does money buy you happiness essay

Can Money Really Buy Happiness?

Money and happiness are related—but not in the way you think..

Updated November 10, 2023 | Reviewed by Chloe Williams

• More money is linked to increased happiness, some research shows.
• People who won the lottery have greater life satisfaction, even years later.
• Wealth is not associated with happiness globally; non-material things are more likely to predict wellbeing.
• Money, in and of itself, cannot buy happiness, but it can provide a means to the things we value in life.

Money is a big part of our lives, our identities, and perhaps our well-being. Sometimes, it can feel like your happiness hinges on how much cash is in your bank account. Have you ever thought to yourself, “If only I could increase my salary by 12 percent, I’d feel better”? How about, “I wish I had an inheritance. How easier life would be!” I don’t blame you — I’ve had the same thoughts many times.

But what does psychological research say about the age-old question: Can money really buy happiness? Let’s take a brutally honest exploration of how money and happiness are (and aren’t) related. (Spoiler alert: I’ve got bad news, good news, and lots of caveats.)

Higher earners are generally happier

Over 10 years ago, a study based on Gallup Poll data on 1,000 people made a big headline in the news. It found that people with higher incomes report being happier... but only up to an annual income of $75,000 (equivalent to about $90,000 today). After this point, a high emotional well-being wasn’t directly correlated to more money. This seemed to show that once a persons’ basic (and some “advanced”) needs are comfortably met, more money isn’t necessary for well-being.

But a new 2021 study of over one million participants found that there’s no such thing as an inflection point where more money doesn’t equal more happiness, at least not up to an annual salary of $500,000. In this study, participants’ well-being was measured in more detail. Instead of being asked to remember how well they felt in the past week, month, or year, they were asked how they felt right now in the moment. And based on this real-time assessment, very high earners were feeling great.

Similarly, a Swedish study on lottery winners found that even after years, people who won the lottery had greater life satisfaction, mental health, and were more prepared to face misfortune like divorce , illness, and being alone than regular folks who didn’t win the lottery. It’s almost as if having a pile of money made those things less difficult to cope with for the winners.

Evaluative vs. experienced well-being

At this point, it's important to suss out what researchers actually mean by "happiness." There are two major types of well-being psychologists measure: evaluative and experienced. Evaluative well-being refers to your answer to, “How do you think your life is going?” It’s what you think about your life. Experienced well-being, however, is your answer to, “What emotions are you feeling from day to day, and in what proportions?” It is your actual experience of positive and negative emotions.

In both of these studies — the one that found the happiness curve to flatten after $75,000 and the one that didn't — the researchers were focusing on experienced well-being. That means there's a disagreement in the research about whether day-to-day experiences of positive emotions really increase with higher and higher incomes, without limit. Which study is more accurate? Well, the 2021 study surveyed many more people, so it has the advantage of being more representative. However, there is a big caveat...

Material wealth is not associated with happiness everywhere in the world

If you’re not a very high earner, you may be feeling a bit irritated right now. How unfair that the rest of us can’t even comfort ourselves with the idea that millionaires must be sad in their giant mansions!

But not so fast.

Yes, in the large million-person study, experienced well-being (aka, happiness) did continually increase with higher income. But this study only included people in the United States. It wouldn't be a stretch to say that our culture is quite materialistic, more so than other countries, and income level plays a huge role in our lifestyle.

Another study of Mayan people in a poor, rural region of Yucatan, Mexico, did not find the level of wealth to be related to happiness, which the participants had high levels of overall. Separately, a Gallup World Poll study of people from many countries and cultures also found that, although higher income was associated with higher life evaluation, it was non-material things that predicted experienced well-being (e.g., learning, autonomy, respect, social support).

Earned wealth generates more happiness than inherited wealth

More good news: For those of us with really big dreams of “making it” and striking it rich through talent and hard work, know that the actual process of reaching your dream will not only bring you cash but also happiness. A study of ultra-rich millionaires (net worth of at least $8,000,000) found that those who earned their wealth through work and effort got more of a happiness boost from their money than those who inherited it. So keep dreaming big and reaching for your entrepreneurial goals … as long as you’re not sacrificing your actual well-being in the pursuit.

There are different types of happiness, and wealth is better for some than others

We’ve been talking about “happiness” as if it’s one big thing. But happiness actually has many different components and flavors. Think about all the positive emotions you’ve felt — can we break them down into more specifics? How about:

• Contentment
• Gratefulness

...and that's just a short list.

It turns out that wealth may be associated with some of these categories of “happiness,” specifically self-focused positive emotions such as pride and contentment, whereas less wealthy people have more other-focused positive emotions like love and compassion.

In fact, in the Swedish lottery winners study, people’s feelings about their social well-being (with friends, family, neighbors, and society) were no different between lottery winners and regular people.

Money is a means to the things we value, not happiness itself

One major difference between lottery winners and non-winners, it turns out, is that lottery winners have more spare time. This is the thing that really makes me envious , and I would hypothesize that this is the main reason why lottery winners are more satisfied with their life.

Consider this simply: If we had the financial security to spend time on things we enjoy and value, instead of feeling pressured to generate income all the time, why wouldn’t we be happier?

This is good news. It’s a reminder that money, in and of itself, cannot literally buy happiness. It can buy time and peace of mind. It can buy security and aesthetic experiences, and the ability to be generous to your family and friends. It makes room for other things that are important in life.

In fact, the researchers in that lottery winner study used statistical approaches to benchmark how much happiness winning $100,000 brings in the short-term (less than one year) and long-term (more than five years) compared to other major life events. For better or worse, getting married and having a baby each give a bigger short-term happiness boost than winning money, but in the long run, all three of these events have the same impact.

What does this mean? We make of our wealth and our life what we will. This is especially true for the vast majority of the world made up of people struggling to meet basic needs and to rise out of insecurity. We’ve learned that being rich can boost your life satisfaction and make it easier to have positive emotions, so it’s certainly worth your effort to set goals, work hard, and move towards financial health.

But getting rich is not the only way to be happy. You can still earn health, compassion, community, love, pride, connectedness, and so much more, even if you don’t have a lot of zeros in your bank account. After all, the original definition of “wealth” referred to a person’s holistic wellness in life, which means we all have the potential to be wealthy... in body, mind, and soul.

Kahneman, D., & Deaton, A.. High income improves evaluation of life but not emotional well-being. . Proceedings of the national academy of sciences. 2010.

Killingsworth, M. A. . Experienced well-being rises with income, even above $75,000 per year .. Proceedings of the National Academy of Sciences. 2021.

Lindqvist, E., Östling, R., & Cesarini, D. . Long-run effects of lottery wealth on psychological well-being. . The Review of Economic Studies. 2020.

Guardiola, J., González‐Gómez, F., García‐Rubio, M. A., & Lendechy‐Grajales, Á.. Does higher income equal higher levels of happiness in every society? The case of the Mayan people. . International Journal of Social Welfare. 2013.

Diener, E., Ng, W., Harter, J., & Arora, R. . Wealth and happiness across the world: material prosperity predicts life evaluation, whereas psychosocial prosperity predicts positive feeling. . Journal of personality and social psychology. 2010.

Donnelly, G. E., Zheng, T., Haisley, E., & Norton, M. I.. The amount and source of millionaires’ wealth (moderately) predict their happiness . . Personality and Social Psychology Bulletin. 2018.

Piff, P. K., & Moskowitz, J. P. . Wealth, poverty, and happiness: Social class is differentially associated with positive emotions.. Emotion. 2018.

Jade Wu, Ph.D., is a clinical health psychologist and host of the Savvy Psychologist podcast. She specializes in helping those with sleep problems and anxiety disorders.

• Find a Therapist
• Find a Treatment Center
• Find a Psychiatrist
• Find a Support Group
• Find Online Therapy
• United States
• Brooklyn, NY
• Chicago, IL
• Houston, TX
• Los Angeles, CA
• New York, NY
• Portland, OR
• San Diego, CA
• San Francisco, CA
• Seattle, WA
• Washington, DC
• Asperger's
• Bipolar Disorder
• Chronic Pain
• Eating Disorders
• Passive Aggression
• Personality
• Goal Setting
• Positive Psychology
• Stopping Smoking
• Low Sexual Desire
• Relationships
• Child Development
• Self Tests NEW
• Therapy Center
• Diagnosis Dictionary
• Types of Therapy

At any moment, someone’s aggravating behavior or our own bad luck can set us off on an emotional spiral that threatens to derail our entire day. Here’s how we can face our triggers with less reactivity so that we can get on with our lives.

• Emotional Intelligence
• Gaslighting
• Affective Forecasting
• Neuroscience

Essay Papers Writing Online

The relationship between wealth and happiness – exploring the impact of money on life satisfaction.

Money and happiness have long been subjects of debate and speculation. Many people believe that money can buy happiness, while others argue that true happiness comes from within. But what is the real relationship between money and happiness?

Recent studies have shown that there is indeed a correlation between income and happiness, up to a certain point. Having enough money to meet basic needs and live comfortably can contribute to an individual’s overall happiness and wellbeing.

However, once a person’s basic needs are met, the relationship between money and happiness becomes more complex. Factors such as personal relationships, health, and a sense of purpose play a significant role in determining a person’s happiness levels.

So, while money can contribute to happiness to a certain extent, it is not the sole determinant of one’s overall well-being. Finding a balance between financial stability and other sources of happiness is key to leading a fulfilling and content life.

The Relationship Between Money and Happiness

Money and happiness have long been linked together, sparking debates and discussions on whether money truly buys happiness. While it is true that money can provide a sense of security and comfort, studies have shown that beyond a certain income level, the correlation between money and happiness diminishes.

Quality of Life: Research suggests that money can improve quality of life up to a certain point where basic needs are met. Ensuring access to necessities such as food, shelter, and healthcare can contribute to overall happiness.

Fulfillment: Money can also provide opportunities for personal growth and fulfillment. Investing in experiences, hobbies, or education can lead to a sense of accomplishment and satisfaction.

Social Connections: While money can enable social interactions and connections, it is the quality of relationships rather than the quantity that plays a crucial role in happiness. Spending time with loved ones and forming meaningful relationships, regardless of financial status, can be a key factor in overall well-being.

In conclusion, while money can contribute to happiness, it is not the sole determinant. True happiness stems from a balance of financial stability, personal fulfillment, and meaningful relationships.

Exploring the Question

Does money buy happiness.

The relationship between money and happiness is a complex and controversial topic that has long intrigued researchers and philosophers alike. While many believe that financial wealth can lead to greater happiness and overall well-being, others argue that true happiness stems from non-material factors such as relationships, experiences, and personal fulfillment.

Studies have shown that there is a correlation between income and happiness up to a certain point, beyond which the impact of money on happiness diminishes. While having enough money to meet basic needs and have a comfortable lifestyle is crucial for happiness, extravagant wealth may not guarantee lasting fulfillment.

Furthermore, research suggests that spending money on experiences rather than material possessions can lead to greater happiness. Experiences like travel, cultural activities, and time spent with loved ones have been shown to contribute more to overall well-being than the accumulation of material goods.

In conclusion, while money can certainly contribute to happiness to a certain extent, it is not the sole determinant of one’s emotional well-being. Exploring the question of whether money buys happiness involves considering the complex interplay between financial resources, personal values, and the pursuit of meaningful experiences in life.

When it comes to the age-old question of whether money can buy happiness, the answer is not as straightforward as one might think. While money can certainly provide comfort and security, its ability to bring long-lasting happiness is debatable. Research has shown that once basic needs are met, additional wealth does not necessarily lead to increased levels of happiness. In fact, studies have found that the correlation between money and happiness tends to diminish beyond a certain income threshold.

One reason for this phenomenon is the concept of adaptation. People have a tendency to adapt to their circumstances, including their income level, which means that a sudden increase in wealth may provide a temporary boost in happiness, but that boost is likely to fade over time as individuals get accustomed to their new financial status.

Furthermore, the pursuit of money can sometimes come at the expense of other aspects of life that are more closely tied to happiness, such as meaningful relationships, personal growth, and work satisfaction. In this sense, the relationship between money and happiness is complex and multifaceted, with various factors contributing to an individual’s overall sense of well-being.

While money can certainly contribute to happiness by meeting basic needs and providing a sense of security, its ability to buy lasting happiness is limited. Ultimately, true happiness may be found not in material wealth, but in the intangible aspects of life that bring fulfillment and meaning.

Impact of Income on Well-Being

Research suggests that income can have a significant impact on an individual’s sense of well-being. While money alone may not buy happiness, it can provide access to resources and opportunities that contribute to overall well-being.

Higher income levels are often associated with better health outcomes, improved access to education and healthcare, and a higher standard of living. This can lead to reduced stress levels and a greater sense of security and stability in life.

However, the relationship between income and well-being is complex and multifaceted. Factors such as individual values, social connections, and personal fulfillment also play a crucial role in determining one’s overall happiness and satisfaction with life.

It is important to recognize that while money can certainly impact well-being, it is not the sole determinant of happiness. Ultimately, a balanced approach that takes into account various aspects of life, including relationships, personal growth, and community involvement, is essential for achieving true well-being and fulfillment.

Psychological Aspects of Wealth

Understanding the psychological aspects of wealth is crucial when exploring the relationship between money and happiness. Studies have shown that the pursuit of wealth can have both positive and negative effects on an individual’s well-being.

On one hand, having financial security can alleviate stress and provide a sense of stability, leading to increased happiness. However, the relentless pursuit of wealth at the expense of other aspects of life, such as relationships and personal growth, can lead to feelings of emptiness and dissatisfaction.

It is important to strike a balance between financial success and overall well-being, recognizing that true happiness comes from a combination of financial security, fulfilling relationships, personal growth, and a sense of purpose.

Material Possessions vs Experiences

When it comes to finding happiness, many people often debate whether material possessions or experiences contribute more to one’s overall well-being.

While material possessions such as a new car, a designer bag, or the latest smartphone can bring temporary joy, studies have shown that experiences tend to have a more lasting impact on our happiness.

Experiences like traveling to new places, trying new activities, or spending quality time with loved ones create lasting memories that can bring us joy and fulfillment long after the moment has passed.

These experiences are unique to us and contribute to our sense of identity and personal growth, enhancing our overall well-being in the long run.

So, while material possessions may provide instant gratification, it is often the experiences we have and the memories we create that truly enrich our lives and bring us lasting happiness.

Strategies for Finding Balance

1. Prioritize experiences over possessions: Instead of focusing on acquiring more money and material things, prioritize experiences that bring joy and fulfillment. Engaging in activities that create lasting memories and meaningful connections with loved ones can contribute more to your overall happiness than material possessions.

2. Practice gratitude: Cultivate a sense of gratitude for the things you already have in your life. By appreciating the simple pleasures and blessings, you can find contentment and satisfaction without constantly chasing after more wealth.

3. Set boundaries with work: Strive to create a balance between work and personal life by setting clear boundaries. Make time for activities that recharge you and bring you joy, and avoid letting work consume all your time and energy.

4. Focus on personal growth: Invest in your own personal development and growth, as true happiness often comes from a sense of progress and accomplishment. Pursue hobbies, interests, and goals that bring you fulfillment and help you grow as an individual.

5. Practice mindfulness: Stay present in the moment and focus on the here and now, rather than getting caught up in worries about the future or regrets about the past. Mindfulness can help you appreciate the present moment and find inner peace and contentment.

Related Post

How to master the art of writing expository essays and captivate your audience, convenient and reliable source to purchase college essays online, step-by-step guide to crafting a powerful literary analysis essay, unlock success with a comprehensive business research paper example guide, unlock your writing potential with writers college – transform your passion into profession, “unlocking the secrets of academic success – navigating the world of research papers in college”, master the art of sociological expression – elevate your writing skills in sociology.

Happiness Economics: Can Money Buy Happiness?

It only costs a small amount, a slight risk, with the possibility of a substantial reward.

But will it make you happy? Will it give you long-lasting happiness?

Undoubtedly, there will be a temporary peak in happiness, but will all your troubles finally fade away?

That is what we will investigate today. We explore the economics of happiness and whether money can buy happiness. In this post, we will start by broadly exploring the topic and then look at theories and substantive research findings. We’ll even have a look at previous lottery winners.

For interested readers, we will list interesting books and podcasts for further enjoyment and share a few of our own happiness resources.

Ka-ching: Let’s get rolling!

Before you continue, we thought you might like to download our three Happiness & Subjective Wellbeing Exercises for free . These detailed, science-based exercises will help you or your clients identify sources of authentic happiness and strategies to boost wellbeing.

This Article Contains

What is happiness economics, theory of the economics of happiness, can money buy happiness 5 research findings, 6 fascinating books and podcasts on the topic, resources from positivepsychology.com, a take-home message.

