The Adage of Happiness
Humans have long debated the adage ‘Money can’t buy you happiness.’ Popular opinion suggests that, indeed, it cannot, but more recently researchers have challenged this notion. Based on extensive studies, investigators found that money, or income, can contribute to your happiness. In our capitalist society, income leads to increases in happiness to the extent that funds are required to attain the things that lead to happiness. By meeting needs for shelter or food, allowing the purchase of a home or groceries, or opening the window to experiences such as adventure or travel, money can increase our sense of satisfaction with life.
But what about the relationship between debt and wellbeing? Does money, even when borrowed, make us happier – or does the state of owing money add to our dissatisfaction and stress? The ‘IOU’ is an ever-present and, at times, necessary evil that allows for a degree on the wall, a roof overhead, or a shiny car in the garage. Yet at what cost?
A person’s sense of wellbeing varied with the source of the borrowed funds. Money borrowed from people or places charging less interest or offering more flexibility – subsidised student loans, for instance – results in less stress than money borrowed from financial institutions with exorbitant interest rates and no forgiveness policies. The emotional toll taken by debt varied with the degree to which an individual had other financial resources. A person whose debt was matched by investments or property had a security blanket to help them through. Especially important was the raison d’être for the loan. Debt undertaken for necessities, such as a home to live in, was less detrimental to one’s wellbeing; debt undertaken for an irresponsible splurge on unnecessary home renovations was more stressful.
So, is education debt less upsetting because it leads to levels of attainment necessary for many careers? Only to a certain degree. Unsurprisingly, our analyses showed that student loans lead to greater financial worry, which has a detrimental effect on life satisfaction. But the more that education led to real income, the less anxiety the borrower felt. We found that as students continued to pay out their debt over the course of up to eight years, happiness was reliably boosted by income and diminished by debt, until the two balanced out.
If you choose to carry some debt, a few considerations are key: only borrow what you can manage. Think hard about why you are borrowing the money and where it is coming from. And borrow only if you can back up the debt with income or other assets. If you consider these factors, then debt need not wipe that smile off your face.
But what about the relationship between debt and wellbeing? Does money, even when borrowed, make us happier – or does the state of owing money add to our dissatisfaction and stress? The ‘IOU’ is an ever-present and, at times, necessary evil that allows for a degree on the wall, a roof overhead, or a shiny car in the garage. Yet at what cost?
A person’s sense of wellbeing varied with the source of the borrowed funds. Money borrowed from people or places charging less interest or offering more flexibility – subsidised student loans, for instance – results in less stress than money borrowed from financial institutions with exorbitant interest rates and no forgiveness policies. The emotional toll taken by debt varied with the degree to which an individual had other financial resources. A person whose debt was matched by investments or property had a security blanket to help them through. Especially important was the raison d’être for the loan. Debt undertaken for necessities, such as a home to live in, was less detrimental to one’s wellbeing; debt undertaken for an irresponsible splurge on unnecessary home renovations was more stressful.
So, is education debt less upsetting because it leads to levels of attainment necessary for many careers? Only to a certain degree. Unsurprisingly, our analyses showed that student loans lead to greater financial worry, which has a detrimental effect on life satisfaction. But the more that education led to real income, the less anxiety the borrower felt. We found that as students continued to pay out their debt over the course of up to eight years, happiness was reliably boosted by income and diminished by debt, until the two balanced out.
If you choose to carry some debt, a few considerations are key: only borrow what you can manage. Think hard about why you are borrowing the money and where it is coming from. And borrow only if you can back up the debt with income or other assets. If you consider these factors, then debt need not wipe that smile off your face.
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