The Factors that Determine Happiness

As you might imagine, there’s been lots of research on the factors that determine happiness. If you read Health in Flames, you know that the determinants of happiness seem to coincide with those factors that engage the body, the mind, or the soul of the human person in some way. And in the book, I mention several of those factors. Among others those factors include:

    • Consuming nourishing food (without which happiness, much less life is impossible)

    • Engaging in physical activity

    • Sleeping well

    • Social engagement with family and friends

    • Having a sense of purpose

    • Meditating

    • Engaging in intellectual pursuits

    • Experiencing a sense of agency over one’s life.

The best things in life are free of cost

First of all, notice that apart from adequate nutrition, there is very little on this list that requires spending money. For example, spending time with family and friends is free of cost. The research on how money impacts happiness is not at all straightforward. It is a fascinating read. This is admittedly oversimplified. I cite and discuss much of the research about this in chapter 2 of Health in Flames and it would be too lengthy to rewrite that into this blog post. However, the research is well summarized by professor of psychology, Sonja Lyubomirsky in her book, The Myths of Happiness.  Here I summarize points from my own commentary from chapter 2 of Health in Flames:

  • After explaining that  the correlation between money and happiness is a great deal stronger for the poor than for the wealthy. Lybubomirsky goes on to make another major point important for our understanding by stating “Income and happiness are indeed significantly correlated, although the relationship isn’t super strong.”  
  • It’s not that surprising that the relationship is not “super strong”. That conclusion may not be intuitive but it is well established science. The real question is why is there a correlation at all between happiness and income once basic needs are met.  As it turns out the answer is not necessarily because of anything that money buys but rather what money provides.  
  • Lyubomirsky explains that the wealthy tend to have greater social status, more leisure time, more fulfilling work, access to better health and nutrition, and greater security, autonomy, and control.  
  • Now, compare a wealthy person with a person who has achieved financial freedom (or no longer depends on their employer for their income) and what do you discover relative to these factors?  Well, except for the ability to acquire more possessions (which due to “hedonic adaptation” does not have much impact on our happiness), there is a lot of overlap.  
  • Those who achieve financial freedom also have more leisure time, can choose the sort of work that is fulfilling for them, achieve financial security, and have greater autonomy and control. While the wealthy person may still hold greater social status, there are other non-monetary goals that those who are financially free may pursue that make up for that in other ways. 
  • All said, there is ample reason to think that financial freedom– as opposed to becoming fabulously wealthy– provides much of the same level of benefits that studies have found correlated with higher incomes.
  • Here’s the point: although trying to make more money for the purpose of social comparison may make us a bit happier on the margins, we’ll gain much greater happiness if we aim for financial freedom instead. 
  • In other words, aiming to be free of consumerism provides a shortcut that “pays off” in a big way.

Suffice to say that once you understand some important caveats, you’ll come to understand (and hopefully embrace) the philosophy based on the science of the determinants of happiness that once basic needs are met, you are best off reducing spending in order to aim to become financially independent of your employer and gain financial freedom. In other words, once basic needs are met, the best things in life are free of cost.

Consumerism often undermines happiness

That understanding and adoption translates to living a life so completely different from the typical 21st century lifestyle that we are accustomed to. It also means that much of the consumption taking place today is “mindless”. Mindless consumerism is the acquisition of goods or services without forethought to how that consumption impacts our wellbeing and happiness. In fact, much of that consumption is so mindless as to actually lead to unhappiness instead of the happiness we aim for.

Overcoming mindless consumerism translates to becoming wealthier

In understanding this aspect about our almost natural inclination to mistakenly try to purchase our way to happiness, we open up the possibility of being able to put away a large part of our income into investments. Contrary to the typical financial advisor who recommends putting 10% (or even 20% if your advisor is that aggressive) of income into investments, many people would be able to invest a far larger share of their income. Doing so consistently over time leads one to become financially independent.

That independence enables one to be free in a way that impacts our happiness. As noted above, one of the determinants of happiness is having a sense of agency. Agency means one experiences a sense of control over one’s destiny. They are not told what to do with their time by their employer. They choose how they want to live and work. Perhaps they choose to continue the same line of work or not. Either way, one starts to see things from a vantage point that unleashes their potential in a way that is far more fulfilling than how most of us live our lives


Happier. Healthier. Wealthier... Video Series