Living Through a Recession

What Money Can’t Buy

To be sure, there are plenty of grim faces out there,
especially among those who’ve lost jobs. Economic losses hurt, and
some believe that the national mood more or less tracks the Dow, which would
put the American psyche somewhere between despondent and clinical. But it
probably won’t last. Experts have spent decades studying the relationship
between money and happiness, and there’s a growing body of evidence
suggesting that the link between the two isn’t as strong as it might
seem. Increases in wealth don’t lead to enduring gains in well-being,
and conversely, decreases in wealth don’t make people permanently
unhappy, either.

“There’s a level of loss at which you
lose a sense of physical safety,” says David Mashburn, a former
clinical psychologist who founded an HR consulting company and href="http://workpuzzle.com">blogs about the psychology of work. “When
that happens, the person’s sense of subjective well-being falls
pretty dramatically. I don’t think people in the United States are
even close to that level.”

Beyond this dynamic noted by Mashburn, the evidence for why
we’re likely to be just fine emotionally despite the recession rests
on several grounds. First is the theory of relative wealth. We’re
social animals, highly status-conscious, and we keep score of success not in
absolute terms but by how we’re doing compared to the people around
us. By that regard, the fact that the recession is so pervasive across the
country is likely to spread the pain around, fostering a sense of lifeboat
camaraderie. “I don’t want to say that this is great,”
says Sonja Lyubomirsky, a psychologist who studies happiness and teaches at the
University of California at Riverside. “It still sucks. The economy
is bad, but overall it’s not as bad as it could be, because we’re
all in the same situation.” In other words, you don’t worry
about keeping up with the Joneses if they’ve just lost their
four-bedroom colonial to a foreclosure.

Another argument has to do with something called “hedonic
adaptation.” This is the phenomenon by which people get accustomed to
both luxuries and hardships. If you get something you wanted, its ability to
make you happier dwindles over time, and your baseline for luxury ratchets up a
notch. Buy yourself a BMW 535 sedan, and pretty soon you’ll find it
hard to believe you ever settled for a Honda. Worse, you soon might find
yourself convinced that you can only be truly happy behind the wheel of a BMW 735.

The good news is that the process works in reverse as well —
we eventually adapt to reduced circumstances, although it’s more
painful and tends to take a little longer. So if you have to scale back your
standard of living by eating out less or vacationing in less trendy climes, you’ll
feel the loss for sure but over time you’ll get used to it and it won’t
feel so bad anymore. It’s as if your happiness level had a thermostat
that keeps it from getting too extreme in either direction.

Further evidence of this phenomenon is supplied by the
research of Harvard psychologist Dan Gilbert, who looked at people who had
experienced something wonderful, such as winning the lottery, and those who had
experienced something awful, such as becoming a paraplegic. In the long term, somewhat
astonishingly, both groups reported similar levels of happiness. It seems you
get used to what you have, good or bad.

The Key to Inner Happiness

If money doesn’t lead to happiness, then what
does? The research is pretty clear here as well: relationships with friends and
family (who can’t be laid off), a sense of fulfillment (which many
people don’t get at their job, even if they still have one), hobbies,
and some kind of spiritual component to their lives.

And this spirituality doesn’t need to come from
religion. Psychologist Andrew Shatt , who counsels corporate clients about
leadership and co-wrote a 2001 book on resilience, says the spiritual component
can be a club or even a political organization. “Just something that
was here before them, and something that’s going to be here after
them,” he says.

Finally, there’s a possibility that some people
might actually become happier through disruptions brought on by the
recession. They’ll discover some hidden inner strength, or change
careers to something more fulfilling, or have the time to repair a fraying
marriage. Lyubomirsky likens it to receiving bad medical news. “Some
people get happier after a cancer diagnosis,” she says. “They
reprioritize their goals, or they discover who their true friends are. No one’s
saying we should all get cancer, but tough situations can lead to greater
happiness.”

Mashburn, the former clinical psychologist, points to a
study on job stress from the 1970s in which researchers interviewed and
examined employees at Illinois Bell Telephone over the course of intense
layoffs as the telephone industry deregulated. Of the group of 430 supervisors
and executives studied, about 65 percent experienced an increase in
stress-related conditions, like heart attacks, strokes, obesity, and divorce.
But the other 35 percent managed to thrive, staying committed to their work or
to the process of finding a new job, and feeling as though they had taken
control of their own fate. Moreover, this group considered the layoffs to be a
challenge — something they could rise above. “They didn’t
feel that their fate was sealed,” Mashburn says. “They
said, ‘This is going to happen. There’s stress in life. I shouldn’t
be surprised by this.’”

In the end, many of us may end up being surprised by how
well we handle the current financial storm. While no one would suggest it’s
going to be fun, there’s undoubtedly something reassuring about
knowing that we’re more adaptable than we think, and that our
happiness is more than just a reflection of our net worth. Those are lessons
that we’re likely to learn again when the good times return —
whenever that is.