Happiness economics is a field of economics that recognizes happiness and wellbeing as important outcome measures, alongside measures typically used, such as employment, education, and health care.

Economics emphasizes how specific economic/financial characteristics affect our wellbeing (Easterlin, 2004).

For example, does employment result in better health and longer lifespan, among other metrics? Do people in wealthier countries have access to better education and longer life spans?

In the last few decades, there has been a shift in economics, where researchers have recognized the importance of the subjective rating of happiness as a valuable and desirable outcome that is significantly correlated with other important outcomes, such as health (Steptoe, 2019) and productivity (DiMaria et al., 2020).

Broadly, happiness is a psychological state of being, typically researched and defined using psychological methods. We often measure it using self-report measures rather than objective measures that are less vulnerable to misinterpretation and error.

Including happiness in economics has opened up an entirely new avenue of research to explore the relationship between happiness and money.

Andrew Clark (2018) illustrates the variability in the term happiness economics with the following examples:

• Happiness can be a predictor variable, influencing our decisions and behaviors.
• Happiness might be the desired outcome, so understanding how and why some people are happier than others is essential.

However, the connection between our behavior and happiness must be better understood. Even though “being happy” is a desired outcome, people still make decisions that prevent them from becoming happier. For example, why do we choose to work more if our work does not make us happier? Why are we unhappy even if our basic needs are met?

An example of how happiness can influence decision-making

Sometimes, we might choose not to maximize a monetary or financial gain but place importance on other, more subjective outcomes.

To illustrate: If faced with two jobs — one that pays well but will bring no joy and another that pays less but will bring much joy — some people would prefer to maximize their happiness over financial gain.

If this decision were evaluated using a utility framework where the only valued outcomes were practical, then the decision would seem irrational. However, this scenario suggests that psychological outcomes, such as the experience of happiness, are as crucial as other socio-economic outcomes.

Economists recognize that subjective wellbeing , or happiness, is an essential characteristic and sometimes a desirable outcome that can motivate our decision-making.

In the last few decades, economics has shifted to include happiness as a measurable and vital part of general wellbeing (Graham, 2005).

The consequence is that typical economic questions now also look at the impact of employment, finances, and other economic metrics on the subjective rating and experience of happiness at individual and country levels.

Happiness is such a vital outcome in society and economic activity that it must be involved in policy making. The subjective measure of happiness is as important as other typical measures used in economics.

Many factors can contribute to happiness. In this post, we consider the role of money. The relationship between happiness, or subjective wellbeing, and money is assumed to be positive: More money means greater happiness.

However, the relationship between money and happiness is paradoxical: More money does not guarantee happiness (for an excellent review, see Graham, 2005).

Specifically, low levels of income are correlated with unhappiness. However, as our individual wealth increases and our basic needs are met, our needs change and differ in their importance.

Initially, our happiness is affected by absolute levels of income, but at a certain threshold, we place importance on relative levels of income. Knowing how we rank and compare to other people, in terms of wealth and material possession, influences our happiness.

The relationship between wealth and happiness continues to increase, but only to a certain point; at this stage, more wealth does not guarantee more happiness (Easterlin, 1974; Diener et al., 1993).

This may be at odds with our everyday lived experience. Most of us choose to work longer hours or multiple jobs so that we make more money. However, what is the point of doing this if money does not increase our happiness? Why do we seem to think that more money will make us happier?

History of the economics of happiness

The relationship between economics and happiness originated in the early 1970s. Brickman and Campbell (1971, as cited in Brickman et al., 1978) first argued that the typical outcomes of a successful life, such as wealth or income, had no impact on individual wellbeing.

Easterlin (1974) expanded these results and showed that although wealthier people tend to be happier than poor people in the same country, the average happiness levels within a country remained unchanged even as the country’s overall wealth increased.

The inconsistent relationship between happiness and income and its sensitivity to critical income thresholds make this topic so interesting.

There is some evidence that wealthier countries are happier than others, but only when comparing the wealthy with the poor (Easterlin, 1974; Graham, 2005).

As countries become wealthier, citizens report higher happiness, but this relationship is strongest when the starting point is poverty. Above a certain income threshold, happiness no longer increases (Diener et al., 1993).

Interestingly, people tend to agree on the amount of money needed to make them happy; but beyond a certain value, there is little increase in happiness (Haesevoets et al., 2022).

Measurement challenges

Measuring happiness accurately and reliably is challenging. Researchers disagree on what happiness means.

It is not the norm in economics to measure happiness by directly asking a participant how happy they are; instead, happiness is inferred through:

• Subjective wellbeing (Clark, 2018; Easterlin, 2004)
• A combination of happiness and life satisfaction (Bruni, 2007)

Furthermore, happiness can refer to an acute psychological state, such as feeling happy after a nice meal, or a lasting state similar to contentment (Nettle, 2005).

Researchers might use different definitions of happiness and ways to measure it, thus leading to contradictory results. For example, happiness might be used synonymously with subjective wellbeing and can refer to several things, including life satisfaction and financial satisfaction (Diener & Oishi, 2000).

It seems contradictory that wealthier nations are not happier overall than poorer nations and that increasing the wealth of poorer nations does not guarantee that their happiness will increase too. What could then be done to increase happiness?

Download 3 Free Happiness Exercises (PDF)

These detailed, science-based exercises will equip you or your clients with tools to discover authentic happiness and cultivate subjective well-being.

Download 3 Free Happiness Tools Pack (PDF)

By filling out your name and email address below.

• Email Address *
• Your Expertise * Your expertise Therapy Coaching Education Counseling Business Healthcare Other
• Email This field is for validation purposes and should be left unchanged.

What is the relationship between income/wealth and happiness? To answer that question, we looked at studies to see where and how money improves happiness, but we’ll also consider the limitations to the positive effect of income.

Money buys access; jobs boost happiness

Overwhelming evidence shows that wealth is correlated with measures of wellbeing.

Wealthier people have access to better healthcare, education, and employment, which in turn results in higher life satisfaction (Helliwell et al., 2012). A certain amount of wealth is needed to meet basic needs, and satisfying these needs improves happiness (Veenhoven & Ehrhardt, 1995).

Increasing happiness through improved quality of life is highest for poor households, but this is explained by the starting point. Access to essential services improves the quality of life, and in turn, this improves measures of wellbeing.

Most people gain wealth through employment; however, it is not just wealth that improves happiness; instead, employment itself has an important association with happiness. Happiness and employment are also significantly correlated with each other (Helliwell et al., 2021).

Lockdown on happiness

The World Happiness Report (Helliwell et al., 2021) reports that unemployment increased during the COVID-19 pandemic, and this was accompanied by a marked decline in happiness and optimism.

The pandemic also changed how we evaluated certain aspects of our lives; for example, the relationship between income and happiness declined. After all, what is the use of money if you can’t spend it? In contrast, the association between happiness and having a partner increased (Helliwell et al., 2021).

Wealthier states smile more, but is it real?

If we took a snapshot of happiness and a country’s wealth, we would find that richer countries tend to have happier populations than poorer countries.

For example, based on the 2021 World Happiness Report, the top five happiest countries — which are also wealthy countries — are Finland, Iceland, Denmark, Switzerland, and the Netherlands (Helliwell et al., 2021).

In contrast, the unhappiest countries are those that tend to be emerging markets or have a lower gross domestic product (GDP), e.g., Zimbabwe, Tanzania, and India (Graham, 2005; Helliwell et al., 2021).

At face value, this makes sense: Poorer countries most likely have other factors associated with them, e.g., higher unemployment, more crime, and less political stability. So, based on this cross-sectional data, a country’s wealth and happiness levels appear to be correlated. However, over a more extended period, the relationship between happiness and GDP is nil (Easterlin, 2004).

That is, the subjective wellbeing of a population does not increase as a country becomes richer. Even though the wealth of various countries worldwide has increased over time, the overall happiness levels have not increased similarly or have remained static (Kahneman et al., 2006). This is known as a happiness–income paradox.

Easterlin (2004) posits four explanations for this finding:

• Societal and individual gains associated with increased wealth are concentrated among the extremely wealthy.
• Our degree of happiness is informed by how we compare to other people, and this relative comparison does not change as country-wide wealth increases.
• Happiness is not limited to only wealth and financial status, but is affected by other societal and political factors, such as crime, education, and trust in the government.
• Long-term satisfaction and contentment differ from short-term, acute happiness.

Kahneman et al. (2006) provide an alternative explanation centered on the method typically used by researchers. Specifically, they argue that the order of the questions asked to measure happiness and how these questions are worded have a focusing effect. Through the question, the participant’s attention to their happiness is sharpened — like a lens in a camera — and their happiness needs to be over- or underestimated.

Kahneman et al. (2006) also point out that job advancements like a raise or a promotion are often accompanied by an increase in salary and work hours. Consequently, high-paying jobs often result in less leisure time available to spend with family or on hobbies and can cause more unhappiness.

Not all that glitters is gold

Extensive research explored whether a sudden financial windfall was associated with a spike in happiness (e.g., Sherman et al., 2020). The findings were mixed. Sometimes, having more money is associated with increased life satisfaction and improved physical and mental health.

This boost in happiness, however, is not guaranteed, nor is it long. Sometimes, individuals even wish it had never happened (Brickman et al., 1978; Sherman et al., 2020).

Consider lottery winners. These people win sizable sums of money — typically more extensive than a salary increase — large enough to impact their lives significantly. Despite this, research has consistently shown that although lottery winners report higher immediate, short-term happiness, they do not experience higher long-term happiness (Sherman et al., 2020).

Here are some reasons for this:

• Previous everyday activities and experiences become less enjoyable when compared to a unique, unusual experience like winning the lottery.
• People habituate to their new lifestyle.
• A sudden increase in wealth can disrupt social relationships among friends and family members.
• Work and hobbies typically give us small nuggets of joy over a more extended period (Csikszentmihalyi et al., 2005). These activities can lose their meaning over a longer period, resulting in more unhappiness (Sherman et al., 2020; Brickman et al., 1978).

Sherman et al. (2020) further argue that lottery winners who decide to quit their job after winning, but do not fill this newly available time with some type of meaningful hobby or interest, are also more likely to become unhappy.

Passive activities do not provide the same happiness as work or hobbies. Instead, if lottery winners continue to take part in activities that give them meaning and require active engagement, then they can avoid further unhappiness.

Happiness: Is it temperature or climate?

Like most psychological research, part of the challenge is clearly defining the topic of investigation — a task made more daunting when the topic falls within two very different fields.

Nettle (2005) describes happiness as a three-tiered concept, ranging from short-lived but intense on one end of the spectrum to more abstract and deep on the other.

The first tier refers to transitory feelings of joy, like when one opens up a birthday present.

The second tier describes judgments about feelings, such as feeling satisfied with your job. The third tier is more complex and refers to life satisfaction.

Across research, different definitions are used: Participants are asked about feelings of (immediate) joy, overall life satisfaction, moments of happiness or satisfaction, and mental wellbeing . The concepts are similar but not identical, thus influencing the results.

Most books on happiness economics are textbooks. Although no doubt very interesting, they’re not the easy-reading books we prefer to recommend.

Instead, below you will find a range of books written by economists that explore happiness. These should provide a good springboard on the overall topic of happiness and what influences it, in case any of our readers want to pick up a more in-depth textbook afterward.

If you have a happiness book you would recommend, please let us know in the comments section.

1. Happiness: Lessons from a New Science – Richard Layard

Richard Layard, a lead economist based in London, explores in his book if and how money can affect happiness.

Layard does an excellent job of introducing topics from various fields and framing them appropriately for the reader.

The book is aimed at readers from varying academic and professional backgrounds, so no experience is needed to enjoy it.

Find the book on Amazon .

2. Happiness by Design: Change What You Do, Not How You Think – Paul Dolan

This book has a more practical spin. The author explains how we can use existing research and theories to make small changes to increase our happiness.

Paul Dolan’s primary thesis is that practical things will have a bigger effect than abstract methods, and we should change our behavior rather than our thinking.

The book is a quick read (airport-perfect!), and Daniel Kahneman penned the foreword.

3. The Psychology of Money: Timeless Lessons on Wealth, Greed and Happiness – Morgan Housel

This book is not necessarily about happiness economics, but it is close enough to the overall theme that it is worth mentioning.

Since most people are concerned with making more money, this book helps teach the reader why we make the decisions we do and how we make better decisions about our money.

This book is a worthwhile addition to any bookcase if you are interested in the relationship between finances and psychology in general.

4. Happiness: The Science Behind Your Smile – Daniel Nettle

If you are interested in happiness overall, then we recommend Happiness: The Science Behind Your Smile by Daniel Nettle, a professor of behavioral science at Newcastle University.

In this book, he takes a scientific approach to explaining happiness, starting with an in-depth exploration of the definition of happiness and some of its challenges.

The research that he presents comes from various fields, including social sciences, medicine, neurobiology, and economics.

Because of its small size, this book is perfect for a weekend away or to read on a plane.

5 & 6. Prefer to listen rather than read?

One of our favorite podcasts is Intelligence2, where leading experts in a particular field gather to debate a particular topic.

This show’s host, Dr. Laurie Santos, argues that we can increase our happiness by not hoarding our money for ourselves but by giving it to others instead. If you are interested in this episode , or any of the other episodes in the Happiness Lab podcast series, then head on over to their page.

There are several resources available at PositivePsychology.com for our readers to use in their professional and personal development.

In this section, you’ll find a few that should supplement any work on happiness and economics. Since the undercurrent of the topic is whether happiness can be improved through wealth, a few resources look at happiness overall.

Valued Living Masterclass

Although knowledge is power, knowing that money does not guarantee happiness does not mean that clients will suddenly feel fulfilled and satisfied with their lives.

For this reason, we recommend the Valued Living Masterclass , for professionals to help their clients find meaning in their lives. Rather than keeping up with the Joneses or chasing a high-paying job, professionals can help their clients connect with their inner meaning (i.e., their why ) as a way to find meaning and gain happiness.

Three free exercises

If you want to try it out before committing, look at the Meaning & Valued Living exercise pack , which includes three exercises for free.

Recommended reading

Read our post on Success Versus Happiness for further information on balancing happiness with success, in any domain . This topic is poignant for readers who conflate happiness and success, and will guide readers to better understand their relationship and how the two terms influence each other.

For readers who wonder about altruism , you would find it interesting that rather than hoarding, you can increase your happiness through volunteering and donating. In this post, the author, Dr. Jeremy Sutton, does a fabulous job of approaching altruism from various fields and provides excellent resources for further reading and real-life application.

Our last recommendation is for readers who want to know more about measuring subjective wellbeing and happiness . The post lists various tests and apps that can measure happiness and the overall history of how happiness was measured and defined. This is a good starting point for researchers or clinicians who want to explore happiness economics professionally.

17 Happines Exercises

If you’re looking for more science-based ways to help others develop strategies to boost their wellbeing, this collection contains 17 validated happiness and wellbeing exercises . Use them to help others pursue authentic happiness and work toward a  life filled with purpose and meaning

World’s Largest Positive Psychology Resource

The Positive Psychology Toolkit© is a groundbreaking practitioner resource containing over 500 science-based exercises , activities, interventions, questionnaires, and assessments created by experts using the latest positive psychology research.

Updated monthly. 100% Science-based.

“The best positive psychology resource out there!” — Emiliya Zhivotovskaya , Flourishing Center CEO

As you’ve seen in our article, the evidence overwhelmingly clarifies that money does not guarantee more happiness … well, long-term happiness.

Our happiness is relative since we compare ourselves to other people, and over time, as we become accustomed to our wealth, we lose all the happiness gains we made.

Money can ease financial and social difficulties; consequently, it can drastically improve people’s living conditions, life expectancy, and education.

Improvements in these outcomes have a knock-on effect on the overall experience of one’s life and the opportunities for one’s family and children. Nevertheless, better opportunities do not guarantee happiness.

Our intention with this post was to illustrate some complexities surrounding the relationship between money and happiness.

Knowing that money does not guarantee happiness, we recommend less expensive methods to improve one’s happiness:

• Spend time with friends.
• Cultivate hobbies and interests.
• Stay active and eat healthy.
• Try to live a meaningful life.
• Give some love (go smooch your partner or tickle your dog’s belly).

Diamonds might be a girl’s best friend, but money is a fair weather one, at best.

We hope you enjoyed reading this article. Don’t forget to download our three Happiness Exercises for free .

