If money doesn't make you happy, you probably aren't spending it right (2010) [pdf]

“While money can't buy happiness, it certainly lets you choose your own form of misery.” ― Groucho Marx

Last year I sold some stock from my last startup, a little over $1m after taxes, and I can say it's definitely changed things for the better.

In this period of time, I have been able to:

- Quit my founder position at that startup (thus avoiding potentially being tied to vesting or retention clauses, in case of an acquisition)

- Own my house, and invest in a few other apartments, which turned into a little side business with great margins

- Start a new company investing my own money, and not requiring a salary

- Travel and live in a few different cities as I build the new startup

- Completely forget about the price tag when buying small-ticket things: a taxi ride, asking for an extra plate, an occasional flight, paying a round of drinks

It's not as it money made me happy by spending it, but it did remove a lot of the constraints I had before. It's made me feel like the default state would be to be carefree and happy, and as long as you can keep the worries and the stress away, everything will go alright.

As a new worry, I now spend a lot of time thinking about how to reinvest it wisely and continue living like this. It's not overwhelming, and it's not very different than what doing my finances felt like before, but doing it a larger scale adds a new dimension to it.

Getting ripped to shreds by a lion can be a genuine experience, but that doesn't mean I desire it. If you enjoy something you can buy with money, there is likewise no need to taint the experience bleak simply because it was money that enabled you to experience it. I have no doubt that money changes the attributes of a thing sometimes, but so can any other attribute, including the way you collectively simplify a set of attributes and make a comparison to an ideal.

Money are the source of lots of unhappiness, but as they point out: We adapt.

The research does not support that "being broke sucks".

The research supports that starving and being homeless sucks. The moment you are not starving, and have shelter, peoples happiness level is on average almost as high as the happiness level of a rich person.

> Feeling successful is pleasant in itself.

It may be, but as we adapt to having little money and success, so do we adapt to having lots of money and lots of success. It does not bring substantial added happiness other than shortly after we achieve it. Being given a raise, or promotion, or public praise gives us happiness, but that happiness fades very quickly. Similarly, not making much money, or failing, is unpleasant but the unhappiness it causes is very much temporary unless you keep doing worse.

Avoiding adaption to an improved situation, and ensuring adaption to a worse situation is key to maximising happiness. You are best served by a slow, steady "drip" of improvement than suddenly achieving wealth, fame or success for example. Conversely, if you need to make cuts, you are far better off cutting your expenditure further than necessary, get used to it, and slowly see things improving, than you are making small cuts with the risk of having to cut back further.

Apart from relative effects on adapation, money overall has very little direct impact on happiness other than at the extremes:

If you starve; if you're homeless; if you lack access to mental health services; if you lack access to health services that can prevent or slow a degenerative condition (pretty much any catastrophic health change is subject to adaptation as long as the change is over quickly - e.g. amputees are as happy as most people relatively soon afterwards - but conditions that slowly become worse avoids adaptation).

(See Jonathan Haidt's "The Happiness Hypothesis" for more on this, and a decent chunk of references)