through consumption, you must continually buy new things. This is what the concept of “retail therapy” is all about. Adjustment is great for the economy, but bad for you and your financial security.

As an investment advisor, I often work with people who believe that more money will bring them more happiness. As this article demonstrates, I really need to help clients determine what will truly make them happy and then determine how much income their ideal life will require. It may be much less than they originally thought.