• Brickman, P., Coates, D., & Janoff-Bulman, R. (1978). Lottery winners and accident victims: Is happiness relative? Journal of Personality and Social Psychology , 36 (8), 917.
• Bruni, L. (2007). Handbook on the economics of happiness . Edward Elgar.
• Clark, A. E. (2018). Four decades of the economics of happiness: Where next? Review of Income and Wealth , 64 (2), 245–269.
• Csikszentmihalyi, M., Abuhamdeh, S., & Nakamura, J. (2005). Flow. In A. J. Elliot & C. S. Dweck (Eds.), Handbook of competence and motivation (pp. 598–608). Guilford Publications.
• Diener, E., Sandvik, E., Seidlitz, L., & Diener, M. (1993). The relationship between income and subjective well-being: Relative or absolute? Social Indicators Research , 28 , 195–223.
• Diener, E., & Oishi, S. (2000). Money and happiness: Income and subjective well-being across nations. Culture and Subjective Well-Being , 185 , 218.
• DiMaria, C. H., Peroni, C., & Sarracino, F. (2020). Happiness matters: Productivity gains from subjective well-being. Journal of Happiness Studies , 21 (1), 139–160.
• Easterlin, R. A. (1974). Does economic growth improve the human lot? Some empirical evidence. In P. A. David & M. W. Reder (Eds.), Nations and households in economic growth: Essays in honor of Moses Abramovitz (pp. 89–125). Academic Press.
• Easterlin, R. A. (2004). The economics of happiness. Daedalus , 133 (2), 26–33.
• Graham, C. (2005). The economics of happiness. World Economics , 6 (3), 41–55.
• Haesevoets, T., Dierckx, K., & Van Hiel, A. (2022). Do people believe that you can have too much money? The relationship between hypothetical lottery wins and expected happiness. Judgment and Decision Making , 17 (6), 1229–1254.
• Helliwell, J., Layard, R., & Sachs, J. (Eds.) (2012). World happiness report . The Earth Institute, Columbia University.
• Helliwell, J. F., Layard, R., Sachs, J. D., & Neve, J. E. D. (2021). World happiness report 2021 .
• Kahneman, D., Krueger, A. B., Schkade, D., Schwarz, N., & Stone, A. A. (2006). Would you be happier if you were richer? A focusing illusion. Science , 312 (5782), 1908–1910.
• Nettle, D. (2005). Happiness: The science behind your smile . Oxford University Press.
• Sherman, A., Shavit, T., & Barokas, G. (2020). A dynamic model on happiness and exogenous wealth shock: The case of lottery winners. Journal of Happiness Studies , 21 , 117–137.
• Steptoe, A. (2019). Happiness and health. Annual Review of Public Health , 40 , 339–359.
• Veenhoven, R., & Ehrhardt, J. (1995). The cross-national pattern of happiness: Test of predictions implied in three theories of happiness. Social Indicators Research , 34 , 33–68.

Share this article:

Article feedback

Let us know your thoughts cancel reply.

Your email address will not be published.

Save my name, email, and website in this browser for the next time I comment.

Related articles

Embracing JOMO: Finding Joy in Missing Out

We’ve probably all heard of FOMO, or ‘the fear of missing out’. FOMO is the currency of social media platforms, eager to encourage us to [...]

The True Meaning of Hedonism: A Philosophical Perspective

“If it feels good, do it, you only live once”. Hedonists are always up for a good time and believe the pursuit of pleasure and [...]

Hedonic vs. Eudaimonic Wellbeing: How to Reach Happiness

Have you ever toyed with the idea of writing your own obituary? As you are now, young or old, would you say you enjoyed a [...]

Read other articles by their category

• Body & Brain (50)
• Coaching & Application (58)
• Compassion (25)
• Counseling (51)
• Emotional Intelligence (23)
• Gratitude (18)
• Grief & Bereavement (21)
• Happiness & SWB (40)
• Meaning & Values (26)
• Meditation (20)
• Mindfulness (44)
• Motivation & Goals (45)
• Optimism & Mindset (34)
• Positive CBT (30)
• Positive Communication (22)
• Positive Education (47)
• Positive Emotions (32)
• Positive Leadership (19)
• Positive Parenting (16)
• Positive Psychology (34)
• Positive Workplace (37)
• Productivity (18)
• Relationships (44)
• Resilience & Coping (39)
• Self Awareness (21)
• Self Esteem (38)
• Strengths & Virtues (32)
• Stress & Burnout Prevention (34)
• Theory & Books (46)
• Therapy Exercises (37)
• Types of Therapy (64)
• Comments This field is for validation purposes and should be left unchanged.

3 Happiness Exercises Pack [PDF]

More Proof That Money Can Buy Happiness (or a Life with Less Stress)

When we wonder whether money can buy happiness, we may consider the luxuries it provides, like expensive dinners and lavish vacations. But cash is key in another important way: It helps people avoid many of the day-to-day hassles that cause stress, new research shows.

Money can provide calm and control, allowing us to buy our way out of unforeseen bumps in the road, whether it’s a small nuisance, like dodging a rainstorm by ordering up an Uber, or a bigger worry, like handling an unexpected hospital bill, says Harvard Business School professor Jon Jachimowicz.

“If we only focus on the happiness that money can bring, I think we are missing something,” says Jachimowicz, an assistant professor of business administration in the Organizational Behavior Unit at HBS. “We also need to think about all of the worries that it can free us from.”

The idea that money can reduce stress in everyday life and make people happier impacts not only the poor, but also more affluent Americans living at the edge of their means in a bumpy economy. Indeed, in 2019, one in every four Americans faced financial scarcity, according to the Board of Governors of the Federal Reserve System. The findings are particularly important now, as inflation eats into the ability of many Americans to afford basic necessities like food and gas, and COVID-19 continues to disrupt the job market.

Buying less stress

The inspiration for researching how money alleviates hardships came from advice that Jachimowicz’s father gave him. After years of living as a struggling graduate student, Jachimowicz received his appointment at HBS and the financial stability that came with it.

“My father said to me, ‘You are going to have to learn how to spend money to fix problems.’” The idea stuck with Jachimowicz, causing him to think differently about even the everyday misfortunes that we all face.

To test the relationship between cash and life satisfaction, Jachimowicz and his colleagues from the University of Southern California, Groningen University, and Columbia Business School conducted a series of experiments, which are outlined in a forthcoming paper in the journal Social Psychological and Personality Science , The Sharp Spikes of Poverty: Financial Scarcity Is Related to Higher Levels of Distress Intensity in Daily Life .

Higher income amounts to lower stress

In one study, 522 participants kept a diary for 30 days, tracking daily events and their emotional responses to them. Participants’ incomes in the previous year ranged from less than $10,000 to $150,000 or more. They found:

• Money reduces intense stress: There was no significant difference in how often the participants experienced distressing events—no matter their income, they recorded a similar number of daily frustrations. But those with higher incomes experienced less negative intensity from those events.
• More money brings greater control : Those with higher incomes felt they had more control over negative events and that control reduced their stress. People with ample incomes felt more agency to deal with whatever hassles may arise.
• Higher incomes lead to higher life satisfaction: People with higher incomes were generally more satisfied with their lives.

“It’s not that rich people don’t have problems,” Jachimowicz says, “but having money allows you to fix problems and resolve them more quickly.”

Why cash matters

In another study, researchers presented about 400 participants with daily dilemmas, like finding time to cook meals, getting around in an area with poor public transportation, or working from home among children in tight spaces. They then asked how participants would solve the problem, either using cash to resolve it, or asking friends and family for assistance. The results showed:

• People lean on family and friends regardless of income: Jachimowicz and his colleagues found that there was no difference in how often people suggested turning to friends and family for help—for example, by asking a friend for a ride or asking a family member to help with childcare or dinner.
• Cash is the answer for people with money: The higher a person’s income, however, the more likely they were to suggest money as a solution to a hassle, for example, by calling an Uber or ordering takeout.

While such results might be expected, Jachimowicz says, people may not consider the extent to which the daily hassles we all face create more stress for cash-strapped individuals—or the way a lack of cash may tax social relationships if people are always asking family and friends for help, rather than using their own money to solve a problem.

“The question is, when problems come your way, to what extent do you feel like you can deal with them, that you can walk through life and know everything is going to be OK,” Jachimowicz says.

Breaking the ‘shame spiral’

In another recent paper , Jachimowicz and colleagues found that people experiencing financial difficulties experience shame, which leads them to avoid dealing with their problems and often makes them worse. Such “shame spirals” stem from a perception that people are to blame for their own lack of money, rather than external environmental and societal factors, the research team says.

“We have normalized this idea that when you are poor, it’s your fault and so you should be ashamed of it,” Jachimowicz says. “At the same time, we’ve structured society in a way that makes it really hard on people who are poor.”

For example, Jachimowicz says, public transportation is often inaccessible and expensive, which affects people who can’t afford cars, and tardy policies at work often penalize people on the lowest end of the pay scale. Changing those deeply-engrained structures—and the way many of us think about financial difficulties—is crucial.

After all, society as a whole may feel the ripple effects of the financial hardships some people face, since financial strain is linked with lower job performance, problems with long-term decision-making, and difficulty with meaningful relationships, the research says. Ultimately, Jachimowicz hopes his work can prompt thinking about systemic change.

“People who are poor should feel like they have some control over their lives, too. Why is that a luxury we only afford to rich people?” Jachimowicz says. “We have to structure organizations and institutions to empower everyone.”

[Image: iStockphoto/mihtiander]

Related reading from the Working Knowledge Archives

Selling Out The American Dream

• 04 Jun 2024
• Research & Ideas

Navigating Consumer Data Privacy in an AI World

• 28 May 2024
• In Practice

Job Search Advice for a Tough Market: Think Broadly and Stay Flexible

• 06 May 2024

The Critical Minutes After a Virtual Meeting That Can Build Up or Tear Down Teams

• 30 May 2024

Racial Bias Might Be Infecting Patient Portals. Can AI Help?

• 22 Nov 2023

Humans vs. Machines: Untangling the Tasks AI Can (and Can't) Handle

• Social Psychology

Sign up for our weekly newsletter

• SUGGESTED TOPICS
• The Magazine
• Newsletters
• Managing Yourself
• Managing Teams
• Work-life Balance
• The Big Idea
• Data & Visuals
• Reading Lists
• Case Selections
• HBR Learning
• Topic Feeds
• Account Settings
• Email Preferences

Does More Money Really Make Us More Happy?

• Elizabeth Dunn
• Chris Courtney

A big paycheck won’t necessarily bring you joy

Although some studies show that wealthier people tend to be happier, prioritizing money over time can actually have the opposite effect.

• But even having just a little bit of extra cash in your savings account ($500), can increase your life satisfaction. So how can you keep more cash on hand?
• Ask yourself: What do I buy that isn’t essential for my survival? Is the expense genuinely contributing to my happiness? If the answer to the second question is no, try taking a break from those expenses.
• Other research shows there are specific ways to spend your money to promote happiness, such as spending on experiences, buying time, and investing in others.
• Spending choices that promote happiness are also dependent on individual personalities, and future research may provide more individualized advice to help you get the most happiness from your money.

Where your work meets your life. See more from Ascend here .

How often have you willingly sacrificed your free time to make more money? You’re not alone. But new research suggests that prioritizing money over time may actually undermine our happiness.

• ED Elizabeth Dunn is a professor of psychology at the University of British Columbia and Chief Science Officer of Happy Money, a financial technology company with a mission to help borrowers become savers. She is also co-author of “ Happy Money: The Science of Happier Spending ” with Dr. Michael Norton. Her TED2019 talk on money and happiness was selected as one of the top 10 talks of the year by TED.
• CC Chris Courtney is the VP of Science at Happy Money. He utilizes his background in cognitive neuroscience, human-computer interaction, and machine learning to drive personalization and engagement in products designed to empower people to take control of their financial lives. His team is focused on creating innovative ways to provide more inclusionary financial services, while building tools to promote financial and psychological well-being and success.

Partner Center

A business journal from the Wharton School of the University of Pennsylvania

Does Money Buy Happiness? Here’s What the Research Says

March 28, 2023 • 5 min read.

Reconciling previously contradictory results, researchers from Wharton and Princeton find a steady association between larger incomes and greater happiness for most people but a rise and plateau for an unhappy minority.

• Finance & Accounting

The following article was originally published on Penn Today .

Does money buy happiness? Though it seems like a straightforward question, research had previously returned contradictory findings, leaving uncertainty about its answer.

Foundational work published in 2010 from Princeton University’s  Daniel Kahneman  and Angus Deaton had found that day-to-day happiness rose as annual income increased, but above $75,000 it leveled off and happiness plateaued. In contrast, work published in 2021 from the University of Pennsylvania’s  Matthew Killingsworth  found that happiness rose steadily with income well beyond $75,000, without evidence of a plateau.

To reconcile the differences, Kahneman and Killingsworth paired up in what’s known as an adversarial collaboration, joining forces with Penn Integrates Knowledge  University Professor  Barbara Mellers  as arbiter. In a new  Proceedings of the National Academy of Sciences  paper , the trio shows that, on average, larger incomes are associated with ever-increasing levels of happiness. Zoom in, however, and the relationship becomes more complex, revealing that within that overall trend, an unhappy cohort in each income group shows a sharp rise in happiness up to $100,000 annually and then plateaus.

“In the simplest terms, this suggests that for most people larger incomes are associated with greater happiness,” says Killingsworth, a senior fellow at Wharton and lead paper author. “The exception is people who are financially well-off but unhappy. For instance, if you’re rich and miserable, more money won’t help. For everyone else, more money was associated with higher happiness to somewhat varying degrees.”

Mellers digs into this last notion, noting that emotional well-being and income aren’t connected by a single relationship. “The function differs for people with different levels of emotional well-being,” she says. Specifically, for the least happy group, happiness rises with income until $100,000, then shows no further increase as income grows. For those in the middle range of emotional well-being, happiness increases linearly with income, and for the happiest group the association actually accelerates above $100,000.

Joining Forces to Ask: “Does Money Buy Happiness?”

The researchers began this combined effort recognizing that their previous work had drawn different conclusions. Kahneman’s 2010 study showed a flattening pattern where Killingsworth’s 2021 study did not. As its name suggests, an adversarial collaboration of this type — a notion originated by Kahneman — aims to solve scientific disputes or disagreements by bringing together the differing parties, along with a third-party mediator.

Killingsworth, Kahneman, and Mellers focused on a new hypothesis that both a happy majority and an unhappy minority exist. For the former, they surmised, happiness keeps rising as more money comes in; the latter’s happiness improves as income rises but only up to a certain income threshold, after which it progresses no further.

To test this new hypothesis, they looked for the flattening pattern in data from Killingworth’s study, which he had collected through an app he created called Track Your Happiness. Several times a day, the app pings participants at random moments, asking a variety of questions including how they feel on a scale from “very good” to “very bad.” Taking an average of the person’s happiness and income, Killingsworth draws conclusions about how the two variables are linked.

A breakthrough in the new partnership came early on when the researchers realized that the 2010 data, which had revealed the happiness plateau, had actually been measuring unhappiness in particular rather than happiness in general.

“It’s easiest to understand with an example,” Killingsworth says. Imagine a cognitive test for dementia that most healthy people pass easily. While such a test could detect the presence and severity of cognitive dysfunction, it wouldn’t reveal much about general intelligence since most healthy people would receive the same perfect score.

“In the same way, the 2010 data showing a plateau in happiness had mostly perfect scores, so it tells us about the trend in the unhappy end of the happiness distribution, rather than the trend of happiness in general. Once you recognize that, the two seemingly contradictory findings aren’t necessarily incompatible,” Killingsworth says. “And what we found bore out that possibility in an incredibly beautiful way. When we looked at the happiness trend for unhappy people in the 2021 data, we found exactly the same pattern as was found in 2010; happiness rises relatively steeply with income and then plateaus.”

“The two findings that seemed utterly contradictory actually result from data that are amazingly consistent,” he says.

Does It Matter Whether Money Can Buy Happiness?

Drawing these conclusions would have been challenging had the two research teams not come together, says Mellers, who suggests there’s no better way than adversarial collaborations to resolve scientific conflict.

“This kind of collaboration requires far greater self-discipline and precision in thought than the standard procedure,” she says. “Collaborating with an adversary — or even a non-adversary — is not easy, but both parties are likelier to recognize the limits of their claims.” Indeed, that’s what happened, leading to a better understanding of the relationship between money and happiness.

And these findings have real-world implications, according to Killingsworth. For one, they could inform thinking about tax rates or how to compensate employees. And, of course, they matter to individuals as they navigate career choices or weigh a larger income against other priorities in life, Killingsworth says.

However, he adds that for emotional well-being money isn’t the be all end all. “Money is just one of the many determinants of happiness,” he says. “Money is not the secret to happiness, but it can probably help a bit.”

