# Money Matters

part of the “what I learned after four years at MIT” series, I guess?

There’s some oft-cited psychology studies that suggest that once your salary goes above $75,000, additional money doesn’t make you happier. This sounds like a sage bit of life advice if it were true, the ultimate rebuff against excessive greed and materialism and sacrificing other things for a six-digit salary, but it overstates the case a bit. 80,000 Hours’ analysis of money and happiness is probably the analysis I’d trust the most here; I think it would be more accurate just to say that you get diminishing returns of happiness from salaries above$70,000.1 Still, that was enough for me to decide fairly early on that I wasn’t interested in trying to get a high-paying job for its own sake, or in spending too much effort trying to invest my way to a fortune.2 I wanted my job to be personally satisfying and good for the world, while paying enough for me and my family (current and future) to get by, but I planned to treat any additional money after that as little more than a bonus used for breaking ties.

I still mostly stand by that decision today, but over the intervening years I realized there were a whole host of reasons to want money that weren’t that selfish at all.

Money is influence. Over the last four years, I have gotten many opportunities to contemplate how many decisions are driven by monetary considerations, how much organizations will do to suit their donors, how wide-ranging the effects of all this are. This happens a lot in national politics — money alone can’t win you an election, but it sure helps — but also in school politics. I think just about every time I’ve recently wished I had money, I wasn’t hoping to buy or afford something; I was hoping to get people to listen to me and people like me: nationally and socially, about climate change and gender equality and LGBTQ rights and so on3, but at school, about dorm restructuring and meal plans and so many other things. I won’t rehash everything that has happened since I expect most readers for which this is relevant will have learned about it from other sources,4 but suffice it to say that I’m not planning to donate a single cent to MIT unless and until they start treating students and student culture better. Unfortunately, without more money to not donate, I don’t think anybody would care, nor would I expect them to.

Money is freedom. Money frees you to solve problems that the world won’t pay you to solve, the kinds of problems for which there are fancy economics terms and theories because they don’t automatically fall out of people making mutually beneficial exchanges, if that’s want you want to do. I wonder sometimes, not very seriously, if I should go off and start a startup — it seems like a pretty popular thing to do5 — but even putting aside the usual questions of whether I have the resources and the grit to start a startup, I think a lot of problems I’d most strongly want to solve are fundamentally incompatible with a traditional business model. It would be nice to build up some savings and have enough money to, at least, have the option of funding myself to just work on such a problem full-time, without needing to worry about profit margins and market fit and competitors and stock options and all that.

Money is the ability to help others. I’ve spent a lot of words contemplating massive salaries from the point of view of somebody who likely won’t have any trouble getting a comfortably livable salary, but it’s easy to lose sight of how well off I already am.6 According to this CareerBuilder survey, 78% of U.S. workers live paycheck to paycheck. This number is astoundingly high to me. Four out of five workers, one financial accident away from bankruptcy. I also got a perspective that’s a bit more visceral from hanging out on Mastodon, where if you look in the right places you will quickly start seeing dozens of glimpses into people’s rocky financial lives, dozens of PayPal and GoFundMe links for people who are just trying to get by, every month; people who might have hit that one financial accident: a medical bill, a car breaking down, an unexpected price hike on something.7 I donate from time to time. I wish I felt comfortable donating more. Whenever I see these donation links, after the requisite wistful contemplation of the societal problems that led so many people to this point, I cannot help but fantasize about the alternate reality in which I make so much more money, I can just throw \$50 at every donation link without hesitating, because spending the time deliberating about whether to donate would cost me more.

All in all, even if you’re not interested in amassing a mountain of wealth and living a luxurious lifestyle, or even if you have sharp philosophical objections to such things, there are many reasons being rich would still be nice. Of course, money is certainly not the only way to achieve any of these things. It’s probably not even the most efficient way to achieve any of them, which is why I still mostly stand by the decision at the start of this post. Still, reflecting on my past selves and their attempts at making career decisions, I should probably have valued it just a bit more highly and felt less bad about doing so.

1. There is also the counterpoint offered by the literature review “If money doesn’t make you happier, you probably aren’t spending it right”, Dunn, Gilbert & Wilson (2011) (which I’ve cited before on this blog):

Money allows people to live longer and healthier lives, to buffer themselves against worry and harm, to have leisure time to spend with friends and family […] Wealthy people [have] more of just about every ingredient in the recipe for a happy life. And yet, they aren’t that much happier than those who have less. If money can buy happiness, then why doesn’t it?

Because people don’t spend it right. Most people don’t know the basic scientific facts about happiness […] and so they don’t know how to use their money to acquire it. It is not surprising when wealthy people who know nothing about wine end up with cellars that aren’t that much better stocked than their neighbors’, and it should not be surprising when wealthy people who know nothing about happiness end up with lives that aren’t that much happier than anyone else’s. Money is an opportunity for happiness, but it is an opportunity that people routinely squander because the things they think will make them happy often don’t.

Worth a read, though it’s worth wondering how well the cited studies replicate. Bullet point 2 is “Help others instead of yourself”, so I still don’t think this undercuts my argument too much.

2. I’ve done the basic financial things, I think. Get a credit card early to build a credit history, which matters for Loans And Stuff™. Stick my savings in some basket of a savings account, bonds, and low-fee mutual funds. Have a budget. I use GnuCash because it’s open-source; it works okay enough that I don’t feel like switching, but if I were starting budgeting anew today, I might consider something more minimalist like ledger-cli. Skim /r/personalfinance occasionally. I think this paragraph is the extent of the practical financial knowledge I’ve learned.

3. I don’t write about these things normally because I think few of my readers who follow me need convincing and because I think I lack the experience to be particularly persuasive on these topics anyway. I think most of my views, though certainly not all, are pretty run-of-the-mill social liberal. I might talk about some of the exceptions in a future post, but that would probably be the hardest (and riskiest) post of this series to write, so I could just as easily imagine it not happening.

4. If you’re interested you can read the New Vassar op-ed for a sample. I do have to say I don’t have any hard sources that say this decision and similar ones were driven by, or might have been averted with, donor pressure. I only think it makes intuitive sense and is somewhat common wisdom.

5. Of course, this is the availability heuristic more than anything else. Startup founders are disproportionately newsworthy.

6. While we’re here: I have no illusions that I got here on my own — I worked for it, sure, but it took a childhood under a top-notch non-American healthcare system, a string of generous financial aid grants, personal interests that somehow align quite well with the job market, and of course my awesome parents. Hi Mom.

7. Even if you’re cynical about the occasional donation link being created by a scam artist profiteering off generosity, it’s hard to believe that most of them are. I’m certainly instinctively paranoid enough that I can’t not think about the possibility seriously. It’s easy to find as many stories of scam fundraisers online as you’d like, but I have no idea how one might go about measuring the statistical prevalence. On its site, GoFundMe says:

Fraudulent campaigns make up less than one tenth of one percent of all campaigns.

This is of course probably the most biased possible source to get such a statistic from, and I have no idea how they computed it or when; but even if they’re off by, say, two orders of magnitude, or if the fraction of views of fundraisers differs from the fraction of fundraisers by two orders of magnitude, I’d still call it a win if 90% of my donations go to people who need them.

(note: the commenting setup here is experimental and I may not check my comments often; if you want to tell me something instead of the world, email me!)