Brain Meets Money

Richard Quinn

HOW OFTEN DO YOU think about money? Hey, you just did. Seriously, we think about money every day and sometimes every hour. Some studies say we ponder financial matters even more often than the old standby: sex.

We’ve been thinking about the stuff for a long time. Money goes back about 3,000 years. Paper currency can be traced to China in 700 BC. They didn’t fool around: Their currency stated that all counterfeiters would be decapitated. I’m guessing counterfeiting was rare.

Today, it costs two cents to manufacture a penny and almost eight cents to make a nickel. Result? Each year, we taxpayers lose about $85.4 million on the production of pennies and $33.5 million on nickels.

Gee, at that rate, those of us on Social Security could receive a $2-a-year raise if they made cheaper money. Who needs pennies anyway? Money is no more than a piece of metal or paper—basically worthless, except you can get stuff for it because the people who sell you stuff can get other stuff with the money you give them.

Does money make us happy? Benjamin Franklin didn’t think so. “Money never made a man happy yet, nor will it. The more a man has, the more he wants. Instead of filling a vacuum, it makes one.”

The evidence suggests Ben was right, but try telling that to addicted lottery players. I recall a TV show depicting the impact of winning the lottery on people. Instead of making the winners happy, it often messes up their lives, mostly because they’re ill-prepared to handle the money and because they thought spending would make them happy.

One winner stands out in my memory. He bought several pieces of used heavy construction equipment just to have. He didn’t know the tax withholding on his winnings wouldn’t cover all of the tax he owed. He eventually lost all of his prize possessions and a great deal more to the IRS.

Another family lived in a trailer and, instead of moving, expanded it, bought each child their own ATV and gave each an allowance of $1,000 a month. The kids were ostracized at school and had to leave.

“The conviction of the rich that the poor are happier is no more foolish than the conviction of the poor that the rich are,” offered Mark Twain. Indeed, if you Google the subject of happiness and money, you will find assessments from every point of view. But none concludes that money buys permanent happiness, only fleeting pleasure perhaps.

On the other hand, money can relieve stress—or create it. If you don’t have enough to pay the bills, more money will help. But if you have plenty of money, the fear of losing some may be stressful. One study found that happiness increases with income up to $75,000 per year and then plateaus. Given that the U.S. median household income is about $75,500, is half the population unhappy? I don’t buy it.

At some point, money becomes a game. Most people will never get to that point. But if you have lots of money, adding further to your wealth is simply a mark of achievement. You don’t need more money. Instead, you’re just proving that you can accumulate more.

Our society often equates the accumulation of money with success. Don’t we want to earn more than our neighbor and, if we don’t earn more, should we feel inadequate? I’m not claiming that’s a valid yardstick. But, for better or worse, that’s how many folks think.

Sometimes, you can feel better by giving money away. There are almost 1.6 million nonprofit organizations in the U.S. Most are public charities. Americans give more than $1 billion a day to charity, with some 80% of that money coming from individuals. Is all that giving the result of empathy, guilt or tax deductions? The answer is “yes.”

Our view of money is highly relative. Just 28% of people with $1 million to $5 million in assets consider themselves wealthy, and yet the median U.S. net worth is $97,300.

I’ve never felt wealthy, but the data say otherwise. I do feel fortunate—and I don’t feel guilty about that good fortune, perhaps because it’s taken more than 70 years to reach that lofty status. I try to explain our relative good fortune to my wife, but she isn’t buying it. She’s even more skeptical than I am.

Richard Quinn blogs at Before retiring in 2010, Dick was a compensation and benefits executive. His previous articles include Count the NoncashIt’s a Stretch and Going Without. Follow Dick on Twitter @QuinnsComments.

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John Yeigh
John Yeigh
3 years ago

My pragmatic, coupon clipping wife is fully aligned with yours. Another excellent rant Richard.

Mik Barbasol
Mik Barbasol
3 years ago

It’s unfortunate some people measure their self-worth using bogus standards…great article.

Langston Holland
Langston Holland
3 years ago

Every time a lottery winner is announced, the IRS throws its hands in the air and exclaims: “Yes!, I won!” Lotteries are a regressive tax scheme.

Roboticus Aquarius
Roboticus Aquarius
3 years ago

Richard, I appreciate the Andy Rooney-esque tone to this post, nicely written!

One item of note… the average net worth figures aren’t very revealing about retiree finances, and they also tend to hide the range of values. About 15% of retiree households are millionaires (NW excluding their house). It’s a lot less rare than it once was. It sounds tone-deaf and elitist to say a million dollars ain’t what it used to be, but it’s undeniably true. At the same time about 15% of retiree households get 90% or more of their income from SS (per IRS, SSA, others. You may have read 40% but that involved a weird definition of retiree.)

Also, regarding happiness, the $75K figure seems supportable, but if you are measuring life satisfaction it keeps increasing up the income scale. There’s an interesting difference between reported happiness, and reported life satisfaction.

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