More From Knowledge at Wharton

How Optimal Deposit Insurance Can Help Prevent Bank Runs

Inflation and the Housing Market | Susan Wachter

Is It Better to Rent or Buy? | Ben Keys

Looking for more insights.

Sign up to stay informed about our latest article releases.

Greater Good Science Center • Magazine • In Action • In Education

Can Money Buy Happiness? It Depends on Why You’re Spending It

Imagine that someone gives you a cash gift and tells you that, instead of saving or investing it, you need to spend it right now. What should you put your money toward if you want to make yourself happiest?

According to past research , we’ll be happier if we spend money on an experience than if we buy a material object—like traveling or going out for a meal instead of buying the latest product we see on social media. For example, people report more gratitude when they spend on experiences rather than possessions.

On the other hand, we can all probably think of times when we’ve spent money on an experience that ended up not being worth it. Maybe you bought pricey event tickets to avoid missing out, only to realize on the day of the event that you’d much prefer a cozy night at home. Or perhaps you went out to dinner with a friend at a fancy restaurant, only to find that your friend was more focused on posting the meal to Instagram than having a deep conversation.

It turns out that there might be another factor at play beyond whether we spend money on an experience or a material item: According to a new study published in the British Journal of Social Psychology , it may also matter how our purchases align with our goals.

In the study, researchers asked 452 participants in an online survey to describe a recent purchase. They were asked to write about something they had spent money on in the last three months (ranging from about $60 to $1,200), excluding everyday expenses such as bills and groceries. After describing it, people were asked to indicate the extent to which the purchase helped to fulfill different goals. They also noted how much they felt the purchase contributed to their happiness and life satisfaction.

According to self-determination theory , goals reflect our intrinsic and extrinsic motivations. Extrinsic goals are things that other people expect for us: for example, working hard at a job not because you’re passionate about the work, but because you need the money or want a high-status job to impress others. Intrinsic goals, on the other hand, are ones that we have a strong internal motivation to pursue. In the survey, extrinsic goals included gaining wealth or social status, whereas intrinsic ones included cultivating relationships, helping other people, and contributing to growth, learning, and development.

The researchers found that, the more a purchase reflected people’s intrinsic goals, the more they thought it improved their well-being. In other words, the greatest well-being occurred when people spent money on something that was personally important to them.

To compare this finding with past research, the current study also asked participants to indicate to what extent their purchase was an experience or a material item. As in past research, participants did report higher well-being from experiences. However, when the researchers looked at both factors together, they found that how much a purchase reflected intrinsic goals explained more of the differences in well-being than whether something was material or experiential.

So, what does this research mean for our spending habits? Olaya Moldes Andrés, lecturer at Cardiff University and the study’s author, points out that we’re under a lot of pressure to spend money these days; just think about the number of targeted ads you see each time you open social media. However, this pressure to spend has a downside: In past research , Moldes Andrés has found that people who are exposed to more materialistic messages have lower well-being.

Before purchasing something, she recommends pausing to think about the reason for our purchase, and what use we will get out of it. If we’re spending money on trying to impress people or project a certain image (in other words, extrinsic goals), the purchase may not actually be worth it.

So, next time you’re planning to buy something, take a moment to think about whether it’s something you’re buying because you feel it’s what’s expected of you—or whether it’s truly something that you want.

About the Author

Elizabeth Hopper

Elizabeth Hopper, Ph.D. , received her Ph.D. in psychology from UC Santa Barbara and currently works as a freelance science writer specializing in psychology and mental health.

You May Also Enjoy

Six Ways to Get More Happiness for Your Money

How does valuing money affect your happiness.

Why Do We Think Money Buys Happiness?

What Makes Us Happier Than Money?

How Much Money Do People Need to Be Happy?

How Spending Influences Happiness

Connection Between Money and Happiness Essay

• To find inspiration for your paper and overcome writer’s block
• As a source of information (ensure proper referencing)
• As a template for you assignment

Introduction

Money and happiness, personal life’s experiences, life’s experiences of others.

Does money buy happiness? If you ask anyone this question, the obvious answer will be yes. There is an intricate relationship between money and happiness, which confounds literal observation that money is happiness. Critical analysis of money-happiness relationship shows that socioeconomic factors determine the happiness of an individual; therefore, it is quite unsatisfactory to attribute money as the only factor and determinant of happiness.

There is a linear relationship between money and happiness; nevertheless, to some extent money has no effect to the happiness of an individual. “According to rank hypothesis, income and utility are therefore not directly linked: Increasing an individual’s income will only increase their utility if ranked position also increases and will necessarily reduce the utility of others who will lose rank” (Boyce, Brown, & Moore, 2008, p. 1).

If one has the highest-ranking income in a given social group or workplace, one tends to be much happier than the other one with the lowest-ranking income. Money facilitates things that bring happiness but itself does not bring happiness.

Since the general perception of money is that it is the ultimate source of happiness, many people work tirelessly day and night to ensure that they earn more money to satisfy their needs.

This belief is quite evident in the way people devote most of their time and energies in work places rather than spending time in pleasure by relaxing with family members and friends. Akin, Norton and Dunn (2008), observe that, “the amount of time the average American spends at work has grown steadily over the past several decades, despite the fact that this apparent investment comes at the cost of family and leisure time” (p. 4).

Although money brings happiness and satisfaction in life through spending to satisfy needs, people also derive pleasure in getting money. Life becomes happier if one is working extra to get more income. Otherwise, working overtime without commensurate income results into loss of happiness and morale of working amongst workers. Hence, money is a motivating factor in the work place and source of pleasure in satisfying needs of the family, and thus there is a linear relationship between money and happiness.

The relationship between money and happiness is very complex since money is not only a factor that determines happiness. The state of happiness results from diverse socioeconomic factors that make it hard to attribute to economic factors only.

Due to existence of the complex relationship, money can have direct relationship with the happiness, but up to a certain level of satiation where money has no effect on happiness. Easterlin paradox reveals that, “since the Second World War, despite getting richer, many countries have not shown improvement in average levels of happiness” (Albor, 2009, p. 38).

Easterlin paradox explains that social and economic factors do not have positive correlation yet they are the factors that influence the state of happiness in an individual, family, community and the entire nation. Improvement in economic factors in terms of increase in income levels does not mean that there is concomitant improvement in social welfare, which reflects happiness in the society.

According to Albor (2009), happiness is composed of seven factors namely, “family relationship, community, social affiliation, financial institution, work, personal freedom and personal values” (p. 44). Thus, money is not the only source of happiness.

My psychological understanding of the fact that money alone cannot buy happiness has helped me in coping with life’s great challenges because the world perceives money as the sole source of happiness. Earlier, I thought that money was everything in life, and that I could even buy happiness with it when deprived of the same.

My dream in life was to achieve great knowledge for the sole purpose of earning huge income that would make my life better and happier. “… priming individuals with the concept of money or wealth appears to increase their feelings of self-sufficiency,” (Quoidbach, Dunn, Petrides, & Mikolajczak, 2010, p. 2). I was so happy nurturing and fantasizing about money, wealth and happiness for I did not know the complexity of happiness because to me, money and happiness were equal.

I longed for the time when I would own as much money and property as I could to surpass everybody in everything including happiness, because money translated into happiness. Not until I gained psychological insight on happiness, only to realize that money was not the core factor in felicity realization.

Having gained psychological perception and understanding of what constitutes happiness, I now perceive life quite differently. I now understand that money is one of the factors that determine happiness, but not the only means to happiness.

Easterlin in explanation of his paradox argues that, “economic growth is a carrier of a material culture of its own that ensures that humankind is forever ensnared in the pursuit of more and more economic goods” (Albor, 2009, p. 47). From this argument, I understand that without psychological perception of what really constitutes happiness, the pursuit of money and wealth will enslave me.

On contrary, people amass money and wealth to have financial freedom, which means abundant happiness, but in real sense, they attain financial slavery. The business of managing and gaining more money is very hectic and weary as an individual spends many hours doing it than having pleasure. I have realized that for money to bring happiness in life there should be a balance between work and pleasure, otherwise overindulgence in money making will lead to enslavement.

I have experienced that the more money one owns, the more he/she walks deeper into this enslavement. Owning a lot of money and wealth is quite challenging because it demand immense psychological attention, which overwhelms the happiness derived from them. At some instances when I have a lot of money, I find myself quite unstable, for I am busy running up and down spending it to attain satisfaction; regrettably, the very goods I buy do not satisfy my thirst for happiness.

Research study by Akin, Norton, & Dunn, (2008), demonstrates that, “…adult Americans erroneously believe that earning less than the median household income is associated with severely diminished happiness- a false belief that may lead many people to chase opportunities for increased wealth” (p. 11). With changed psychological perception, I cannot pursue happiness by indefinitely striving to hoard money and wealth since I will be striving after the wind, and that is vanity.

Many people poorly understand the relationship between money and happiness. They think that the only means to attain happiness is through the satisfaction of human needs that literally money can buy. However, money cannot buy everything that determines happiness, for instance, good friends, friendly community, and personal values amongst other key factors that define happiness.

Due to lack of psychological understanding of real meaning and source of happiness, many people grope in economic circles thinking that happiness lies there. False perception of happiness has made many people to struggle endlessly in pursuit of financial happiness, which never materializes. People think that solutions of many problems they encounter in life lies in money, because money pays education, rent, food, healthcare and many others needs.

Smith (2008) cautions this form of thinking for people assume that they “…might work longer hours to make more money, but then face heightened anxieties regarding childcare cost, comminuting, diminished leisure, physical and mental costs that accrue for the well-being of the families” (Smith, 2008, p. 20). In the course of achieving happiness through financial means, the process is tedious and very demanding making people to lose happiness instead of gaining more.

As aforementioned, money alone cannot have overwhelming influence on happiness since there are other factors that influence the status of happiness. These factors are personal values, personal freedom, family, community, work and social affiliation.

These factors constitute happiness; unfortunately, due to poor psychological understanding, many people neglect them and focus on the financial aspect of happiness only. Below poverty level, money is the overriding factor of happiness and as the financial status changes above the poverty level, others factors gradually become dominant.

International comparison of average levels of happiness shows that, “…among poorer countries, gains in income are accompanied by dramatic increases in happiness, but among richer countries, higher income do not buy more happiness” (Albor, 2009, p. 39). This confirms that, at the level of satiation, money no longer determines happiness but other factors begin to have significant influence. Thus, achievement of the greatest felicity requires consideration of all factors that constitutes happiness.

All the factors, which constitute happiness, are in two broad categories, social and economic factors. Economic factors partially influence happiness because the perception and the source of happiness lie in the social context of life, as happiness is not quantifiable in terms of money. According to Albor, “happiness is a universal feeling that all human beings have the potential to experience” (2009, p. 40).

Happiness is a contagious feeling, which makes everybody happy in the family, community, workplace and the whole world. I have noticed that, people think that money is everything in life, for out of their abundant riches; they afford to live in seclusion where they get satisfaction of their wealth and money while the surrounding people are struggling in abject poverty. Only the sight of the poor people makes them lose happiness.

Moreover, they live in great fear of robbery attacks and property loss, wishing to have their own continent, free from the eyesore status of the poor. All these happen because they have poor psychological understanding of happiness. If they could embrace social factors, they could derive ample happiness from their environment by relating to and assisting the poor.

In pursuit of happiness, young people do not have the right perception of what constitutes happiness. Given the choice between the money and schooling, they would prefer money, because they do not understand that money gives short-lived happiness. Regardless of virtues, and values we instill in children, they still perceive that money equals happiness.

Smith (2008) argues that, “… rather than setting off to follow their deepest passions, many of our most talented and driven graduates just need to get a job, whatever job that best allows them to begin their a life of paying off debt,” (p. 23). Young people have abandoned personal development, which is another source of happiness and are busy pursuing financial pleasures that give short-lived happiness.

In youths, there are many pleasures money can buy, hence, money has blinded their life’s priorities due to false satisfaction of needs that brings happiness. A rich person without personal development is as a fool is a sea of knowledge who wants to satisfy psychological needs out of folly. For one to achieve lasting happiness it requires understanding of the factors that significantly contribute to happiness and not mere stereotyping that money is equal to happiness.

Money and happiness have linear relationship but up to a certain level of satiation where other factors of happiness such as work, family, community, social affiliation, personal values and freedom, come into effect. Poor psychological understanding of happiness has led many people to believe erroneously that, money is the only source of happiness.

It is true that money brings happiness but the misunderstanding arises in the cumulative source of happiness. People derive happiness from both economic and social aspects of life, but rarely do people consider the social aspects. Social aspects demand psychological understanding of happiness; however, many people fail to realize its importance as source of happiness in the family, community and the entire society.

Therefore, people should be wary in attributing money as the only source of happiness for they will pursue happiness in vain, unless they come to the realization that social aspects are also integral part of happiness. Thus, happiness and money have partial relationship; whereby, money facilitates things that bring happiness but in itself, money lacks the capacity to bring happiness.

Akin, L., Norton, M., & Dunn, E. (2008). From Wealth to Well-Being? Money Matters, but Less People Think. Journal of Psychology University of British Columbia, 2(5), 1-20.

Albor, C. (2009). How Much Can Money Buy Happiness? Is the Debate Over for the Easterlin Paradox? Radical Statistics, 1(98), 38-48.

Boyce, C., Brown, G., & Moore, S. (2008). Money Happiness: Rank of Income, not Income, Affects Life Satisfaction. University of Warwick Psychology Journal, 1-16.

Quoidbach, J., Dunn, E., Petrides, K., & Mikolajczak, M. (2010). Money Giveth, Money Taketh Away: the Dual Effect of Wealth on Happiness. Association for Psychological Science, 20(5), 1-5.

Smith, N. (2008). Poverty, Money, and Happiness. A University Dialogue on Poverty and Opportunity Journal, 20-25.

• Money, Happiness and Satisfaction With Life
• Epicurus’ Perception of Pleasure and Justice
• Aristotle’s Account of Pleasure
• Prescribing of Medication by Psychologists: For and Against
• If Every Person in the World Understood Basic Principles of Psychology, the World Would Be A Better Place
• Analysis of Impact of Culture Shock on Individual Psychology
• Aspects of Rhetoric and Stereotype Image
• Perspectives Chemical Dependency
• Chicago (A-D)
• Chicago (N-B)

IvyPanda. (2018, July 30). Connection Between Money and Happiness. https://ivypanda.com/essays/relationship-between-money-and-happiness/

"Connection Between Money and Happiness." IvyPanda , 30 July 2018, ivypanda.com/essays/relationship-between-money-and-happiness/.

IvyPanda . (2018) 'Connection Between Money and Happiness'. 30 July.

IvyPanda . 2018. "Connection Between Money and Happiness." July 30, 2018. https://ivypanda.com/essays/relationship-between-money-and-happiness/.

1. IvyPanda . "Connection Between Money and Happiness." July 30, 2018. https://ivypanda.com/essays/relationship-between-money-and-happiness/.

Bibliography

IvyPanda . "Connection Between Money and Happiness." July 30, 2018. https://ivypanda.com/essays/relationship-between-money-and-happiness/.

Money can buy happiness: Here's how much you need and how to spend it, according to a financial therapist

• Money can buy happiness up to a point — studies indicate emotional well-being rises with income up to about $75,000.
• Researchers have also found that experiences make people happier because they enhance social relationships and are a bigger part of one's identity.
• Spending money on experiences or items that align with your values can increase your potential for happiness.
• This article was  medically reviewed  by  Alisa Ruby Bash , PsyD, LMFT, in Malibu, California. 

You know the phrase: money can't buy happiness. It turns out, that's not entirely true. Money can buy a certain degree of life satisfaction, depending on how much wealth you have and how you spend it. 

Research shows that emotional well-being rises along with income, up to a point. A 2010 study looked at surveys of 450,000 Americans and found that participants with higher incomes reported higher emotional well-being, up to an annual income of $75,000. After that, it drops off. 

Beyond simply having money, here's why being able to meet your basic needs, enjoying life experiences, and having social ties are also important factors for satisfaction and happiness in life.

Basic Needs

Lindsay Bryan-Podvin, LMSW , a financial therapist and author of "The Financial Anxiety Solution" says an annual income of $75,000 may not be the threshold for everyone. Being able to meet basic needs like food, housing, and healthcare are top priorities.  Then, the amount of satisfaction derived from income varies depending on factors like the cost of living in your area and your personal interests.

"The data is pretty clear that when we can financially take care of ourselves, our mental health is better," says Bryan-Podvin. "It's stressful to be on the grind all the time."

In fact, according to the CDC , adults living below the poverty level were three to four times more likely to have depression than adults living at or above the poverty level. 

