In pursuit of true wealth

At Addidi, we’ve known for a long time how important factors other than accumulating financial and material wealth are to our wellbeing. Twenty plus years of experience improving and nurturing our clients’ financial wellbeing is our proof and our purpose. A satisfying and rewarding life is about using what we have to live our best life. It isn’t just about money or having the latest stuff – it’s about helping others and leaving a positive and inspiring legacy. That’s true wealth.

We’d never say money isn’t important – of course it is. If you can’t meet your basic, material needs and responsibilities life can be extremely difficult, miserable and even dangerous. If you were in this position, of course you’d have psychological and emotional needs too, but your priorities would be about securing the basics.

Maslow got it right in 1943 when his famous pyramid was published for the first time in an academic journal in the U.S.

The reason for the enduring popularity of Maslow’s model is because it captures very simply and honestly the ideal of a balanced, well-lived life. It reminds us at a glance that we can’t live in our higher purpose alone, but also that it can’t be right to be solely focused on the material either. It addresses the big questions of what it means to be human.

Maslow would agree that there is nothing intrinsically wrong with monetary wealth – it is how we use what we have that is significant. Some of the world’s wealthiest individuals find their true wealth legacy in philanthropy and helping the poorest in society. Their wealth has become a wonderful enabler, a creative force for good in the world. What is interesting is that Maslow believed we all need that feeling of completeness, of doing something useful when we are able. This is important for us wherever we are on our wealth journey.

We need to attend to the whole pyramid – the base supports our journey to the summit. Maslow recognized the complexity of our lives and needs. His model is as relevant today as it was when he first published it. 

Wealth and wellbeing

 There are several recent pieces of research that confirm what Maslow knew about the human condition and our need for balance, social support, affirmation and self-actualisation.

 A recent global study1. published in 2018 set out to measure the relationship between our income and our happiness. Researchers explored and analysed findings around two areas of well-being:

  1. Emotional well-being which is about day-to-day feelings and emotions, such as being happy, excited, sad or angry.
  2. Life satisfaction which is an overall assessment of how a person is doing in life and which is more likely to be influenced by higher goals and comparisons to others.

The study found that in the UK a yearly income of between £43,478 and £54,347 led to emotional well-being. A higher annual income of £68,840 would lead to life satisfaction. Beyond both these thresholds people didn’t feel more satisfied with life or more happy on a daily basis.

The study’s author, Andrew Jebb, a psychology professor at Purdue University in Indiana, USA, said: “These amounts might be surprising as what we see on TV and what advertisers tell us we need would indicate that there is no ceiling when it comes to how much money is needed for happiness, but we now see there are some thresholds.”

People who lived in richer countries were generally happier than people in poorer regions of the world and the annual income thresholds at which people felt happy differed according to the relative wealth of their region. However, the principle that there is such a thing as ‘wealth satiation’ as it relates to happiness, was broadly evident around the world.

In his book Happy Ever After: Escaping the Myth of the Perfect Life, Professor Paul Dolan, a behavioural psychologist at the LSE, cites research by the UK’s Office for National Statistics (ONS), which has been studying the happiness levels of a sample of 200,000 people each year since 2011.

He notes that “earning less than £400 per week (or about £20,000 a year) is one of the factors that raises the chances of being in the most miserable 1% of the population. Above £400 per week, the law of diminishing marginal returns kicks in. Once your basic needs are satisfied, your desire for ever-increasing amounts of money generates ever-decreasing returns of happiness.” 2.

Both Jebb and Dolan understand the social pressure and power of the dominant ‘success’ narratives which drive the pursuit of more money. How much we earn relative to our peers has a significant bearing on how satisfied we are with life. Even if we have enough income to lead a good, comfortable life by our own measure, knowing that a colleague is earning more than us is likely to lower our happiness. Fairness matters.

Dolan’s book questions our conformity to social norms. He simply encourages us to be honest about our experiences, in the hope that we’ll liberate ourselves from these constraints in order to live our best, most rewarding life.

Not so dissimilar to Maslow.

