April 16, 2025 • 12 mins
Can money buy you happiness? How much money is too much? Does wealth offer diminishing returns? In this edition of At the Money, Barry Ritholtz is joined by Brian Portnoy to explore these questions. Portnoy has held senior investment roles throughout the hedge fund and mutual fund industries. He is also the author of the bestselling books, 'The Geometry of Wealth' and 'The Investors Paradox.'
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:07):
Because if you fail.
Speaker 1 (00:14):
Money doesn't automatically lead to happiness. Our relationship with money
is complicated. Speak to someone at the bottom of the
economic ladder and they will tell you in no uncertain
terms that a lack of money can lead to misery.
But speak to enough millionaires and billionaires, and it's pretty
clear that money doesn't automatically lead to happiness. As it
(00:39):
turns out, money buys you a little bit of happiness,
but only up to a point. And on today's edition
of At the Money, we're going to discuss how and
why money can buy you happiness. To help us unpack
all of this and what it means for your financial health,
let's bring in Brian Portnoy. He is the author of
(00:59):
the Geometry of Wealth, How to Shape a Life of
Money and Meaning. Okay, we'll start with an easy enough question,
does money buy happiness?
Speaker 2 (01:09):
Let me give you a very simple, clear answer. Yes, no, maybe,
sort of not really.
Speaker 1 (01:16):
Kind of Okay, I get that. So you're saying it's
complicated and it really depends on a lot of factors.
Let's start really basic with Maslow's hierarchy of needs, safety, security, food, shelter, etc. Obviously,
if you don't have those things, lack of money is
(01:37):
certainly going to bring misery.
Speaker 2 (01:38):
So that's exactly the right place to start. Let's talk
about the elimination of misery as distinct from the achievement
of happiness. There's no doubt that money's most powerful impact
on our emotional lives our physical lives is the elimination
of misery. So we're built to to survive. That's our
(02:01):
evolutionary story. And money buys us shelter, it buys us food,
it buys us warmth, it buys us safety. At a
higher level, it can allow us to afford getting rid
of aggravation or certain people you don't want to see,
or certain commutes you don't want to make. We can
think of money as a way to mitigate or even
(02:22):
eliminate sadness, disappointment, and misery. That is by far the
most powerful relationship between money and a particular emotional state.
Speaker 1 (02:31):
So I've seen a couple of studies that look at
where does money stop buying contentment so to speak? And
I know these are all from different eras and so
they may not be inflation adjusted numbers. But one study
says it peaks around seventy k and then starts to
roll off. That seems like in America that buys you shelter, food, clothing, healthcare,
(02:54):
and maybe even some education. Then I've seen three hundred
thousand and five hundred thousand, where does the marginal utility
of each earned dollar really begin to matter less and less?
Speaker 2 (03:07):
So you've pointed accurately to a number of studies on this,
and maybe it's seventy five thousand or ninety thousand. I'd
also point out that a dollar spent in Manhattan, New
York versus Manhattan, Kansas. Those are very different conversations. Let
me intervene first, though, and say there's two different definitions
of happiness that we should make sure are clear. One
(03:27):
is sort of just the day today, good mood, bad mood,
having positive emotions. The other sort of happiness, going back
to Aristotle, what he called youd ammonia, is a deeper
source of meaning and contentment. As it relates to the
first definition of happiness, you are correct. There's been study
after study that shows that once you can afford the
(03:49):
basics in life, having that marginal dollar isn't necessarily going
to put you in a good mood or a bad mood.
You're sort of wired with a certain disposition, and if
you're a generally cheerful person, you're going to be that way.
And if you're generally kind of dour or miserable while
making hundreds of thousands of dollars a year, aren't going
to make an impact. I'd go to the second definition
(04:12):
of what we call happiness. It's a difficult word. You
go to the sourus. There's thirty different words for this thing.
But we're going to talk about day to day happiness
versus contentment what Aristotle called you'd ammonia. And there's some
interesting research from Danny Khneman and Angus Deaton that shows
that if spent wisely, money can underwrite a meaningful life,
(04:37):
and there are different sources of meaning in our lives.
When spent wisely on certain types of experiences and relationships,
money can very much be used effectively to lead a happier,
better life.
