The Long View – Daniel Crosby: Can Money Really Buy Happiness?
In the December 17, 2024 episode of Morningstar's "The Long View," host Christine Benz engages in an insightful conversation with Dr. Daniel Crosby, the Chief Behavioral Officer at Orion Advisor Solutions and author of The Soul of Money: Reflections on Money and Meaning. The discussion delves deep into the intricate relationship between money and happiness, exploring how financial resources can influence our well-being beyond mere wealth accumulation.
1. Introduction to Dr. Daniel Crosby and His Work
Christine Benz begins by introducing Dr. Crosby, highlighting his extensive background in behavioral finance and his latest book, The Soul of Money. She commends his unique approach to structuring the book with 50 short chapters, inspired by Rick Rubin’s The Creative Act, which makes the content more accessible and digestible for readers.
“It forced me to be concise, to be parsimonious with my words and really think about what I wanted to say.” [01:39]
2. The Paradox of Wealth and Happiness
Dr. Crosby addresses a fundamental paradox: while global wealth has surged, levels of depression and loneliness remain alarmingly high. He attributes this to humanity's transition from securing basic needs to grappling with higher-order needs such as belonging, relationships, and purpose.
“We have a massive meaning crisis in the world today.” [05:34]
He explains that historically, money was crucial for survival, but in affluent societies, it’s now tied to more complex emotional and psychological states. This shift has introduced new challenges in achieving true happiness.
3. Research Insights: Money’s Impact on Happiness
Discussing the often-cited study suggesting happiness plateaus around a $75,000 income (adjusted to $100,000), Dr. Crosby provides a nuanced view. He differentiates between the absence of misery and qualitative happiness, asserting that while money effectively alleviates discomfort by meeting essential needs, its influence on genuine happiness extends much further.
“Money buys us an absence of misery. For sure. Money can buy some qualitative happiness as well.” [05:52]
Furthermore, he highlights that for a subset of people (about 15%), money doesn’t significantly impact their happiness due to other underlying issues like mental illness.
4. Strategies for Using Money to Enhance Happiness
Dr. Crosby offers actionable strategies to leverage financial resources for greater happiness:
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Experiences Over Things: Emphasizing that experiences lead to lasting positive memories, whereas material possessions quickly become mundane.
“Experiences tend to better with time because we engage in something called rosy retrospection.” [09:24]
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Buying Back Time: Outsourcing disliked tasks to free up time for more fulfilling activities.
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Fostering Relationships: Investing in activities that deepen connections with others, which are paramount for a good life.
5. The "I'll Be Happy When" Phenomenon
Many individuals set financial milestones believing that reaching them will bring happiness. Dr. Crosby explains that this mindset is counterproductive, rooted in evolutionary drives that are misaligned with modern financial abundance.
“We are not wired for that. We are wired to wake up every morning... trying to get more.” [15:31]
He advises embracing self-honesty, practicing daily gratitude, and focusing on the journey rather than fixating on a hypothetical financial finish line.
6. Navigating Retirement and Financial Well-being
Retirement often brings anxiety about spending accumulated savings appropriately. Dr. Crosby emphasizes the importance of balancing enjoyment in the present with security for the future. He suggests finding meaningful purposes that surpass the fear of overspending, such as philanthropy or personal fulfillment projects.
“Find the yes that's bigger than the no.” [24:56]
When addressing couples with differing financial attitudes, he recommends gradual compromise and mutual understanding to bridge the gap effectively.
7. The Detrimental Effects of Social Comparisons
Dr. Crosby warns about the pervasive impact of social media on self-perception and happiness. He explains that constant exposure to others' curated lives leads to unhealthy comparisons, significantly affecting financial contentment.
“If people just limited their screen time on social media to 10 minutes... it was good for a 13% increase in happiness.” [34:04]
He advocates for limiting social media usage and fostering in-person relationships to mitigate these negative effects.
8. Developing Healthy Financial Habits
Implementing healthy financial habits is crucial for overall well-being. Dr. Crosby discusses the importance of making good financial behaviors habitual and bad behaviors difficult, utilizing frameworks like the British Nudge Unit's EAST (Easy, Attractive, Social, Timely).
“Make the good behaviors habitual and make the bad behaviors hard.” [47:37]
He personalizes this by sharing his own success in weight loss through consistent monitoring and community support, drawing parallels to financial discipline.
9. Personal Anecdotes and Lighthearted Moments
Towards the end, Dr. Crosby shares a humorous story about his viral Diet Coke tweet, illustrating the unpredictable nature of social media fame. This lightens the conversation while reinforcing the theme of genuine connections over superficial engagements.
“I have signed more Diet Cokes than I would care to mention. And it’s good fun.” [52:51]
Conclusion
Throughout the episode, Dr. Daniel Crosby provides a comprehensive exploration of how money intersects with happiness, advocating for mindful spending, meaningful relationships, and balanced financial planning. His insights challenge conventional notions of wealth and well-being, encouraging listeners to cultivate a deeper understanding of what truly constitutes a fulfilling life.
Notable Quotes:
- “It forced me to be concise, to be parsimonious with my words and really think about what I wanted to say.” [01:39]
- “We have a massive meaning crisis in the world today.” [05:34]
- “Money buys us an absence of misery. For sure. Money can buy some qualitative happiness as well.” [05:52]
- “Find the yes that's bigger than the no.” [24:56]
- “If people just limited their screen time on social media to 10 minutes... it was good for a 13% increase in happiness.” [34:04]
- “Make the good behaviors habitual and make the bad behaviors hard.” [47:37]
- “I have signed more Diet Cokes than I would care to mention. And it’s good fun.” [52:51]
This episode is a must-listen for anyone looking to deepen their understanding of the psychological dimensions of wealth and how to harness financial resources to enhance overall life satisfaction.