Peak stuff and the search for meaning

 There are positive signs that we are starting to re-think the powerful narrative of material success and how this translates to meaning in our lives. As a response to unethical manufacturing processes, environmental degradation, and exploitation of resources we are questioning the status quo.

Unaffordable housing and an uncertain future have put young people at the centre of rethinking the story. 74% of millennials believe that successful business requires genuine purpose and 81% of 13-34 year-olds reject the concept of conspicuous luxury.3.

This shift in what we value is influencing the choices we make and our behaviours. Tech innovations such as streaming, e-publishing, on-demand-services and resale or reuse platforms are enabling the sharing economy and challenging the long-held belief that our happiness is tied to the number of things we own.

Throwaway culture isn’t cool anymore as we see the damage caused by plastics and waste. The circular economy is at last making sustainability visible and tangible, rather than conceptual. ‘Less is more’ is gathering momentum. The popularity of Marie Kondo and other minimalist advocates who encourage us to declutter our lives to make room for more of the things that ‘spark joy’ and truly matter – passions, experiences, growth and contentment.

 The realisation that acquiring more stuff doesn’t make us happy may not be new, but it is significant and timely.

Inequality cannot be part of a nation’s true wealth

It’s true that global capitalism has brought many benefits and lifted millions out of poverty. But in recent decades the unhealthy focus on growth and profit at all costs, that has characterised the world’s advanced economies has spiraled out of control.

Years of low taxation for the rich, deregulation of labour and product markets and globalisation is widely recognised to be stalling social mobility and entrenching inequality. With most wealth accumulating at the very top of the income scale, there is little evidence of ‘trickle down’ for ordinary working people as their wages and salaries continue to stagnate. It’s broadly agreed that this rampant, unchecked inequality lies behind much of the political, social and environmental distress we’re experiencing today.

It’s no surprise that the countries that have a narrower gap between the highest and lowest paid and a strong sense of civic and social support tend to be ‘happier’. A more equal society allows us all to feel valued for the contribution we make. Knowing there is a safety net there if we need it means we feel supported and secure in the event of hard times and that will of course create a more cohesive feeling of community.

The climate of inequality and extremity isn’t simply a political or moral problem either. Economies with less inequality are performing better while growth in the USA and UK is lower today than it was in the twenty-five years after World War II.4. So surely change is both essential and inevitable?

It’s an important time for governments, economists and policy makers to take note and creatively rethink how to develop and measure true wealth and well being at national and global levels. Non-material factors such as social supports, freedoms, and fairness are likely to play a bigger role than money in future well-being.

At the World Economic Forum in Davos earlier this year there were some optimistic, expert voices:

“Increasingly, governments and corporations are starting to realise that true, sustainable wealth cannot be merely financial, but must include the social, natural and human capitals that underpin all economic activity. This new approach is revolutionising what it means for a country or a business to be wealthy and profitable.” 5.

Let’s hope so. The subject of wealth inequality and its roots in the current culture of wealth has entered mainstream public discourse.  At Addidi, we believe business can be a force for good in the world – we see it with our clients everyday. This shift in values and culture is already manifest in progressive, successful companies. Governments really do need to understand the changing mood too and act otherwise they will become increasingly redundant in a world that is already sending signals that the powers that be are dangerously out of touch with the people.

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 Sources

  1. Andrew Jebb, Purdue University. Research based on figures from the Gallup World Poll, a representative survey sample of more than 1.7million people in 164 countries. Analysis and report published in the science journal Nature Human Behaviour, 2018.
  2. Paul Dolan, Happy Ever After: Escaping the Myth of the Perfect Life, published on 17 January 2019 by Allen Lane.
  3. Deloitte Millenials Survey, 2018.
  4. Joseph E. Stiglitz, People, Power, and Profits: Progressive Capitalism for an Age of Discontent, published by W.W. Norton and Allen Lane.
  5. Macro-economists, financiers and business leaders discuss their visions of what the future of wealthwill look like in 2030, Green Economy Coalition interactive panel on Sustainable Development Goals, World Economic Forum, Davos 2019

This article first published in two parts on LinkedIn

 

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