Speaker 1 (04:50):
So let's talk a little bit about other people. There's
a famous ahl Manking quote was once they asked how
do you define wealth? And his answer was one hundred
dollars more than my brother in law. There's other studies
that have asked people, would you rather have making up
these numbers? But they're bullpark sixty thousand dollars when you
(05:13):
live in a town when everybody else has fifty thousand dollars?
Or would you prefer two hundred thousand dollars in a
town where everybody else has three hundred thousand? I know
what I would choose. I would take the latter, But
that doesn't seem to be the answer that most people give.
They say, well, I'd rather be the wealthiest guy in
town at sixty K than the poorest guy in town
(05:35):
at one hundred K. Why is that? Explain why that
behavior and belief system exists, and what does that mean
for our satisfaction?
Speaker 2 (05:46):
Welcome to the human condition, Welcome to the evolutionary path
that we've been on. Status matters, tribe matters, and these
aren't trivial things. These are deep down genetic codes that
we all live with, and so when we have a
little bit more than others, we feel better than ourselves.
And so you're absolutely right. The studies do show, and
(06:07):
I don't have the exact numbers, but people would rather
have a one hundred thousand dollars income when others are making
eighty versus one hundred and fifty thousand dollars income when
others are making two hundred thousand dollars a year. You
and I might say, well, I'd prefer one versus the other.
But the fact is that the preponderance of responses reflect
the fact that we want to feel connected to our
(06:29):
tribe and safe in our tribe. And when you have
a little bit more than others, it can make you
feel pretty good. Go quote for quote. You gave me
H'll make and I'll give you the original, JP Morgan.
He said, nothing corrupts your financial judgment more than the
site of your neighbor getting rich.
Speaker 1 (06:47):
Especially if your neighbor's an idiot. Well, if your neighbors
JP Morgan. I have a very vivid recollection in the
early days of house flipping, in the two thousands leading
up to that, and the early days of crypto. I
can't tell you how often I've heard people say, my
neighbor is making all this money and that guy's are
(07:08):
more on It's almost as if it's insult to injury.
What is it about seeing somebody else make a lot
of money that gets our envy and greed buttons ranging?
Speaker 2 (07:19):
Yeah, so I don't know whether to quote neuroscience or.
Speaker 1 (07:21):
The Bible go both ways, because I bet they're related.
Speaker 2 (07:26):
They are they are, you know, they both speak to
kind of who we are as a human species. There's
no getting around the fact that we feel envy or
greed when others have more. I mean, I don't know
if we need to provide a dissertation or Bible quotes
to show why that's true. We just know that when
(07:46):
others are getting ahead, we feel like we're falling behind.
It's really important from a financial wellbeing point of view
for people to have their own individual, authentic goals, hopefully
baked into some form of a financial plan. You feel
like you're making progress toward the things that you've said
matter to you and your loved ones. That can be
(08:06):
used to mitigate some of these negative emotional impacts. When
it's just like, oh, I'm at the casino, I bet
on black, he bet on red, he won, he's rich,
I'm not, and you don't feel very good about yourself.
That's not a great way to work your way through
your financial life.
Speaker 1 (08:23):
So let's tie this together. Given the difference between the
pursuit of happiness and the pursuit of contentment. What does
this mean for how investors should think about pursuing gains
in their portfolios.
Speaker 2 (08:38):
Investing outside of a well defined financial plan is speculation,
and that might not necessarily be a bad thing. You know,
you like to pick stocks?
Speaker 1 (08:47):
I don't, oh not anymore. I started began on a
trading desk. GAT mean, look, I taken around with market
timing is what I do. But that's just outside of
professional that's just in my own little stupid Yeah you
can personal account.
Speaker 2 (09:01):
Okay.
Speaker 1 (09:01):
So and by the way, that that two percent of
my assets scratches such an itch, I can't begin to
tell you.
Speaker 2 (09:09):
Yeah, that's why we advise advisors to, oh, allow some
clients to have cowboy accounts. Yeah, absolutely, you will manage
ninety seven percent of your assets. Three percent go wild
by crypto all this stuff.
Speaker 1 (09:21):
And one of the funny things are is with those
sort of accounts is if they go to zero, who cares?
