Search by Type of card

Search by Credit Quality

Search by Bank or Issuer

News & Advice

Information Center

Canadian Credit Cards > Credit Card News > Author Q&A: Debt and "The Happiness Equation"


Author Q&A: Debt and "The Happiness Equation"

By Daniel Workman

Email this article: Author Q&A: Debt and  Email 
 Link to story 

A unique study from market research firm Ipsos concludes that 18 per cent of Canadians are very happy, 43 per cent are moderately cheerful and 39 per cent are downright testy.


John Hallward, President of Global Product Development at the market research firm Ipsos ASI, was so intrigued by those and other findings that he authored "The Happiness Equation: The Human Nature of Happy People" to help Canadians better focus on what truly makes life worth living.

According to Hallward's research, the most important ingredients for Canuck happiness include:

  • Living debt-free.
  • Being in a romantic relationship.
  • Spirituality.

Doing something you're passionate about can also improve how happy you are, says Hallward. "It could be your work if you love it, helping others, cooking or being involved in a hobby," said Hallward in an interview with

Here are some of Hallward's other insights about specific happiness equation factors: Chapter 5 of your book delves into an Ipsos study of happy and unhappy Canadians. Could you reveal a few findings relevant to personal finance that will help Canadians understand their more natural state of happiness? 

John Hallward: [Our research found that] one's annual income level does not strongly correlate with happiness. However, one's net assets and, in particular, debt levels do indeed correlate strongly ... Those with debt are less happy (regardless of income level). It appears that having debt adds stress and a certain lack of control over one's own decisions.

To ask the popular question about whether money buys happiness, the answer is not really "yes," but rather the lack of money (i.e., debt) leads to unhappiness. There is a diminishing value to money and buying happiness, but not having money and specifically having (any) debt adds stress and unhappiness. Thus, the key isn't necessarily to have a high income, but instead to ... avoid debt and live within one's means. A key point you make in your book is that humans are poor judges of their own future emotional experiences, which explains in part our obsession with acquiring materialistic possessions while overlooking the true enablers of human happiness like compassion and helping others. Do you see credit card marketing as further clouding our judgment? 

Hallward: I'm not sure credit cards are the problem, just like guns aren't the cause of murder. Frankly, one can suggest that credit cards enable payment in a smoother, safer manner than carrying a lot of cash. The issue with credit cards lies within the consumers' ability to manage/control their spending to avoid debt and to avoid a possible escalating balance problem. Consumers need to appreciate that debt is a real stressor, and credit cards need to be well-managed since they perhaps enable debt problems more easily than one might suspect in day-to-day decision making. 

Yes, I think credit cards cloud judgment. But this is likely because consumers are irrational and overly emotional beings. The closer the 'pay-off horizon' for a decision seems, the more emotional and less rational humans become. Credit cards do not help [when] we become more emotional and less rational! What other happiness blockers did your research uncover? 

Hallward: Along with debt levels, other correlates of unhappiness [include]:

  • A lack of religiosity.
  • Poor physical health.
  • Poor mental health.
  • Lack of exercise.
  • Obesity.
  • Too much screen-time [and too little] social face-to-face time.
  • [Being} less sexually active [and/or] unmarried.
  • Lack of romance.
  • Having young children at home.  
  • [Being] preoccupied about money. 
  • Lack of a passionate hobby or activity.
  • Being selfish (not volunteering or helping others in a charitable way).
  • Overall, leading an unbalanced life. In the book, you admit that Canadians are quite happy; it's just that 68 per cent of Canadians reflect on their level of happiness weekly while 41 per cent say they want more happiness than more money. Applying the Happiness Equation to credit cards, what would you say is the best way for Canadians to use their cards in order to achieve greater happiness?

Hallward: I suggest that in order to be happier, Canadians need to mitigate their debt levels ... Canadians should manage their monthly [credit card] balances, and pay it all off every month! That is, use the cards as a payment system, but not a banking [and] debt system. If someone cannot afford to buy something and pay off the full credit card monthly statement, then perhaps they should not be buying it. 

Generally speaking, people need to understand that the emotional desire and emotional 'high' of acquisition will not provide the increase in happiness to overcome the stress and unhappiness caused by outstanding debt. Naturally, we have unscheduled emergencies in life, but we ideally should have an emergency fund or savings account for such problems. We should not be living so close to the edge (of debt) that we cannot absorb some 'shock.' Thinking about your personal experiences, how have credit cards affected your happiness?

Hallward: I'm happy with my credit cards since I put a lot of my expenditures [on] them and collect both Air Miles and Aeroplan points. Meanwhile, I pay off my balances every month to avoid any debt. In turn, I have a happy relationship and do not associate any stress with my credit cards. Besides, the reward points and air miles are fun to expend!

See related: 6 debt spiral traps that threaten Canadian households; Credit card tips from author Jonathan Chevreau

Published: August 16, 2011