The ability to meet basic needs without working multiple jobs also means you are more likely to have time for your friends and family, which is important for happiness. A Harvard study , which started in 1938 and tracked hundreds of men for nearly 80 years, collected data on both physical and mental well-being. The researchers found that close relationships, more than money or fame, keep people happy throughout their lives. 

Experience vs materials

Once you cover basic needs, whether money buys happiness may depend on what you spend it on, says Bryan-Podvin. 

There is a common theory that spending money on experiences will make you happier than spending money on material objects. Some studies back this up. A 2014 review found that experiences make people happier because they enhance social relationships, are a bigger part of one's identity, and are less likely to be compared to other people's experiences. 

A poll of more than 2,000 millennials in 2014 found that 78% prefer spending money on experiences or events compared to a material object. It's not just millennials. The same poll found that consumer spending on experience and events is up 70% since 1987. 

For some people, though, it may be buying a tangible item that brings the most happiness. "What research shows is if we have a very strong affinity for something, then we do get a lot of happiness out of buying that thing," says Bryan-Podvin, who gives the example of someone passionate about cars. 

When money doesn't buy happiness

One reason more money doesn't always equal more happiness is a tendency for what Bryan-Podvin calls "lifestyle creep." Meaning that when you are making more money, your expenses often go up.

For instance, you may end up spending money on things like a country club membership or dinners at more expensive restaurants. If this is happening, you may not feel like you don't have enough money even though you are making a substantial salary.  

Happiness also depends on how much you have to work to make that money. "You might be pulling in $300,000, which sounds great in theory, but if you are working 80 hours a week and can't enjoy the money you are earning, then what is the point?" says Bryan-Podvin. 

Bottom line

How much money a person needs to be happy varies. Happiness may depend on how much money is required to cover your own basic needs and what brings you joy personally.

For one person, that might be season tickets to the Yankees. For someone else, it might be a massage once a month or a new pair of running shoes. 

Ultimately, money can increase the potential for life satisfaction, depending on how you spend it. If you spend money on experiences or items that align with your values, you will increase your happiness, says Bryan-Podvin.

Related articles from Health Reference:

• How to increase dopamine levels and feel like your best self
• The best exercises to battle depression
• How to get better sleep with anxiety or stress, in 5 different ways
• The 5 types of anxiety disorder and how to know if you have one
• 5 benefits of green tea and how it can help your memory, skin, and bones

• Main content

Here’s How Money Really Can Buy You Happiness

The following story is excerpted from TIME’s special edition, The Science of Happiness , which is available at Amazon .

“Whoever said money can’t buy happiness isn’t spending it right.” You may remember those Lexus ads from years back, which hijacked this bumper-sticker-ready twist on the conventional wisdom to sell a car so fancy that no one would ever dream of affixing a bumper sticker to it.

What made the ads so intriguing, but also so infuriating, was that they seemed to offer a simple—if rather expensive—solution to a common question: How can you transform the money you work so hard to earn into something approaching the good life? You know that there must be some connection between money and happiness. If there weren’t, you’d be less likely to stay late at work (or even go in at all) or struggle to save money and invest it profitably. But then, why aren’t your lucrative promotion, five-bedroom house and fat 401(k) cheering you up? The relationship between money and happiness, it would appear, is more complicated than you can possibly imagine.

Fortunately, you don’t have to do the untangling yourself. Over the past quarter-century, economists and psychologists have banded together to sort out the hows, whys and why-nots of money and mood. Especially the why-nots. Why is it that the more money you have, the more you want? Why doesn’t buying the car, condo or cellphone of your dreams bring you more than momentary joy?

In attempting to answer these seemingly depressing questions, the new scholars of happiness have arrived at some insights that are, well, downright cheery. Money can help you find more happiness, so long as you know just what you can and can’t expect from it. And no, you don’t have to buy a Lexus to be happy. Much of the research suggests that seeking the good life at a store is an expensive exercise in futility. Before you can pursue happiness the right way, you need to recognize what you’ve been doing wrong.

Money misery

The new science of happiness starts with a simple insight: we’re never satisfied. “We always think if we just had a little bit more money, we’d be happier,” says Catherine Sanderson, a psychology professor at Amherst College, “but when we get there, we’re not.” Indeed, the more you make, the more you want. The more you have, the less effective it is at bringing you joy, and that seeming paradox has long bedeviled economists. “Once you get basic human needs met, a lot more money doesn’t make a lot more happiness,” notes Dan Gilbert, a psychology professor at Harvard University and the author of Stumbling on Happiness . Some research shows that going from earning less than $20,000 a year to making more than $50,000 makes you twice as likely to be happy, yet the payoff for then surpassing $90,000 is slight. And while the rich are happier than the poor, the enormous rise in living standards over the past 50 years hasn’t made Americans happier. Why? Three reasons:

You overestimate how much pleasure you’ll get from having more. Humans are adaptable creatures, which has been a plus during assorted ice ages, plagues and wars. But that’s also why you’re never all that satisfied for long when good fortune comes your way. While earning more makes you happy in the short term, you quickly adjust to your new wealth—and everything it buys you. Yes, you get a thrill at first from shiny new cars and TV screens the size of Picasso’s Guernica . But you soon get used to them, a state of running in place that economists call the “hedonic treadmill” or “hedonic adaptation.”

Even though stuff seldom brings you the satisfaction you expect, you keep returning to the mall and the car dealership in search of more. “When you imagine how much you’re going to enjoy a Porsche, what you’re imagining is the day you get it,” says Gilbert. When your new car loses its ability to make your heart go pitter-patter, he says, you tend to draw the wrong conclusions. Instead of questioning the notion that you can buy happiness on the car lot, you begin to question your choice of car. So you pin your hopes on a new BMW, only to be disappointed again.

More money can also lead to more stress. The big salary you pull in from your high-paying job may not buy you much in the way of happiness. But it can buy you a spacious house in the suburbs. Trouble is, that also means a long trip to and from work, and study after study confirms what you sense daily: even if you love your job, the little slice of everyday hell you call the commute can wear you down. You can adjust to most anything, but a stop-and-go drive or an overstuffed subway car will make you unhappy whether it’s your first day on the job or your last.

You endlessly compare yourself with the family next door. H.L. Mencken once quipped that the happy man is one who earns $100 more than his wife’s sister’s husband. He was right. Happiness scholars have found that how you stand relative to others makes a much bigger difference in your sense of well-being than how much you make in an absolute sense.

You may feel a touch of envy when you read about the glamorous lives of the absurdly wealthy, but the group you likely compare yourself with are folks Dartmouth economist Erzo Luttmer calls “similar others”—the people you work with, people you grew up with, old friends and old classmates. “You have to think, ‘I could have been that person,’ ” Luttmer says.

Matching census data on earnings with data on self-reported happiness from a national survey, Luttmer found that, sure enough, your happiness can depend a great deal on your neighbors’ paychecks. “If you compare two people with the same income, with one living in a richer area than the other,” Luttmer says, “the person in the richer area reports being less happy.”

Your penchant for comparing yourself with the guy next door, like your tendency to grow bored with the things that you acquire, seems to be a deeply rooted human trait. An inability to stay satisfied is arguably one of the key reasons prehistoric man moved out of his drafty cave and began building the civilization you now inhabit. But you’re not living in a cave, and you likely don’t have to worry about mere survival. You can afford to step off the hedonic treadmill. The question is, how do you do it?

Money bliss

If you want to know how to use the money you have to become happier, you need to understand just what it is that brings you happiness in the first place. And that’s where the newest happiness research comes in.

Friends and family are a mighty elixir. One secret of happiness? People. Innumerable studies suggest that having friends matters a great deal. Large-scale surveys by the University of Chicago’s National Opinion Research Center (NORC), for example, have found that those with five or more close friends are 50% more likely to describe themselves as “very happy” than those with smaller social circles. Compared with the happiness-increasing powers of human connection, the power of money looks feeble indeed. So throw a party, set up regular lunch dates—whatever it takes to invest in your friendships.

Even more important to your happiness is your relationship with your aptly named “significant other.” People in happy, stable, committed relationships tend to be far happier than those who aren’t. Among those surveyed by NORC from the 1970s through the 1990s, some 40% of married couples said they were “very happy”; among the never-married, only about a quarter were quite so exuberant. But there is good reason to choose wisely. Divorce brings misery to everyone involved, though those who stick it out in a terrible marriage are the unhappiest of all.

While a healthy marriage is a clear happiness booster, the kids who tend to follow are more of a mixed blessing. Studies of kids and happiness have come up with little more than a mess of conflicting data. “When you take moment-by-moment readouts of how people feel when they’re taking care of the kids, they actually aren’t very happy,” notes Cornell University psychologist Tom Gilovich. “But if you ask them, they say that having kids is one of the most enjoyable things they do with their lives.”

Doing things can bring us more joy than having things. Our preoccupation with stuff obscures an important truth: the things that don’t last create the most lasting happiness. That’s what Gilovich and Leaf Van Boven of the University of Colorado found when they asked students to compare the pleasure they got from the most recent things they bought with the experiences (a night out, a vacation) they spent money on.

One reason may be that experiences tend to blossom as you recall them, not diminish. “In your memory, you’re free to embellish and elaborate,” says Gilovich. Your trip to Mexico may have been an endless parade of hassles punctuated by a few exquisite moments. But looking back on it, your brain can edit out the surly cabdrivers, remembering only the glorious sunsets. So next time you think that arranging a vacation is more trouble than it’s worth—or a cost you’d rather not shoulder—factor in the delayed impact.

Of course, a lot of what you spend money on could be considered a thing, an experience or a bit of both. A book that sits unread on a bookshelf is a thing; a book you plunge into with gusto, savoring every plot twist, is an experience. Gilovich says that people define what is and isn’t an experience differently. Maybe that’s the key. He suspects that the people who are happiest are those who are best at wringing experiences out of everything they spend money on, whether it’s dancing lessons or hiking boots.

Applying yourself to something hard makes you happy. We’re addicted to challenges, and we’re often far happier while working toward a goal than after we reach it. Challenges help you attain what psychologist Mihaly Csikszentmihalyi calls a state of “flow”: total absorption in something that stretches you to the limits of your abilities, mental or physical. Buy the $1,000 golf clubs; pay for the $50-an-hour music lessons.

Most Popular from TIME

Flow takes work.

After all, you have to learn to play scales on a guitar before you can lose yourself in a Van Halen–esque solo—but the satisfaction you get in the end is greater than what you can get out of more passive pursuits. When people are asked what makes them happy on a moment-to-moment basis, watching TV ranks pretty high. But people who watch a lot of TV tend to be less happy than those who don’t. Settling down on the couch with the remote can help you recharge, but to be truly happy, you need more in your life than passive pleasures.

You need to find activities that help you get into the state of flow. You can find flow at work if you have a job that interests and challenges you and that gives you ample control over your daily assignments. Indeed, one study by two University of British Columbia researchers suggests that workers would be happy to forgo as much as a 20% raise if it meant having a job with more variety.

Not long ago, most researchers thought you had a happiness set point that you were largely stuck with for life. One famous paper said that “trying to be happier” may be “as futile as trying to be taller.” The author of those words has since recanted, and experts are increasingly coming to view happiness as a talent, not an inborn trait. Exceptionally happy people seem to have a set of skills—ones that you too can learn.

Sonja Lyubomirsky, a psychology professor at the University of California, Riverside, has found that happy people don’t waste time dwelling on unpleasant things. They tend to interpret ambiguous events in positive ways. And perhaps most tellingly, they aren’t bothered by the successes of others. Lyubomirsky says that when she asked less-happy people whom they compared themselves with, “they went on and on.” She adds, “The happy people didn’t know what we were talking about.” They dare not to compare, thus short-circuiting invidious social comparisons.

That’s not the only way to get yourself to spend less and appreciate what you have more. Try counting your blessings. Literally. In a series of studies, psychologists Robert Emmons of the University of California, Davis, and Michael McCullough of the University of Miami found that those who did exercises to cultivate feelings of gratitude, such as keeping weekly journals, ended up feeling happier, healthier, more energetic and more optimistic than those who didn’t.

And if you can’t change how you think, you can at least learn to resist. The act of shopping unleashes primal hunter-gatherer urges. When you’re in that hot state, you tend to be an extremely poor judge of what you’ll think of a product when you cool down later. Before giving in to your lust, give yourself a time-out. Over the next month, keep track of how many times you tell yourself: I wish I had a camera! If in the course of your life you almost never find yourself wanting a camera, forget about it and move on, happily.

More Must-Reads from TIME

• How Joe Biden Leads
• TIME100 Most Influential Companies 2024
• Javier Milei’s Radical Plan to Transform Argentina
• How Private Donors Shape Birth-Control Choices
• What Sealed Trump’s Fate : Column
• Are Walking Pads Worth It?
• 15 LGBTQ+ Books to Read for Pride
• Want Weekly Recs on What to Watch, Read, and More? Sign Up for Worth Your Time

Contact us at [email protected]

About Stanford GSB

• The Leadership
• Dean’s Updates
• School News & History
• Commencement
• Business, Government & Society
• Centers & Institutes
• Center for Entrepreneurial Studies
• Center for Social Innovation
• Stanford Seed

About the Experience

• Learning at Stanford GSB
• Experiential Learning
• Guest Speakers
• Entrepreneurship
• Social Innovation
• Communication
• Life at Stanford GSB
• Collaborative Environment
• Activities & Organizations
• Student Services
• Housing Options
• International Students

Full-Time Degree Programs

• Why Stanford MBA
• Academic Experience
• Financial Aid
• Why Stanford MSx
• Research Fellows Program
• See All Programs

Non-Degree & Certificate Programs

• Executive Education
• Stanford Executive Program
• Programs for Organizations
• The Difference
• Online Programs
• Stanford LEAD
• Seed Transformation Program
• Aspire Program
• Seed Spark Program
• Faculty Profiles
• Academic Areas
• Awards & Honors
• Conferences

Faculty Research

• Publications
• Working Papers
• Case Studies

Research Hub

• Research Labs & Initiatives
• Business Library
• Data, Analytics & Research Computing
• Behavioral Lab

Research Labs

• Cities, Housing & Society Lab
• Golub Capital Social Impact Lab

Research Initiatives

• Corporate Governance Research Initiative
• Corporations and Society Initiative
• Policy and Innovation Initiative
• Rapid Decarbonization Initiative
• Stanford Latino Entrepreneurship Initiative
• Value Chain Innovation Initiative
• Venture Capital Initiative
• Career & Success
• Climate & Sustainability
• Corporate Governance
• Culture & Society
• Finance & Investing
• Government & Politics
• Leadership & Management
• Markets and Trade
• Operations & Logistics
• Opportunity & Access
• Technology & AI
• Opinion & Analysis
• Email Newsletter

Welcome, Alumni

• Communities
• Digital Communities & Tools
• Regional Chapters
• Women’s Programs
• Identity Chapters
• Find Your Reunion
• Career Resources
• Job Search Resources
• Career & Life Transitions
• Programs & Services
• Career Video Library
• Alumni Education
• Research Resources
• Volunteering
• Alumni News
• Class Notes
• Alumni Voices
• Contact Alumni Relations
• Upcoming Events

Admission Events & Information Sessions

• MBA Program
• MSx Program
• PhD Program
• Alumni Events
• All Other Events

Research: Can Money Buy Happiness?

In his quarterly column, Francis J. Flynn looks at research that examines how to spend your way to a more satisfying life.

September 25, 2013

A boy looks at a toy train he received during an annual gift-giving event on Christmas Eve 2011. | Reuters/Jose Luis Gonzalez

What inspires people to act selflessly, help others, and make personal sacrifices? Each quarter, this column features one piece of scholarly research that provides insight on what motivates people to engage in what psychologists call “prosocial behavior” — things like making charitable contributions, buying gifts, volunteering one‘s time, and so forth. In short, it looks at the work of some of our finest researchers on what spurs people to do something on behalf of someone else.

In this column I explore the idea that many of the ways we spend money are prosocial acts — and prosocial expenditures may, in fact, make us happier than personal expenditures. Authors Elizabeth Dunn and Michael Norton discuss evidence for this in their new book, Happy Money: The Science of Smarter Spending . These behavioral scientists show that you can get more out of your money by following several principles — like spending money on others rather than yourself. Moreover, they demonstrate that these principles can be used not only by individuals, but also by companies seeking to create happier employees and more satisfying products.

According to Dunn and Norton, recent research on happiness suggests that the most satisfying way of using money is to invest in others. This can take a seemingly limitless variety of forms, from donating to a charity that helps strangers in a faraway country to buying lunch for a friend.

Witness Bill Gates and Warren Buffet, two of the wealthiest people in the world. On a March day in 2010, they sat in a diner in Carter Lake, Iowa, and hatched a scheme. They would ask America‘s billionaires to pledge the majority of their wealth to charity. Buffet decided to donate 99 percent of his, saying, “I couldn‘t be happier with that decision.”