Was two percent of your assets? And if they triple,
Hey they tripled because it was two percent. If it
was actually all your money, you would never have been
able to hold on that long.
Speaker 2 (09:36):
That's right.
Speaker 1 (09:36):
You would have taken Oh my god, I'm up thirty percent.
I gotta I gotta take some profits.
Speaker 2 (09:40):
And by the way, there's nothing wrong with being interested
in the stock or bond market, or in crypto or
in any other market and seeing if you can deliver
bring your insight into picking better securities or better outcomes. However,
if we're really thinking about the relationship between money and
half happiness, when you have a well defined plan, it
(10:03):
means that you're heading towards something. It could be your
kid's college education, it could be a comfortable retirement, it
could be a particular vacation that you have in mind.
So you pick your goal and you invest accordingly. You
build a portfolio, you have time horizons, you have risk tolerance.
(10:23):
It's not as sexy or as provocative as playing the markets,
so to speak. But the conversation about money and happiness
actually makes a lot more sense in the context of
having well defined goals and the other stuff. It's kind
of fun, but just let's call it what it is.
It's not investing, it's speculating.
Speaker 1 (10:44):
Thanks Brian. That's really interesting. You know, this idea of
money buying happiness comes up all the time. It comes
up in conversations with clients and friends and family, and
I always like to point to the example of the
op of money leading to satisfaction and contentment, something I
call purposeless capital. Bill Hwang ran the hedge fund ARCHI
(11:10):
Ghost Capital Management, and they very famously ran up a
stake of a few billion dollars using leverage and very
aggressive trading up to twenty billion dollars before they ultimately
just blew up. And I always suspected part of the
reason that happened was because this was purposeless capital. There
(11:30):
was no intent behind it. There was no plan to
meet certain life goals, give money to philanthropy, build experiences
with the family. It was just more for the sake
of more. And as we've learned over time, sure money
doesn't always buy happiness, but if used right, it could
(11:51):
buy experiences, You can help others, and it can bring
a life of funded contentment if applied correctly. You can
listen to At the Money every week find it in
our Masters and Business feed at Bloomberg dot com, Apple
Podcasts and Spotify. Each week we'll be here to discuss
(12:13):
the issues that matter most to you As an infestor.
I'm Barry Ritolts. You've been listening to Add the Money
on Bloomberg Radio,
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:07):
Because if you fail.
Speaker 1 (00:14):
Money doesn't automatically lead to happiness. Our relationship with money
is complicated. Speak to someone at the bottom of the
economic ladder and they will tell you in no uncertain
terms that a lack of money can lead to misery.
But speak to enough millionaires and billionaires, and it's pretty
clear that money doesn't automatically lead to happiness. As it
(00:39):
turns out, money buys you a little bit of happiness,
but only up to a point. And on today's edition
of At the Money, we're going to discuss how and
why money can buy you happiness. To help us unpack
all of this and what it means for your financial health,
let's bring in Brian Portnoy. He is the author of
(00:59):
the Geometry of Wealth, How to Shape a Life of
Money and Meaning. Okay, we'll start with an easy enough question,
does money buy happiness?
Speaker 2 (01:09):
Let me give you a very simple, clear answer. Yes, no, maybe,
sort of not really.
Speaker 1 (01:16):
Kind of Okay, I get that. So you're saying it's
complicated and it really depends on a lot of factors.
Let's start really basic with Maslow's hierarchy of needs, safety, security, food, shelter, etc. Obviously,
if you don't have those things, lack of money is
(01:37):
certainly going to bring misery.
Speaker 2 (01:38):
So that's exactly the right place to start. Let's talk
about the elimination of misery as distinct from the achievement
of happiness. There's no doubt that money's most powerful impact
on our emotional lives our physical lives is the elimination
of misery. So we're built to to survive. That's our
(02:01):
evolutionary story. And money buys us shelter, it buys us food,
it buys us warmth, it buys us safety. At a
higher level, it can allow us to afford getting rid
of aggravation or certain people you don't want to see,
or certain commutes you don't want to make. We can
think of money as a way to mitigate or even
(02:22):
eliminate sadness, disappointment, and misery. That is by far the
most powerful relationship between money and a particular emotional state.
