Money Does buy Happiness
A new study suggests that the more money you have the happier you get. Period. This contradicts previous studies which have suggested that there is a plateau at $75,000. Instead, researcher Matthew Killingsworth, a senior fellow at Penn’s Wharton School who studies human happiness, says his study shows that money does influence happiness and there is no dollar value at which it stops influencing a person’s wellbeing.
Through the app ‘Track Your Happiness,’ Killingsworth collected data from 33,391 employed, 18- to 65-year-olds in the United States. This provided in-the-moment snapshots of feelings during daily life which people recorded at a few randomised times each day. “This process provided repeated snapshots of people’s lives, which collectively gives us a composite image, a stop-motion movie of their lives,” he says.
Previous studies have shown that after a certain income level, there is no measurable rise in happiness. However, contrary to earlier research, this study showed no tapering off of happiness levels at higher levels of income.
Instead, the study found that people who have higher incomes are happier. This is due in part to having more of a sense of control over life, and probably also having less financial stress in life overall. “When you have more money, you have more choices about how to live your life. You can likely see this in the pandemic. People living pay check to pay check who lose their job might need to take the first available job to stay afloat, even if it’s one they dislike. People with a financial cushion can wait for one that’s a better fit. Across decisions big and small, having more money gives a person more choices and a greater sense of autonomy.”
But even though the latest research shows that having more money makes you happier, it’s not the only factor in what make you happy. In fact, the research is still showing that if you focus only on the money, you still won’t be happy. It’s only a means to an end. There are still many unhappy people with plenty of money.
Killingsworth warns of getting stuck on the hedonic treadmill and only chasing success and money. His research shows that income is only moderately linked to happiness.
“Although money might be good for happiness, I found that people who equated money and success were less happy than those who didn’t. I also found that people who earned more money worked longer hours and felt more pressed for time,” he said. “If anything, people probably overemphasize money when they think about how well their life is going,” said Killingsworth. “
It seems, as always, that nothing is ever simple! Let’s look at the other factors and research into money and happiness.
It’s all in Your Head: Comparison and Perception
Theodore Roosevelt called comparison “the thief of joy.” Yet, in today’s day and age, it’s hard not to compare ourselves to others. With social media feeds constantly reminding us of celebrities’ “perfect” lives, it’s not only hard to keep up but also hard to feel like we’re measuring up.
Yet social comparison theory suggests that we are all biologically wired to try to understand ourselves and how we fit within the world around us. This means it’s perfectly normal to look at everyone around you and think that some people are prettier, smarter, richer, happier, have more friends, better health or better jobs. The problem is that focusing on those who have more can lead to negative feelings, such as envy, poor self-esteem or unhappiness.
Research published in 2020 in the Psychological Bulletin, by researchers at Yale School of Management and Singapore Management University, suggests that it’s not so much about how much you earn, but how you perceive your earnings and standing in society compared to those around you. Instead, researchers suggest that income does not adequately capture the influence of money on happiness, and they now want to test the idea that happiness is more dependent on what people think they have compared to others.
These findings were backed up by a different study published in 2020 by the American Psychological Association that showed that there is a growing class divide in happiness in the U.S. The researchers found a link between socioeconomic status (including income, education, and occupational prestige) and happiness. Over 40 years, the happiness levels of rich individuals have been consistent, whereas the happiness levels of poorer individuals have slowly declined. Researcher Jean Twenge said the decrease in happiness among lower-income people may be a result of rising inequality, increasing real estate values and decreased ability to pay for education.
Read: Turns Out Money Does Buy You Happiness, Study Finds
The simple lesson here is to stop comparing your life to others and instead focus on the activities that can bring you happiness. It’s easier said than done, I know, but half the battle is being aware of your behaviour.
Money Does Matter at Work
Although having a lot of money won’t make you happy in and of itself, a recent study of 2,000 people in Belgium shows that it’s the main factor in our happiness at work. Human resources company Acerta found that 53 per cent of Belgians said having a good salary was key to their happiness at work, while 39 per cent wanted good work-life balance and 35 per cent said job security were important.
In support of the uPenn study, Acerta also found that 84 per cent of people surveyed want their pay to be flexible, in the form of a budget that allows them to make their own choices about pay and possible benefits. This again points to the idea that it’s not so much the money that matters, but the choice and control that it enables.
When Money Can’t buy Happiness
If all the above research stands the test of time, then it’s fair to say that you should be spending your money on experiences you can get excited about planning or enjoy and share with others – not fancy cars, bigger houses and flashy clothes.
Yet, despite all that research, there is one group for which getting material things does lead to better happiness levels: children. In a recent study, children 3-12-years-old found more happiness from material things than from experiences. This is because kids at this age are still developing their memory, so having a Barbie doll or a toy truck to play with over the year brings them more joy over time than an outing with the family, for instance, which they can easily forget.
However, the researchers note, “As children age, the happiness they derive from experiences increases, to the point that older adolescents derive more happiness from experiences than from material goods, consistent with adult findings.” So don’t go putting down that deposit on a McMansion just yet!
Read: 5 Cheap Ways to Live a Happy Life
Relationships Still win
Having a decent income plays a small factor in our happiness, more because of what it enables rather than because chasing and earning money will make you happy. So, if money isn’t the answer, then what is?
Simple. Good relationships.
Time and time again, research shows that having good relationships, with lovers, family and friends – or any combination of the three – is absolutely critical to our happiness levels. Yet, chasing money can lead us away from time with loved ones.
“When people base their self-worth on financial success, they experience feelings of pressure and a lack of autonomy, which are associated with negative social outcomes,” says Lora Park, who co-authored a recent study into money and loneliness.
“Feeling that pressure to achieve financial goals means we’re putting ourselves to work at the cost of spending time with loved ones, and it’s that lack of time spent with people close to us that’s associated with feeling lonely and disconnected,” said Deborah Ward, who led the research team.
In the end, nothing is black and white, but a lot of it is common sense if you think about it. And that’s the key. You have to think about it. Reflect.
When was the last time you felt at peace, content or happy? What brings you joy?
It’s guaranteed to fit into three foundations:
- spending time with people;
- doing activities you enjoy and that bring you purpose and meaning; and
- looking after yourself – from getting enough sleep, and eating well, to getting outside and doing some exercise, or getting a massage.