And what about the rest of us? Dunn and Norton show how we all might learn from that example, regardless of the size of our bank accounts. Research demonstrating that people derive more satisfaction spending money on others than they do spending it on themselves spans poor and rich countries alike, as well as income levels. The authors show how this phenomenon extends over an extraordinary range of circumstances, from a Canadian college student purchasing a scarf for her mother to a Ugandan woman buying lifesaving malaria medication for a friend. Indeed, the benefits of giving emerge among children before the age of two.

Investing in others can make individuals feel healthier and wealthier, even if it means making yourself a little poorer to reap these benefits. One study shows that giving as little as $1 away can cause you to feel more flush.

Quote Investing in others can make you feel healthier and wealthier, even if it means making yourself a little poorer.

Dunn and Norton further discuss how businesses such as PepsiCo and Google and nonprofits such as DonorsChoose.org are harnessing these benefits by encouraging donors, customers, and employees to invest in others. When Pepsi punted advertising at the 2010 Superbowl and diverted funds to supporting grants that would allow people to “refresh” their communities, for example, more public votes were cast for projects than had been cast in the 2008 election. Pepsi got buzz, and the company‘s in-house competition also offering a seed grant boosted employee morale.

Could this altruistic happiness principle be applied to one of our most disputed spheres — paying taxes? As it turns out, countries with more equal distributions of income also tend to be happier. And people in countries with more progressive taxation (such as Sweden and Japan) are more content than those in countries where taxes are less progressive (such as Italy and Singapore). One study indicated that people would be happier about paying taxes if they had more choice as to where their money went. Dunn and Norton thus suggest that if taxes were made to feel more like charitable contributions, people might be less resentful having to pay them.

The researchers persuasively suggest that the proclivity to derive joy from investing in others may well be just a fundamental component of human nature. Thus the typical ratio we all tend to fall into of spending on self versus others — ten to one — may need a shift. Giving generously to charities, friends, and coworkers — and even your country — may well be a productive means of increasing well-being and improving our lives.

Research selected by Francis Flynn, Paul E. Holden Professor of Organizational Behavior at Stanford Graduate School of Business.

For media inquiries, visit the Newsroom .

Explore More

Communicating through conflict: how to get along with anyone, power, culture, persuasion, and the self: communication insights from stanford gsb faculty, a dozen of our favorite insights stories of 2021, editor’s picks.

• Priorities for the GSB's Future
• See the Current DEI Report
• Supporting Data
• Research & Insights
• Share Your Thoughts
• Search Fund Primer
• Teaching & Curriculum
• Affiliated Faculty
• Faculty Advisors
• Louis W. Foster Resource Center
• Defining Social Innovation
• Impact Compass
• Global Health Innovation Insights
• Faculty Affiliates
• Student Awards & Certificates
• Changemakers
• Dean Jonathan Levin
• Dean Garth Saloner
• Dean Robert Joss
• Dean Michael Spence
• Dean Robert Jaedicke
• Dean Rene McPherson
• Dean Arjay Miller
• Dean Ernest Arbuckle
• Dean Jacob Hugh Jackson
• Dean Willard Hotchkiss
• Faculty in Memoriam
• Stanford GSB Firsts
• Certificate & Award Recipients
• Teaching Approach
• Analysis and Measurement of Impact
• The Corporate Entrepreneur: Startup in a Grown-Up Enterprise
• Data-Driven Impact
• Designing Experiments for Impact
• Digital Business Transformation
• The Founder’s Right Hand
• Marketing for Measurable Change
• Product Management
• Public Policy Lab: Financial Challenges Facing US Cities
• Public Policy Lab: Homelessness in California
• Lab Features
• Curricular Integration
• View From The Top
• Formation of New Ventures
• Managing Growing Enterprises
• Startup Garage
• Explore Beyond the Classroom
• Stanford Venture Studio
• Summer Program
• Workshops & Events
• The Five Lenses of Entrepreneurship
• Leadership Labs
• Executive Challenge
• Arbuckle Leadership Fellows Program
• Selection Process
• Training Schedule
• Time Commitment
• Learning Expectations
• Post-Training Opportunities
• Who Should Apply
• Introductory T-Groups
• Leadership for Society Program
• Certificate
• 2024 Awardees
• 2023 Awardees
• 2022 Awardees
• 2021 Awardees
• 2020 Awardees
• 2019 Awardees
• 2018 Awardees
• Social Management Immersion Fund
• Stanford Impact Founder Fellowships and Prizes
• Stanford Impact Leader Prizes
• Social Entrepreneurship
• Stanford GSB Impact Fund
• Economic Development
• Energy & Environment
• Stanford GSB Residences
• Environmental Leadership
• Stanford GSB Artwork
• A Closer Look
• California & the Bay Area
• Voices of Stanford GSB
• Business & Beneficial Technology
• Business & Sustainability
• Business & Free Markets
• Business, Government, and Society Forum
• Get Involved
• Second Year
• Global Experiences
• JD/MBA Joint Degree
• MA Education/MBA Joint Degree
• MD/MBA Dual Degree
• MPP/MBA Joint Degree
• MS Computer Science/MBA Joint Degree
• MS Electrical Engineering/MBA Joint Degree
• MS Environment and Resources (E-IPER)/MBA Joint Degree
• Academic Calendar
• Clubs & Activities
• LGBTQ+ Students
• Military Veterans
• Minorities & People of Color
• Partners & Families
• Students with Disabilities
• Student Support
• Residential Life
• Student Voices
• MBA Alumni Voices
• A Week in the Life
• Career Support
• Employment Outcomes
• Cost of Attendance
• Knight-Hennessy Scholars Program
• Yellow Ribbon Program
• BOLD Fellows Fund
• Application Process
• Loan Forgiveness
• Contact the Financial Aid Office
• Evaluation Criteria
• GMAT & GRE
• English Language Proficiency
• Personal Information, Activities & Awards
• Professional Experience
• Letters of Recommendation
• Optional Short Answer Questions
• Application Fee
• Reapplication
• Deferred Enrollment
• Joint & Dual Degrees
• Entering Class Profile
• Event Schedule
• Ambassadors
• New & Noteworthy
• Ask a Question
• See Why Stanford MSx
• Is MSx Right for You?
• MSx Stories
• Leadership Development
• Career Advancement
• Career Change
• How You Will Learn
• Admission Events
• Personal Information
• Information for Recommenders
• GMAT, GRE & EA
• English Proficiency Tests
• After You’re Admitted
• Daycare, Schools & Camps
• U.S. Citizens and Permanent Residents
• Requirements
• Requirements: Behavioral
• Requirements: Quantitative
• Requirements: Macro
• Requirements: Micro
• Annual Evaluations
• Field Examination
• Research Activities
• Research Papers
• Dissertation
• Oral Examination
• Current Students
• Education & CV
• International Applicants
• Statement of Purpose
• Reapplicants
• Application Fee Waiver
• Deadline & Decisions
• Job Market Candidates
• Academic Placements
• Stay in Touch
• Faculty Mentors
• Current Fellows
• Standard Track
• Fellowship & Benefits
• Group Enrollment
• Program Formats
• Developing a Program
• Diversity & Inclusion
• Strategic Transformation
• Program Experience
• Contact Client Services
• Campus Experience
• Live Online Experience
• Silicon Valley & Bay Area
• Digital Credentials
• Faculty Spotlights
• Participant Spotlights
• Eligibility
• International Participants
• Stanford Ignite
• Frequently Asked Questions
• Operations, Information & Technology
• Organizational Behavior
• Political Economy
• Classical Liberalism
• The Eddie Lunch
• Accounting Summer Camp
• Videos, Code & Data
• California Econometrics Conference
• California Quantitative Marketing PhD Conference
• California School Conference
• China India Insights Conference
• Homo economicus, Evolving
• Political Economics (2023–24)
• Scaling Geologic Storage of CO2 (2023–24)
• A Resilient Pacific: Building Connections, Envisioning Solutions
• Adaptation and Innovation
• Changing Climate
• Civil Society
• Climate Impact Summit
• Climate Science
• Corporate Carbon Disclosures
• Earth’s Seafloor
• Environmental Justice
• Operations and Information Technology
• Organizations
• Sustainability Reporting and Control
• Taking the Pulse of the Planet
• Urban Infrastructure
• Watershed Restoration
• Junior Faculty Workshop on Financial Regulation and Banking
• Ken Singleton Celebration
• Marketing Camp
• Quantitative Marketing PhD Alumni Conference
• Presentations
• Theory and Inference in Accounting Research
• Stanford Closer Look Series
• Quick Guides
• Core Concepts
• Journal Articles
• Glossary of Terms
• Faculty & Staff
• Researchers & Students
• Research Approach
• Charitable Giving
• Financial Health
• Government Services
• Workers & Careers
• Short Course
• Adaptive & Iterative Experimentation
• Incentive Design
• Social Sciences & Behavioral Nudges
• Bandit Experiment Application
• Conferences & Events
• Reading Materials
• Energy Entrepreneurship
• Faculty & Affiliates
• SOLE Report
• Responsible Supply Chains
• Current Study Usage
• Pre-Registration Information
• Participate in a Study
• Founding Donors
• Location Information
• Participant Profile
• Network Membership
• Program Impact
• Collaborators
• Entrepreneur Profiles
• Company Spotlights
• Seed Transformation Network
• Responsibilities
• Current Coaches
• How to Apply
• Meet the Consultants
• Meet the Interns
• Intern Profiles
• Collaborate
• Research Library
• News & Insights
• Program Contacts
• Databases & Datasets
• Research Guides
• Consultations
• Research Workshops
• Career Research
• Research Data Services
• Course Reserves
• Course Research Guides
• Material Loan Periods
• Fines & Other Charges
• Document Delivery
• Interlibrary Loan
• Equipment Checkout
• Print & Scan
• MBA & MSx Students
• PhD Students
• Other Stanford Students
• Faculty Assistants
• Research Assistants
• Stanford GSB Alumni
• Telling Our Story
• Staff Directory
• Site Registration
• Alumni Directory
• Alumni Email
• Privacy Settings & My Profile
• Success Stories
• The Story of Circles
• Support Women’s Circles
• Stanford Women on Boards Initiative
• Alumnae Spotlights
• Insights & Research
• Industry & Professional
• Entrepreneurial Commitment Group
• Recent Alumni
• Half-Century Club
• Fall Reunions
• Spring Reunions
• MBA 25th Reunion
• Half-Century Club Reunion
• Faculty Lectures
• Ernest C. Arbuckle Award
• Alison Elliott Exceptional Achievement Award
• ENCORE Award
• Excellence in Leadership Award
• John W. Gardner Volunteer Leadership Award
• Robert K. Jaedicke Faculty Award
• Jack McDonald Military Service Appreciation Award
• Jerry I. Porras Latino Leadership Award
• Tapestry Award
• Student & Alumni Events
• Executive Recruiters
• Interviewing
• Land the Perfect Job with LinkedIn
• Negotiating
• Elevator Pitch
• Email Best Practices
• Resumes & Cover Letters
• Self-Assessment
• Whitney Birdwell Ball
• Margaret Brooks
• Bryn Panee Burkhart
• Margaret Chan
• Ricki Frankel
• Peter Gandolfo
• Cindy W. Greig
• Natalie Guillen
• Carly Janson
• Sloan Klein
• Sherri Appel Lassila
• Stuart Meyer
• Tanisha Parrish
• Virginia Roberson
• Philippe Taieb
• Michael Takagawa
• Terra Winston
• Johanna Wise
• Debbie Wolter
• Rebecca Zucker
• Complimentary Coaching
• Changing Careers
• Work-Life Integration
• Career Breaks
• Flexible Work
• Encore Careers
• Join a Board
• D&B Hoovers
• Data Axle (ReferenceUSA)
• EBSCO Business Source
• Global Newsstream
• Market Share Reporter
• ProQuest One Business
• Student Clubs
• Entrepreneurial Students
• Stanford GSB Trust
• Alumni Community
• How to Volunteer
• Springboard Sessions
• Consulting Projects
• 2020 – 2029
• 2010 – 2019
• 2000 – 2009
• 1990 – 1999
• 1980 – 1989
• 1970 – 1979
• 1960 – 1969
• 1950 – 1959
• 1940 – 1949
• Service Areas
• ACT History
• ACT Awards Celebration
• ACT Governance Structure
• Building Leadership for ACT
• Individual Leadership Positions
• Leadership Role Overview
• Purpose of the ACT Management Board
• Contact ACT
• Business & Nonprofit Communities
• Reunion Volunteers
• Ways to Give
• Fiscal Year Report
• Business School Fund Leadership Council
• Planned Giving Options
• Planned Giving Benefits
• Planned Gifts and Reunions
• Legacy Partners
• Giving News & Stories
• Giving Deadlines
• Development Staff
• Submit Class Notes
• Class Secretaries
• Board of Directors
• Health Care
• Sustainability
• Class Takeaways
• All Else Equal: Making Better Decisions
• If/Then: Business, Leadership, Society
• Grit & Growth
• Think Fast, Talk Smart
• Spring 2022
• Spring 2021
• Autumn 2020
• Summer 2020
• Winter 2020
• In the Media
• For Journalists
• DCI Fellows
• Other Auditors
• Academic Calendar & Deadlines
• Course Materials
• Entrepreneurial Resources
• Campus Drive Grove
• Campus Drive Lawn
• CEMEX Auditorium
• King Community Court
• Seawell Family Boardroom
• Stanford GSB Bowl
• Stanford Investors Common
• Town Square
• Vidalakis Courtyard
• Vidalakis Dining Hall
• Catering Services
• Policies & Guidelines
• Reservations
• Contact Faculty Recruiting
• Lecturer Positions
• Postdoctoral Positions
• Accommodations
• CMC-Managed Interviews
• Recruiter-Managed Interviews
• Virtual Interviews
• Campus & Virtual
• Search for Candidates
• Think Globally
• Recruiting Calendar
• Recruiting Policies
• Full-Time Employment
• Summer Employment
• Entrepreneurial Summer Program
• Global Management Immersion Experience
• Social-Purpose Summer Internships
• Process Overview
• Project Types
• Client Eligibility Criteria
• Client Screening
• ACT Leadership
• Social Innovation & Nonprofit Management Resources
• Develop Your Organization’s Talent
• Centers & Initiatives
• Student Fellowships

August 10, 2010

Can Money Buy Happiness?

New research reveals that reminders of wealth impair our capacity to savor life's little pleasures

By Sonja Lyubomirsky

Money can't buy you love. Worshipping Mammon foments evil ways. Materialists are shallow and unhappy. The greenback finds itself in tough times these days. Whether it’s Wall Street bankers earning lavish multi-million-dollar bonuses or two-bit city managers in Los Angeles County bringing in higher salaries than President Obama the recessionary economic climate has helped spur outrage and revulsion at those of us collecting undeserved lucre.

Wealthy people have a bad rep. Sure, there are philanthropists like Warren Buffet and Bill Gates, who have given billions of their net worth away and have made the world a better, healthier, safer place. But, sadly, they are an exception . American families who make over $300,000 a year donate to charity a mere 4 percent of their incomes. The statistic should not be surprising, as studies by University of Minnesota psychologist Kathleen Vohs and her collaborators have shown that merely glimpsing dollar bills makes people less generous and approachable, and more egocentric.

Now come a new set of studies that reveal yet another toll that money takes. An international team of researchers led by Jordi Quoidbach report in the August 2010 issue of Psychological Science that, although wealth may grant us opportunities to purchase many things, it simultaneously impairs our ability to enjoy those things.

On supporting science journalism

If you're enjoying this article, consider supporting our award-winning journalism by subscribing . By purchasing a subscription you are helping to ensure the future of impactful stories about the discoveries and ideas shaping our world today.

Their first study, conducted with adult employees of the University of Liège in Belgium showed that the wealthier the workers were, the less likely they were to display a strong capacity to savor positive experiences in their lives. Furthermore, simply being reminded of money (by being exposed to a picture of a huge stack of Euros) dampened their savoring ability. 

Quoidbach and his colleagues’ second study was even cleverer. Participants aged 16 to 59 recruited on the University of British Columbia campus were entrusted with the not unpleasant task of tasting a piece of chocolate. Before accepting the chocolate, however, they were obliged to complete a brief questionnaire. For half of the participants, this questionnaire furtively included a page with a picture of Canadian money (allegedly for an unrelated experiment), and for the other half, it included a neutral picture.

Although the ostensibly irrelevant photo was unlikely to have elicited more than a cursory glance, it had a pronounced effect on the volunteers’ behavior. Those “primed,” or subconsciously reminded, of money ended up spending less time consuming the chocolate and were rated by observers as enjoying it less.

