Can Money Truly Buy Happiness?

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It's been said that money can't buy happiness. Yet in recent research by economists Amy Finklestein, Erzo Luttmer and Matthew Notowidigdo tells a different story, one that says you are happier if you spend your money while you are still young enough to really enjoy it.

The purpose of their research was to understand better what makes us happiest. Although economics generally is associated with rational calculation than emotion, there's an ever-growing subculture of "happiness economists." These 'happiness economists' are more interested in finding out just how much happiness a country produces.

Corporate profits and trade flows are easy enough to figure out, but measuring an individuals psychic well-being is harder to measure. Having said that, the researchers took the easy road and just asked people if they were happy. What they concluded was that money does indeed make us happier.

To sum it all up, Slate goes on to say that the researchers' findings reinforce claims that economists have made elsewhere that Americans aren't really under saving all that much for their golden years. Americans are able to be frugal in their older age and can live on less than they did when they were younger.

As well, health has everything to do with how much happiness that money can buy. If you are retired and healthy, you will enjoy your money much more than if you are in poor health.

The authors also have a surprising suggestion regarding health insurance: We'd actually be better off if insurance companies reduced the portion of medical expenditures they pay for. Your monthly insurance payments would end up costing you less, and while you'd shell out more for hospital stays and other medical expenses if illness struck, well, at that point you wouldn't be healthy enough to enjoy spending the extra cash anyway.

Thus, if you are retired and in good health, this new research gives you permission to go out and spend that money you've saved! We never know what tomorrow will bring, so we need to enjoy it now!