Editor's Note: Below is an excerpt from today's Early Look written by Hedgeye Director of Research Daryl Jones. Click here to learn more about subscribing.
More money certainly leads to more security. But what about happiness?
Most of us have the luxury of not having to overly worry about money. Or if we do, it is likely because we are outspending our means. But in reality we all make much more than the national median income of ~$50,000.
To a point, money does buy happiness. According to a well-known study from the Case Western University, each incremental dollar in income from the 20th percentile onwards makes a big difference in reducing negative emotions. Those returns peak by the time you reach the 80th percentile and disappear around $200,000 in annual income.
So money does make you happier to a point, but there are also negative implications to having money and power.
The social-psychologist Paul Piff recently undertook a number of experiments centered on the game of monopoly. These experiments involved the secret recording of “rigged” games of monopoly in which one randomly selected player was given a priori advantages: twice the money, greater ability to move around the board, and access to higher resources (higher bonuses for passing “go”).
The goal of the experiment was to study “how a privileged player in a rigged game behaves.” Within just 15 minutes of play in most games, the researchers noticed “dramatic” behavioral changes in advantaged players. These changes ranged from the players being louder, moving their pieces more forcefully, and even something seemingly benign as eating more pretzels.
Piff’s conclusion from this experiment, which was corroborated by other experiments he’s undertaken, is that wealth and hierarchical status tend to increase ones sense of entitlement, while simultaneously decreasing one’s empathy and concern for others. Now, the caveat of course is that monopoly is just a game...