How to explain these results? The researchers argue that because wealth allows people to experience the best that life has to offer, it ultimately undermines their ability to savor life’s little pleasures. Once we’ve had the opportunity to drink the finest French wines, fly in a private jet, eat foie gras with edible gold leaf, and watch the Super Bowl from a box seat, coffee at Starbucks with a friend, a sunny day after a week of rain, or an unexpected Reese’s peanut butter cup on our desks just doesn't provide the same jolt of happiness it used to. Indeed, a landmark study of lottery winners showed just that: People who had won between $50,000 and $1,000,000 (in 1970s dollars) were less impressed by life’s simple pleasures than people who experienced no such windfall.

Of course, Quoidbach et al.'s findings may have alternative explanations. Maybe seeing banknotes triggers feelings of disgust (due to associations with greed or just with germs) or stirs up our money worries, and those feelings of disgust, anxiety, or unease may be enough to lose our appetites just a little and curb enjoyment of the chocolate bar.

Despite those possibilities, I find the researchers' arguments compelling. In a book I'm writing, I devote an entire chapter to the costs of materialism and wealth. The single biggest culprit, I argue, is that having money raises our aspirations about the happiness that we expect in our daily lives, and these raised aspirations can be toxic. They say you can never go back to holding hands, but it's also hard to go back to economy class (from business), to sleeping on a futon with a bunch of roommates (from your comfortable master bedroom in a split level), or to eating at chain restaurants (after regularly partaking of the cuisines of Mario Batali and Bobby Flay ).

Unfortunately, raised aspirations don’t only lead us to take things for granted and impair our savoring abilities. They steer us to consume too much, tax the planet's resources, overspend and undersave, go into debt, gamble, live beyond our means, and purchase mortgages that we can’t afford. Not long ago, I read a newspaper article that quoted the shocking statistic that 20 percent of Americans trade in their automobiles every two years. Every two years! We acquire the new Toyota Camry or Lexus SUV or Jaguar, and for the first few weeks or months, the ride is thrilling. But, as we all know too well, the thrill wears off not long after the new car smell fades.

If attaining wealth or earning pay raises so unfailingly elevates our aspirations, are we doomed never to reap money’s pleasures and rewards? Can people who make partner, write a best-seller, or invest wisely ever enjoy a simple piece of chocolate? Of course, they can. Indeed, in my mind, one of the biggest misconceptions about money is that it can’t make us happy – or rather, that the joys it offers can be only faint and fleeting. As it happens, a growing social science of money is showing how we can compensate for some of its damaging effects by getting the most out of our spending. The conclusion is that if we want to buy happiness, we need to wring as many rewarding and stretching experiences from our purchases as possible. The most effective empirically-supported ways include:

spending our money on activities that help us grow as a person (taking guitar lessons, investing in an entrepreneurial venture), strengthen our connections with others (dinners with colleagues, car trips with friends, roller blades for mom and child), and contribute to our communities (catering a fundraiser, donating to the needy);

shelling it out on activities and experiences (e.g., rock climbing expeditions, wine tasting family reunions) rather than material possessions;

spending it on many small pleasures (e.g., regular massages, weekly delivery of fresh flowers, or frequent phone calls to our best friend in Europe) rather than on one big-ticket item (like a new car or flat-screen TV); and

splurging on something that we work extremely hard to get and have to wait for (whether it’s a concert, trip, or gadget) and relish the feeling of hard-won accomplishment and anticipation as we wait.

Finally, our money will be even better spent if we take the time to appreciate the objects of our spending (the vacation, gadget, or smiles of the people we have helped); if we make efforts to inject novelty, variety, and surprise (e.g., buying activities that bring unexpected opportunities or adventures); and if we strive to compare less with others (e.g., focusing on how much I enjoyed the Paul McCartney concert rather than on how much better my neighbor’s seats were, or recognizing that my roller blades give me no less pleasure even if my sister has an even fancier pair). As researchers (including Ken Sheldon and myself ) have argued, these are all factors that slow down or pre-empt the process that leads us to take our purchases for granted and allow us to derive the maximal possible happiness from them.

Both empirical research and anecdotal observations testify to the many pitfalls of thinking about money. And now we know from Quoidbach and his colleagues that merely scanning a wad of cash can impair our ability to savor life’s small delights. If this all seems like pretty strong evidence that money cannot pay for happiness, then we are not looking at the problem in the right way. The truth is that money’s pitfalls can be overcome with a little effort and forethought.

A famous Lexus ad pronounced, “Whoever said money can’t buy happiness isn’t spending it right.” Happiness is a choice. We can choose to become never-satisfied janitors of our possessions, or we can use our money in ways that improve our worlds and, as a bonus, supply us with genuine and lasting well-being.

Are you a scientist? Have you recently read a peer-reviewed paper that you want to write about? Then contact Mind Matters co-editor Gareth Cook, a Pulitzer prize –winning journalist at the Boston Globe, where he edits the Sunday Ideas section. He can be reached at garethideas AT gmail.com

Essay on Can Money Buy Happiness

Students are often asked to write an essay on Can Money Buy Happiness in their schools and colleges. And if you’re also looking for the same, we have created 100-word, 250-word, and 500-word essays on the topic.

Let’s take a look…

100 Words Essay on Can Money Buy Happiness

Introduction.

Money is essential in life, but can it buy happiness? This question has sparked debates worldwide.

Money and Materialistic Joy

Money can buy materialistic things that bring joy. For example, your favorite video game or a bicycle can make you happy, and you need money for them.

Money and Freedom

Money can provide freedom to explore hobbies, travel, and experience new things, which can lead to happiness.

Limitations of Money

However, money can’t buy love, friendship, health, or peace of mind, which are essential for true happiness.

In conclusion, while money can buy temporary joy, it can’t buy lasting happiness.

250 Words Essay on Can Money Buy Happiness

The age-old question, “Can money buy happiness?” has sparked countless debates among philosophers, economists, and psychologists. While some argue that wealth is a key contributor to happiness, others believe that happiness lies in intangible aspects of life.

The Power of Wealth

Money, undeniably, holds power. It provides the ability to afford basic necessities, luxuries, and experiences. It can help in eliminating stressors like debt and financial instability, which are often associated with unhappiness. From a utilitarian perspective, money can indeed buy happiness as it facilitates access to goods and services that can improve quality of life.

The Limitations of Money

However, the relationship between money and happiness is not linear. Beyond a certain income level, additional wealth does not equate to increased happiness. This is known as the ‘Easterlin Paradox’. Also, an overemphasis on wealth can lead to materialism, which has been linked to decreased well-being and increased mental health issues.

The Role of Intangible Aspects

While money can provide comfort and security, it cannot buy intangible aspects such as love, friendship, health, or peace of mind. These aspects, according to many psychologists, are the true essence of happiness. They provide a sense of belonging, purpose, and contentment that money cannot procure.

In conclusion, money can buy temporary happiness by providing comfort, security, and experiences. However, it falls short in procuring lasting happiness that is often found in intangible aspects of life. Thus, the pursuit of wealth should be balanced with the pursuit of intangible aspects to achieve holistic happiness.

500 Words Essay on Can Money Buy Happiness

The question, “Can money buy happiness?” is a popular one. Many people think that having more money means being happier. But is that really true? Let’s explore this idea in a simple way.

Money and Basic Needs

Firstly, money is important because it helps us meet our basic needs. It allows us to buy food, clothes, and a place to live. Without money, we would struggle to survive. In this way, money can bring a certain level of happiness. It provides comfort and security, which are key to feeling satisfied in life.

Money and Material Possessions

Secondly, money can buy material things. This includes toys, gadgets, cars, or even vacations. These things can make us feel happy for a while. But after some time, the excitement fades. We start to want newer, better things. This is called the “hedonic treadmill.” It means that buying stuff only brings short-term happiness. Over time, we get used to what we have and want more.

Money and Relationships

Thirdly, let’s consider money and relationships. Money can help us do nice things for others. We can buy gifts for friends or donate to those in need. This can make us feel good about ourselves. But, money can’t buy true friendship or love. These are based on trust, understanding, and shared experiences. They can’t be bought with money.

Money and Happiness: The Real Picture

So, can money buy happiness? The answer is not straightforward. Money can buy things that make life more comfortable and enjoyable. But it can’t buy everything. It can’t buy love, good health, time, or peace of mind. These things are often the most important for true happiness.

Research shows that after a certain income level, more money doesn’t equal more happiness. This level is enough to meet basic needs and some wants. Beyond that, more money might not make a big difference in how happy you are.

In conclusion, money can buy some forms of happiness, but not all. It’s important to remember that the best things in life aren’t things. They are experiences, relationships, and good health. These can’t be bought with money. So, while money is important, it’s not the only path to happiness. It’s just one piece of the puzzle.

Remember, happiness comes from within. It’s about being content with what you have, not what you don’t have. It’s about enjoying the simple things in life. And most importantly, it’s about being true to yourself and your values.

That’s it! I hope the essay helped you.

If you’re looking for more, here are essays on other interesting topics:

• Essay on Can Computers Replace Teacher
• Essay on Can Anyone be Above the Law
• Essay on Bullying

Apart from these, you can look at all the essays by clicking here .

Happy studying!

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Save my name, email, and website in this browser for the next time I comment.

One More Time, Does Money Buy Happiness?

• Published: 19 September 2023
• Volume 18 , pages 3089–3110, ( 2023 )

Cite this article

• James Fisher   ORCID: orcid.org/0000-0001-9201-4204 1 &
• Michael Frechette   ORCID: orcid.org/0000-0002-8193-6796 2  

1375 Accesses

Explore all metrics

This paper integrates multiple positions on the relationship between money and well-being, commonly referred to as happiness. An aggregation of prior work appears to suggest that money does buy happiness, but not directly. Although many personal and situational characteristics do influence the relationship between money and happiness, most are moderating factors, which would not necessarily rule out a direct link. Here, we discuss the cognitive and affective elements within the formation of happiness, which we propose play a series of mediating roles, first cognition, then affect, between money and happiness. The paper concludes with a discussion about how this proposal influences academic research and society as a whole.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Price includes VAT (Russian Federation)

Instant access to the full article PDF.

Rent this article via DeepDyve

Institutional subscriptions

Similar content being viewed by others

Are women truly “more emotional” than men? Sex differences in an indirect model-based measure of emotional feelings

Basic psychological need satisfaction, need frustration, and need strength across four cultures.

The Relationship Between Nature Connectedness and Eudaimonic Well-Being: A Meta-analysis

Materials and/or code availability.

There are no materials or code related to this manuscript.

Data Availability

This conceptual study collected no original data. Citations are given to the original sources when referencing data or results from prior studies.

“As far as I am aware, in every representative national survey ever done a significant positive bivariate relationship between happiness and income has been found.” (Easterlin 2001 , 468). Easterlin supports this assertion with references to Andrews 1996 , xi; Argyle 1999 , 356–57; and Diener 1984 , 553.

A simple correlation of 0.2 is an oft-cited benchmark (cf. Easterlin 2001 , who labels it “highly significant”). At the same time, many researchers qualify the relationship, saying that income ultimately explains relatively little of the variance in self-reports of happiness: e.g., Ahuvia ( 2017 , 18) generalizes that “typically studies in developed economies indicate that income explains only about 3% of the difference in happiness.” Some twenty years prior to Ahuvia’s assessment, Frank ( 1997 ) offered a similar conclusion: the relationship between income and happiness is closer at lower levels of income than for middle- or upper-income households, where "variations in income explain less than 2% of variations in reported satisfaction levels” (citing Diener and Diener 1995 on 1835). Diener and Biswas-Diener ( 2002 , 123) summarize over a dozen correlations between income and subjective well-being, most ranging between 0.15 and 0.25. Kahneman and Deaton ( 2010 ) recommend that efforts to estimate the relationship between that subjective well-being and income should rely on a logarithmic transformation of income, providing a rationale based on Weber’s Law, having to do with the perception of change reflecting the percentage change and not the absolute change.

This literature review reflects the authors’ point-of-view that in answering the question of “how” money buys happiness economists have offered the highest-level, abstract answer (i.e., through a process of utility-maximization); psychologists and researchers into subjective well-being have sought a more precise accounting of what money buys vis-à-vis individual dispositions (e.g., personality) and motivations (e.g., materialism) as well as cultural or national determinants (e.g., individualism versus collectivism); and marketers and consumer researchers have inquired in the most detailed way as to how money delivers particular experiences and effects throughout the continuum of pre-purchase processes, the experience of consumption and post-purchase satisfaction.

Happiness data are a relative late-comers to economic analyses of this sort: “[T]he approach departs from a long tradition in economics that shies away from using what people say about their feelings. Instead, economists have built their trade by analyzing what people do and, from these observations and some theoretical assumptions about the structure of welfare, deducing the implied changes in happiness” (Di Tella and MacCulloch 2006 , 43). Kahneman and Krueger ( 2006 , 3) express a similar opinion: “[E]conomists have had a long-standing preference for studying peoples’ revealed preferences; that is, looking at individuals’ actual choices and decisions rather than their stated intentions or subjective reports of likes and dislikes.”.

An assertion strenuously challenged by Diener and Oishi 2000 and more modestly objected to by Frank ( 1997 , 1820), who interprets the data to say that there “is only slight evidence … that greater economic prosperity leads to more well-being in a nation.”.

Cummins ( 2000 ), in his review of personal income and subjective well-being, constructs a couple of straw men that reflect his estimation of how researchers into quality of life may view income ambivalently. At the outset of the review article, his abstract announces, "Conventional wisdom holds that money has little relevance to happiness." Later in the same review article, he identifies a bias "that can quite commonly be found within the QOL literature" (p. 139) that the rich are not as satisfied with their lot as commonly imagined. Chambers ( 1997 ) provides him with a suitable proof text in which "the link between wealth and well-being is weak or even negative" and therefore, "amassing wealth does not assure well-being and may diminish it” (at 1728 in Chambers). Cummins himself disavows this disciplinary tendency, ultimately labeling it “fanciful.”.

When it comes to terms like subjective well-being, life satisfaction, and happiness, there is some variation in the precision of the terminology. Thus, Kahneman and Krueger ( 2006 ) use life satisfaction and happiness as roughly synonymous in discussing the measurement of well-being and in emphasizing the measurement of emotional states. On the other hand, Diener may commonly use the term happiness as a convenient and widely used construct but will employ more precision in measuring or analyzing "types of well-being.".

E.g., basic needs met, psychological needs met, and satisfaction with living standards in Diener, Ng, Harter and Arora ( 2010 , 56).

E.g., pleasant affect, unpleasant affect, life satisfaction, and domain satisfaction in Diener, Suh, Lucas and Smith ( 1999 , 277).

Dunn et al. ( 2011 ) stake out this position with their article’s title “If money doesn’t make you happy, then you probably aren’t spending it right.”.

Thus, Scitovsky’s title, The Joyless Economy .

Actually, it is nice to be rich. (2023, March 24). The Week , 33.

Ahuvia, A. C. (2017). Consumption, Income and Happiness. In Alan Lewis (Ed.), The Cambridge Handbook of Psychology and Economic Behaviour, Cambridge. Cambridge: Cambridge University Press.

Google Scholar  

Allcott, H., Braghieri, L., Eichmeyer, S., & Gentzkow, M. (2020). The welfare effects of social media. American Economic Review, 110 (3), 629–676.

Article   Google Scholar  

Andrews, F. (1996). Editor’s introduction. In F. Andrews (Ed.), Research on the Quality of Life (pp. ix–xiv). University of Michigan.

Argyle, M. (1999). 'Causes and correlates of happiness,' in (D. Kahneman, E. Diener, and N. Schwarz eds.), Well-Being: The Foundations of Hedonic Psychology , (pp. 353–73). New York: Russell Sage Foundation.

Auerbach, A. J., Kotlikoff, L. J., & Koehler, D. (2016). US Inequality and Fiscal Progressivity: An Intragenerational Accounting. Available at SSRN 2747187 .

Bradburn, N. M. (1969). The structure of psychological well-being . Aldine.

Bradburn, N. M., & Caplovitz, D. (1965). Reports on Happiness: A Pilot Study of Behavior Related to Mental Health . Aldine Publishing Company.

Bryson, A., & MacKerron, G. (2017). Are you happy while you work? The Economic Journal, 127 (599), 106–125.

Brzozowski, M., & Spotton Visano, B. (2020). Havin’ money’s not everything, not havin’ it is: The importance of financial satisfaction for life satisfaction in financially stressed households. Journal of Happiness Studies, 21 (2), 573–591.

Cantril, H. (1965). The pattern of human concerns . Rutgers University Press.