Speaker 1 (02:31):
So I've seen a couple of studies that look at
where does money stop buying contentment so to speak? And
I know these are all from different eras and so
they may not be inflation adjusted numbers. But one study
says it peaks around seventy k and then starts to
roll off. That seems like in America that buys you shelter, food, clothing, healthcare,
(02:54):
and maybe even some education. Then I've seen three hundred
thousand and five hundred thousand, where does the marginal utility
of each earned dollar really begin to matter less and less?
Speaker 2 (03:07):
So you've pointed accurately to a number of studies on this,
and maybe it's seventy five thousand or ninety thousand. I'd
also point out that a dollar spent in Manhattan, New
York versus Manhattan, Kansas. Those are very different conversations. Let
me intervene first, though, and say there's two different definitions
of happiness that we should make sure are clear. One
(03:27):
is sort of just the day today, good mood, bad mood,
having positive emotions. The other sort of happiness, going back
to Aristotle, what he called youd ammonia, is a deeper
source of meaning and contentment. As it relates to the
first definition of happiness, you are correct. There's been study
after study that shows that once you can afford the
(03:49):
basics in life, having that marginal dollar isn't necessarily going
to put you in a good mood or a bad mood.
You're sort of wired with a certain disposition, and if
you're a generally cheerful person, you're going to be that way.
And if you're generally kind of dour or miserable while
making hundreds of thousands of dollars a year, aren't going
to make an impact. I'd go to the second definition
(04:12):
of what we call happiness. It's a difficult word. You
go to the sourus. There's thirty different words for this thing.
But we're going to talk about day to day happiness
versus contentment what Aristotle called you'd ammonia. And there's some
interesting research from Danny Khneman and Angus Deaton that shows
that if spent wisely, money can underwrite a meaningful life,
(04:37):
and there are different sources of meaning in our lives.
When spent wisely on certain types of experiences and relationships,
money can very much be used effectively to lead a happier,
better life.
Speaker 1 (04:50):
So let's talk a little bit about other people. There's
a famous ahl Manking quote was once they asked how
do you define wealth? And his answer was one hundred
dollars more than my brother in law. There's other studies
that have asked people, would you rather have making up
these numbers? But they're bullpark sixty thousand dollars when you
(05:13):
live in a town when everybody else has fifty thousand dollars?
Or would you prefer two hundred thousand dollars in a
town where everybody else has three hundred thousand? I know
what I would choose. I would take the latter, But
that doesn't seem to be the answer that most people give.
They say, well, I'd rather be the wealthiest guy in
town at sixty K than the poorest guy in town
(05:35):
at one hundred K. Why is that? Explain why that
behavior and belief system exists, and what does that mean
for our satisfaction?
Speaker 2 (05:46):
Welcome to the human condition, Welcome to the evolutionary path
that we've been on. Status matters, tribe matters, and these
aren't trivial things. These are deep down genetic codes that
we all live with, and so when we have a
little bit more than others, we feel better than ourselves.
And so you're absolutely right. The studies do show, and
(06:07):
I don't have the exact numbers, but people would rather
have a one hundred thousand dollars income when others are making
eighty versus one hundred and fifty thousand dollars income when
others are making two hundred thousand dollars a year. You
and I might say, well, I'd prefer one versus the other.
But the fact is that the preponderance of responses reflect
the fact that we want to feel connected to our
(06:29):
tribe and safe in our tribe. And when you have
a little bit more than others, it can make you
feel pretty good. Go quote for quote. You gave me
H'll make and I'll give you the original, JP Morgan.
He said, nothing corrupts your financial judgment more than the
site of your neighbor getting rich.
Speaker 1 (06:47):
Especially if your neighbor's an idiot. Well, if your neighbors
JP Morgan. I have a very vivid recollection in the
early days of house flipping, in the two thousands leading
up to that, and the early days of crypto. I
can't tell you how often I've heard people say, my
neighbor is making all this money and that guy's are
(07:08):
more on It's almost as if it's insult to injury.
What is it about seeing somebody else make a lot
of money that gets our envy and greed buttons ranging?
Speaker 2 (07:19):
Yeah, so I don't know whether to quote neuroscience or.
Speaker 1 (07:21):
The Bible go both ways, because I bet they're related.
