“At a party given by a billionaire on Shelter Island, Kurt Vonnegut informs his pal, Joseph Heller, that their host, a hedge fund manager, had made more money in a single day than Heller had earned from his wildly popular novel Catch-22 over its whole history. Heller responds, “Yes, but I have something he will never have – Enough.”
I first came across this story above from the book “The Psychology of Money” authored by Morgan Housel. This story, however, was originally told by Vanguard founder John Bogle. It has stuck in my head ever since.
What is Enough?
The definition of the word “Enough” from Merriam-Webster dictionary is:
“Occurring in such quantity, quality, or scope as to fully meet demands, needs, or expectations.”
Note the keywords: Fully meet demands, needs, and expectation
Some examples:
Recommended daily calories intake for an average man is 2,500, and for the average woman is around 2,000. Ordering 2 boxes of large pizzas and try to finish it alone in a single sitting is pure gluttony.
Having a pair of shoes dedicated to each type of activity is common. Having 10 pairs for each category, however, is a little excessive, to say the least (unless you’re a friendly cartoon centipede who wears shoes). To shoe collectors out there, don’t get offended… I did mention the word “category”.
Well, you get my point.
Infinite Amounts of Stuff to Buy, Finite Amounts of Money
“Every day is a good day to purchase my products” – says EVERY salesperson, marketeer, and advertiser out there. It’s not wrong for them to want you to buy their products, they too have mouths to feed. We all have to make a living.
The thing is, in our world of consumerism, there is always more stuff for you to get your hands on – more than you ever could afford. There is always that shiny new car, the fancy picket fence house at a more prestigious neighborhood, and the latest gadgets that companies roll out during the “launch” season. The cycle thus repeats itself.
I learned of the term “gazingus pin” after reading “Your Money or Your Life” written by Vicki Robin and Joe Dominguez. Basically, it is any item that you just can’t pass by without buying. It could be anything – from wallets, shades, clothes, figurines, to electronic gadgets. Most of us tend to have impulses to buy more gazingus pins, even though we already have a few similar items tucked away in the drawer or closet.
With infinite amounts of stuff to buy, there is no way our wallets could ever keep up.
Can We Depend on Money to Buy Happiness?
Let’s imagine a scenario where your money is unlimited:- Can you buy your way to happiness?
Markus Alexej Persson, a.k.a Notch, is a Swedish video game programmer and designer, who is best known for creating the critically acclaimed sandbox video game Minecraft. He was also the founder of the video game company Mojang.
Minecraft is a total hit at launch (although I have not played it myself), it surpassed over a million purchases less than a month after entering its beta phase in early 2011. In September 2014, Mircosoft has agreed to buy Mojang (the company that developed Minecraft) for a whooping sum of $2.5 billion! This has made Minecraft the most successful indie game of all time.
The sale of his company to Microsoft without a doubt made Persson tremendously rich. He even bought a $70 million LA mansion, outbidding both Jay Z and Beyonce. With the amount of wealth and luxury, surely he’s happy – right?
Not quite.
In 2015, Persson a.k.a Notch, twitted as below:
In a series of somber tweets, he wrote: “Hanging out in Ibiza with a bunch of friends and partying with famous people, able to do whatever I want, and I’ve never felt more isolated.”
In another tweet, he wrote: “In Sweden, I will sit around and wait for my friends with jobs and families to have time to do shit, watching my reflection in the monitor.”
I guess the saying “It’s lonely at the top” does hold water. Even with all the money in the world, one can still be unhappy.
The Hedonic Treadmill
The hedonic treadmill, also known as hedonic adaptation, is the observed tendency of humans to quickly return to a relatively stable level of happiness despite major positive or negative events or life changes. According to this theory, as a person makes more money, expectations, and desires rise in tandem, which results in no permanent gain in happiness. – Wikipedia.
This term is first coined by Philip Brickman and Donald T. Campbell in their 1971 article. In 1978, Brickman, together with Dan Coates and Ronnie Janoff-Bulman were among the first to investigate the hedonic treadmill in their study titled: “Lottery Winners and Accident Victims: Is Happiness Relative?”
In this study, both study groups – lottery winners and paralyzed accident victims (paraplegics) were interviewed about their happiness right after the major event happened to them. Both groups are then interviewed again after 6 months.
The interesting findings from the study is that:
- For the paraplegics: happiness has almost returned to the levels before their accident happen.
- For the lottery winners: happiness too, returned to levels before they won big, with some even reported to be less happy than they originally were before the winning.
Persson (Creator of Minecraft) is a classic example of someone who has undergone the hedonic treadmill. There is only so much stuff you could buy, and partying you could do – until you hit the happiness ceiling of consumerism. Eventually, the treadmill will bring you back to square one.
So… Money Can’t Buy Happiness?
Don’t get me wrong, our levels of wealth definitely affect our happiness – to a certain extent. If a person’s wage is below the poverty line, daily stress and anxiety on how to make ends meet will be tough for them to be happy.
You’ve probably come across the happiness magic number of $75,000 a year quoted by various media outlets. The $75,000 price tag was actually suggested by 2002 winner of the Nobel Prize in economics Daniel Kahneman and fellow researcher Angus Deaton in their 2010 study.
The Layman’s explanation of the study is:
A person’s happiness will increase with the increase in wealth, but only up to an income of $75,000 a year. Earning more than that will not make a person any happier.
Do bear in mind that this study is done on US Residents, and the number will probably be different for other countries. With that said, it’s more of a guideline. Each person’s circumstances are unique, so we probably do not want to cast a number like that in stone.
In Search for Our “Enough”
So the question remains: How Much Money is Enough?
$10 million? $100 million? or $1 billion?
The answer lies within the dream lifestyle that you desire, and on how you identify “enough“. Some may be content to live in a small house, another might dream of living in a mansion.
One idea that I would like to share is from a chapter from Tony Robbins‘ book “Money, Master the Game“. This chapter has drastically influenced the way I looked at “enough”.
In his book, Robbins asked one of his younger audience how his dream lifestyle be like if he had a billion dollars. The young chap thought for a moment and gave his answers – his dream lifestyle includes owning a private jet and a private island (ambitious dreams).
For more context, let me elaborate more from Robbins’ book (a simplified version):
On owning a private jet: They looked up how much a long-distance Gulfstream G650 would cost, and the answer is: around $65 million. This was not including fuel, maintenance, and crew.
On owning a private island: They looked it up and found that he could buy an island in the Bahamas for around $10 million, but it will take another $30-$40 million to build a small resort!
To sum up the two:
Private Jet @ $65m + Private Island @ $50m = $115 million!
Robbins then asked: What if you charter/rent it rather than own it? As you won’t be using it all the time anyway.
They went back and did a calculation on chartering/renting:
On chartering a private jet: Chartering a Gulfstream per hour costs around $5,000. If he were to charter 100 hours per year, and do this for 10 years, it will cost around $5 million.
On owning a private island: Renting a resort in Necker Island for a week will cost around $350,000. Doing so for 10 years will add up to $3.5 million.
To sum up the two:
Chartered Private Jet @ $5m + Rented Private Island @ $3.5m = $8.5 million!
The difference between the two is more than 13X! Even if you charter/rent for another 10 more years, it’s still cost much lesser than owning.
No doubt $8.5 million IS still a lot of money, but it’s way lesser when compared to the original $115 million if the young chap were to own the jet and the island. This shows that most of the time, we overestimate how much our dreams actually cost.
This is just one of the many ideas to help us identify our “enough”, there are tons more to explore. Why not give it a try and calculate how much your dream lifestyle will cost?
This is post #12.
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