From Sonja Lyubomirsky “The Myths of Happiness”
Once you reach a basic level of living, making more money does not make people much happier.
This is due to Hedonic Adaptation. While you may genuinely be happy after you purchase something, the novelty wears off. Humans adapt to almost everything, including nice cars, houses, luxury items, and other material things.
Buying new things may seem great, but the stress and responsibilities of making more money often outweighs the benefits of making more money.
Examples:
“Living in a bigger house with a bigger backyard gives us pleasure, but this pleasure diminishes over time until we barely notice the square-footage or the updated bathrooms. More critical is the fact that our pleasure from the house can’t come close to matching the pain and worry of eking out monthly mortgage payments. Shifting from being house-poor to being house-rich means less daily stress and more moment-to-moment happiness.” (p. 151)
2. “economists have found that two-thirds of the benefits of a raise in income are erased after just one year, in part because our spending and new “needs” rise alongside it and because we begin to associate with people in a higher income bracket.” (p. 168)
3. “In the beginning, greater wealth brings us a higher standard of living, and the extra comforts and extravagances bring extra pleasure. Then, we get used to—and perhaps even “addicted” to—the higher standard of living, to the extent that we are not satisfied unless we up the dosage by acquiring even more.” (p. 169)
4. “what our peers are making determines our happiness even more than what we are making, not matter how generous it is. In other words, the average person (though, as we learned earlier, not the happiest one) cares more about social comparison, about status, about rank, and about so-called positional goods than about the absolute value of his bank account or reputation.” (p.168)