Speaker 2 (07:26):
They are they are, you know, they both speak to
kind of who we are as a human species. There's
no getting around the fact that we feel envy or
greed when others have more. I mean, I don't know
if we need to provide a dissertation or Bible quotes
to show why that's true. We just know that when
(07:46):
others are getting ahead, we feel like we're falling behind.
It's really important from a financial wellbeing point of view
for people to have their own individual, authentic goals, hopefully
baked into some form of a financial plan. You feel
like you're making progress toward the things that you've said
matter to you and your loved ones. That can be
(08:06):
used to mitigate some of these negative emotional impacts. When
it's just like, oh, I'm at the casino, I bet
on black, he bet on red, he won, he's rich,
I'm not, and you don't feel very good about yourself.
That's not a great way to work your way through
your financial life.
Speaker 1 (08:23):
So let's tie this together. Given the difference between the
pursuit of happiness and the pursuit of contentment. What does
this mean for how investors should think about pursuing gains
in their portfolios.
Speaker 2 (08:38):
Investing outside of a well defined financial plan is speculation,
and that might not necessarily be a bad thing. You know,
you like to pick stocks?
Speaker 1 (08:47):
I don't, oh not anymore. I started began on a
trading desk. GAT mean, look, I taken around with market
timing is what I do. But that's just outside of
professional that's just in my own little stupid Yeah you
can personal account.
Speaker 2 (09:01):
Okay.
Speaker 1 (09:01):
So and by the way, that that two percent of
my assets scratches such an itch, I can't begin to
tell you.
Speaker 2 (09:09):
Yeah, that's why we advise advisors to, oh, allow some
clients to have cowboy accounts. Yeah, absolutely, you will manage
ninety seven percent of your assets. Three percent go wild
by crypto all this stuff.
Speaker 1 (09:21):
And one of the funny things are is with those
sort of accounts is if they go to zero, who cares?
Was two percent of your assets? And if they triple,
Hey they tripled because it was two percent. If it
was actually all your money, you would never have been
able to hold on that long.
Speaker 2 (09:36):
That's right.
Speaker 1 (09:36):
You would have taken Oh my god, I'm up thirty percent.
I gotta I gotta take some profits.
Speaker 2 (09:40):
And by the way, there's nothing wrong with being interested
in the stock or bond market, or in crypto or
in any other market and seeing if you can deliver
bring your insight into picking better securities or better outcomes. However,
if we're really thinking about the relationship between money and
half happiness, when you have a well defined plan, it
(10:03):
means that you're heading towards something. It could be your
kid's college education, it could be a comfortable retirement, it
could be a particular vacation that you have in mind.
So you pick your goal and you invest accordingly. You
build a portfolio, you have time horizons, you have risk tolerance.
(10:23):
It's not as sexy or as provocative as playing the markets,
so to speak. But the conversation about money and happiness
actually makes a lot more sense in the context of
having well defined goals and the other stuff. It's kind
of fun, but just let's call it what it is.
It's not investing, it's speculating.
Speaker 1 (10:44):
Thanks Brian. That's really interesting. You know, this idea of
money buying happiness comes up all the time. It comes
up in conversations with clients and friends and family, and
I always like to point to the example of the
op of money leading to satisfaction and contentment, something I
call purposeless capital. Bill Hwang ran the hedge fund ARCHI
(11:10):
Ghost Capital Management, and they very famously ran up a
stake of a few billion dollars using leverage and very
aggressive trading up to twenty billion dollars before they ultimately
just blew up. And I always suspected part of the
reason that happened was because this was purposeless capital. There
(11:30):
was no intent behind it. There was no plan to
meet certain life goals, give money to philanthropy, build experiences
with the family. It was just more for the sake
of more. And as we've learned over time, sure money
doesn't always buy happiness, but if used right, it could
(11:51):
buy experiences, You can help others, and it can bring
a life of funded contentment if applied correctly. You can
listen to At the Money every week find it in
our Masters and Business feed at Bloomberg dot com, Apple
Podcasts and Spotify. Each week we'll be here to discuss
(12:13):
the issues that matter most to you As an infestor.
I'm Barry Ritolts. You've been listening to Add the Money
on Bloomberg Radio,
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