Chambers, R. (1997). Responsible well-being—A personal agenda for development. World Development, 25 (11), 1743–1754.

Clark, A. E., Frijters, P., & Shields, M. A. (2008). Relative income, happiness, and utility: An explanation for the Easterlin paradox and other puzzles. Journal of Economic literature , 46 (1), 95–144.

Coy, P. (2022, July 18) There’s a Better Way to Measure Economic Inequality: Differences in wealth or income are not good gauges. New York Times, https://www.nytimes.com/2022/07/18/opinion/economic-inequality-spending-power.html?searchResultPosition=39 .

Cummins, R. A. (2000). Personal income and subjective well-being: A review. Journal of Happiness Studies, 1 , 133–158.

Di Tella, R., & MacCulloch, R. (2006). Some uses of happiness data in economics. The Journal of Economic Perspectives, 20 (1), 25–46.

Diener, E. (1984). Subjective well-being. Psychological Bulletin, 95 (3), 542–575.

Diener, E. (2012). New findings and future directions for subjective well-being research. American Psychologist, 67 (8), 590–597.

Diener, E., & Biswas-Diener, R. (2002). Will money increase subjective well-being? A literature review guide to needed research. Social Indicators Research, 57 (2), 119–169.

Diener, E., & Diener, C. (1995). The wealth of nations revisited: Income and quality of life. Social Indicators Research, 36 (3), 275–286.

Diener, E., & Seligman, M. E. (2004). Beyond money: Toward an economy of well-being. Psychological Science in the Public Interest, 5 (1), 1–31.

Diener, E., Suh, E. M., Lucas, R. E., & Smith, H. L. (1999). Subjective well-being: Three decades of progress. Psychological Bulletin, 125 (2), 276–302.

Diener, E., Ng, W., Harter, J., & Arora, R. (2010). Wealth and happiness across the world: Material prosperity predicts life evaluation, whereas psychosocial prosperity predicts positive feeling. Journal of Personality and Social Psychology, 99 (1), 52–61.

Diener, E., & Oishi, S. (2000). Money and happiness: Income and subjective well-being across nations. Culture and Subjective Well-Being. 185–218.

Dreilinger, D. (2021). The Secret History of Home Economics: How Trailblazing Women Harnessed the Power of Home and Changed the Way We Live . W.W. Norton & Company Inc.

Dunn, E. W., & Weidman, A. C. (2015). Building a science of spending: Lessons from the past and directions for the future. Journal of Consumer Psychology, 25 (1), 172–178.

Dunn, E. W., Gilbert, D. T., & Wilson, T. D. (2011). If money doesn’t make you happy, then you probably aren’t spending it right. Journal of Consumer Psychology, 21 (2), 115–125.

Easterlin, R. A. (1973). Does money buy happiness? The Public Interest, 30 , 3–10.

Easterlin, R. A. (1974). Does economic growth improve the human lot? Some empirical evidence. In P. A. David & M. W. Reder (Eds.), Nations and households in economic growth: Essays in honour of Moses Abramovitz (pp. 89–125). Academic Press.

Easterlin, R. A. (2001). Income and happiness: Towards a unified theory. The Economic Journal, 111 (473), 465–484.

Easterlin, R. A. (2003). Explaining happiness. Proceedings of the National Academy of Sciences, 100 (19), 11176–11183.

Easterlin, R. A. (2005). Feeding the illusion of growth and happiness: A reply to Hagerty and Veenhoven. Social Indicators Research, 74 (3), 429–443.

Easterlin, R. A., McVey, L. A., Switek, M., Sawangfa, O., & Zweig, J. S. (2010). The happiness-income paradox revisited. Proceedings of the National Academy of Sciences., 107 (52), 22463–22468.

Easterlin, R. A., & O'Connor, K. J. (2020). The Easterlin Paradox. IZA Institute of Labor Economics Discussion Paper Series. No. 13923. Available at: https://docs.iza.org/dp13923.pdf .

Ekici, T., & Koydemir, S. (2016). Income expectations and happiness: Evidence from British panel data. Applied Research in Quality of Life, 11 (2), 539–552.

Frank, R. H. (1997). The frame of reference as a public good. The Economic Journal, 107 (445), 1832–1847.

Frey, B., & Stutzer, A. (2002). What can economists learn from happiness research? Journal of Economic Literature, 40 , 402–435.

Fussell, P. (1983). Class: A Guide Through the American Status System . Simon & Schuster.

Gilbert, D. T., & Wilson, T. D. (2007). Prospection: Experiencing the future. Science, 317 , 1351–1354.

Glaeser, E. L., Gottlieb, J. D., & Ziv, O. (2016). Unhappy cities. Journal of Labor Economics, 34 (S2), S129–S182.

Goffman, E. (1951). Symbols of class status. The British Journal of Sociology, 2 (4), 294–304.

Hagerty, M. R., & Veenhoven, R. (2003). Wealth and happiness revisited–growing national income does go with greater happiness. Social Indicators Research, 64 (1), 1–27.

Inglehart, R., & Klingemann, H. D. (2000). Genes, culture, democracy, and happiness. In E. Diener & M. Suh (Eds.), Culture and subjective well-being (pp. 165–183). The MIT Press.

Chapter   Google Scholar  

Inkeles, A. (1960). Industrial man: The relation of status to experience, perception, and value. American Journal of Sociology, 66 (1), 1–31.

Jarden, A. (2011, September). Positive psychological assessment: A practical introduction to empirically validated research tools for measuring wellbeing. In 1st New Zealand Association of Positive Psychology Conference , Auckland (pp. 9–10).

Kahneman, D., & Deaton, A. (2010). High income improves evaluation of life but not emotional well-being. Proceedings of the National Academy of Sciences, 107 (38), 16489–16493.

Kahneman, D., & Krueger, A. B. (2006). Development in the measurement of subjective well-being. Journal of Economic Perspectives, 20 (1), 3–24.

Killingsworth, M. A. (2021). Experienced well-being rises with income, even above $75,000 per year. Proceedings of the National Academy of Sciences, 118 (4), e2016976118.

Killingsworth, M. A., Kahneman, D., & Mellers, B. (2023). Income and emotional well-being: A conflict resolved. Proceedings of the National Academy of Sciences, 120 (10), e2208661120.

Klein, E. (2022, July 17) Why a Middle-Class Lifestyle Remains Out of Reach for So Many: Inflation has unmasked the depths of our affordability crisis. New York Times, https://www.nytimes.com/2022/07/17/opinion/inflation-prices-affordability.html?searchResultPosition=4 .

Layard, R. (2006). Happiness and public policy: A challenge to the profession. The Economic Journal, 116 (510), C24–C33.

Levitt, T. (1983). The globalization of markets. Harvard Business Review, 61 , 92–102.

Li, F., Mu, W., Li, S., Li, X., Zhang, J., Chen, C., & Zhou, M. (2022). Income and Subjective Well-being: Test of a Multilevel Moderated Mediation Model. Applied Research in Quality of Life , 1–18.

Lim, H. E., Shaw, D., Liao, P. S., & Duan, H. (2020). The effects of income on happiness in east and south Asia: Societal values matter? Journal of Happiness Studies, 21 (2), 391–415.

MacKerron, G., & Mourato, S. (2020). Mappiness: natural environments and in-the-moment happiness. In Handbook on Wellbeing, Happiness and the Environment (pp. 266–282). Edward Elgar Publishing.

Muresan, G. M., Ciumas, C., & Achim, M. V. (2020). Can money buy happiness? Evidence for European countries. Applied Research in Quality of Life, 15 , 953–970.

Mureșan, G. M., Fülöp, M. T., & Ciumaș, C. (2021). The road from money to happiness. Journal of Risk and Financial Management, 14 (10), 459.

Ng, Y. K. (2002). East-Asian happiness gap. Pacific Economic Review, 7 (1), 51–63.

Ng, W., & Diener, E. (2019). Affluence and subjective well-being: Does income inequality moderate their associations? Applied Research in Quality of Life, 14 (1), 155–170.

Ouweneel, P., and Veenhoven, R. (1991) Cross-national differences in happiness: Cultural bias or societal quality? in Bleichrodt, N & Drenth, P.J. (eds) Contemporary issues in cross-cultural psychology, Swets & Zeitlinger, Amsterdam, 168–184.

Pearlin, L. I., & Schooler, C. (1978). The structure of coping. Journal of Health and Social Behaviors, 19 (1), 2–21.

Rajan, R. (2010). Bernanke Must End Era of Ultra-Low Rates. Financial Times , 28.

Scitovsky, T. (1976). The joyless economy: An inquiry into human satisfaction and consumer dissatisfaction . Oxford U Press.

Stevenson, B., & Wolfers, J. (2008). Economic growth and subjective well-being: Reassessing the Easterlin paradox (No. w14282). National Bureau of Economic Research.

Suranyi-Unger, T., Jr. (1981). Consumer behavior and consumer well-being: An economist’s digest. Journal of Consumer Research, 8 (2), 132–143.

Veenhoven, R. (1991). Is happiness relative? Social Indicators Research, 24 (1), 1–34.

Veenhoven, R., & Hagerty, M. (2006). Rising happiness in nations 1946–2004: A reply to Easterlin. Social Indicators Research, 79 (3), 421–436.

Download references

No funding was received to assist with the preparation of this manuscript.

Author information

Authors and affiliations.

Chaifetz School of Business, Saint Louis University, Saint Louis, MO, USA

James Fisher

Welch College of Business and Technology, Sacred Heart University, Fairfield, CT, USA

Michael Frechette

You can also search for this author in PubMed   Google Scholar

Contributions

Each author contributed equally to this manuscript.

One more time, does money buy happiness?

Corresponding author

Correspondence to Michael Frechette .

Ethics declarations

Ethics approval.

IRB approval was granted by Saint Louis University, #24311.

Competing Interests

There are no competing interests regarding this manuscript.

As a theoretical paper consent was not relevant to this theoretical manuscript.

No employment was promised for or contingent upon this manuscript.

Additional information

Publisher's note.

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Rights and permissions

Springer Nature or its licensor (e.g. a society or other partner) holds exclusive rights to this article under a publishing agreement with the author(s) or other rightsholder(s); author self-archiving of the accepted manuscript version of this article is solely governed by the terms of such publishing agreement and applicable law.

Reprints and permissions

About this article

Fisher, J., Frechette, M. One More Time, Does Money Buy Happiness?. Applied Research Quality Life 18 , 3089–3110 (2023). https://doi.org/10.1007/s11482-023-10221-9

Download citation

Received : 26 November 2022

Accepted : 28 August 2023

Published : 19 September 2023

Issue Date : December 2023

DOI : https://doi.org/10.1007/s11482-023-10221-9

Share this article

Anyone you share the following link with will be able to read this content:

Sorry, a shareable link is not currently available for this article.

Provided by the Springer Nature SharedIt content-sharing initiative

• Subjective well-being
• Find a journal
• Publish with us
• Track your research

Home — Essay Samples — Life — Happiness — Riches And Eternal Joy: Possibility of Buy Happiness

Riches and Eternal Joy: Possibility of Buy Happiness

• Categories: Happiness Money

About this sample

Words: 802 |

Published: Apr 4, 2022

Words: 802 | Page: 1 | 5 min read

Works Cited

• Aknin, L. B., Dunn, E. W., & Norton, M. I. (2009). Money doesn't buy happiness: A reexamination with new evidence. Social Psychological and Personality Science, 1(3), 90-95.
• Diener, E., & Biswas-Diener, R. (2002). Will money increase subjective well-being? A literature review and guide to needed research. Social Indicators Research, 57(2), 119-169.
• Diener, E., Ng, W., Harter, J., & Arora, R. (2010). Wealth and happiness across the world: Material prosperity predicts life evaluation, whereas psychosocial prosperity predicts positive feeling. Journal of Personality and Social Psychology, 99(1), 52-61.
• Dunn, E. W., Gilbert, D. T., & Wilson, T. D. (2011). If money doesn't make you happy, then you probably aren't spending it right. Journal of Consumer Psychology , 21(2), 115-125.
• Graham, C. (2011). Adaptation amidst prosperity and adversity: Insights from happiness studies from around the world. In J. Helliwell, R. Layard, & J. Sachs (Eds.), World happiness report (pp. 36-60). Earth Institute, Columbia University.
• Layard, R. (2005). Happiness: Lessons from a new science. Penguin UK.
• Lyubomirsky, S., Sheldon, K. M., & Schkade, D. (2005). Pursuing happiness: The architecture of sustainable change. Review of General Psychology, 9(2), 111-131.
• Ng, W., Diener, E., Aurora, R., Harter, J., & Arora, R. (2009). Affluence and subjective well-being: Evidence from 54 countries. Journal of Happiness Studies, 10(4), 447-463.
• Vohs, K. D., Mead, N. L., & Goode, M. R. (2006). The psychological consequences of money. Science, 314(5802), 1154-1156.
• Xu, J., Wei, L., & Liu, Q. (2018). Can money buy happiness? Evidence from a meta-analysis of studies using the Satisfaction with Life Scale. Journal of Economic Psychology, 68, 1-9.

Cite this Essay

Let us write you an essay from scratch

• 450+ experts on 30 subjects ready to help
• Custom essay delivered in as few as 3 hours

Get high-quality help

Verified writer

• Expert in: Life Economics

+ 120 experts online

By clicking “Check Writers’ Offers”, you agree to our terms of service and privacy policy . We’ll occasionally send you promo and account related email

No need to pay just yet!

Related Essays

5 pages / 2479 words

3 pages / 1270 words

3 pages / 1321 words

2 pages / 713 words

Remember! This is just a sample.

You can get your custom paper by one of our expert writers.

121 writers online

Still can’t find what you need?

Browse our vast selection of original essay samples, each expertly formatted and styled

If the ultimate goal in life is to reach happiness, then I have met the most incredible of winners. To me he is the best example of true goodness. He does not judge by looks, does not occupy his mind with hateful thoughts, nor [...]

Aristotle, one of the greatest philosophers in history, embarked on a quest to understand the ultimate human good, which he unequivocally identified as happiness. In his ethical exploration, Aristotle expounds upon the intricate [...]

The pursuit of happiness is a timeless endeavor, but the question of whether we are truly in control of our own happiness remains a complex and intriguing one. This essay delves into the intricate interplay between external [...]

Although they are very young, the responsibility of securing their future has been given solely to students. They receive guidance from parents and teachers but most of the work must be done by them. Therefore, to be able to [...]

Despite being faced with adverse conditions while growing up, humankind possesses resilience and the capacity to accept and forgive those responsible. In The Glass Castle (2005) by Jeannette Walls, Walls demonstrates a [...]

Today Highly secure virtual grid is demanding in which you can share any resource from any cluster even with the existence of a fault in the system. Grid computing is a distributed computing paradigm that differs from [...]

Related Topics

By clicking “Send”, you agree to our Terms of service and Privacy statement . We will occasionally send you account related emails.

Where do you want us to send this sample?

By clicking “Continue”, you agree to our terms of service and privacy policy.

Be careful. This essay is not unique

This essay was donated by a student and is likely to have been used and submitted before

Download this Sample

Free samples may contain mistakes and not unique parts

Sorry, we could not paraphrase this essay. Our professional writers can rewrite it and get you a unique paper.

Please check your inbox.

We can write you a custom essay that will follow your exact instructions and meet the deadlines. Let's fix your grades together!

Get Your Personalized Essay in 3 Hours or Less!

We use cookies to personalyze your web-site experience. By continuing we’ll assume you board with our cookie policy .

• Instructions Followed To The Letter
• Deadlines Met At Every Stage
• Unique And Plagiarism Free

We couldn’t find any results matching your search.

Please try using other words for your search or explore other sections of the website for relevant information.

We’re sorry, we are currently experiencing some issues, please try again later.

Our team is working diligently to resolve the issue. Thank you for your patience and understanding.

News & Insights

The Minimum Salary You Need To Be Happy in Every State

June 07, 2024 — 09:00 am EDT

Written by Gabrielle Olya for GOBankingRates  ->

Can money buy happiness? According to a Purdue University study published in the journal Nature Human Behaviour, income can correlate with emotional well-being and life satisfaction, though this probably has to do with a variety of factors, such as having the money to fund the things vital to you, such as your healthcare.

To estimate how much money you might need to be happy in every U.S. state, GOBankingRates factored in each state’s cost-of-living index and used $105,000 — which the Purdue study found was the ideal income for life satisfaction in North America — as the “benchmark.” The states were ranked from least to most amount of money needed to be happy. GOBankingRates also included unemployment rates for many states for informational purposes.

Read More: I’m a Self-Made Millionaire, but I Still Opt for the Budget Versions of These 6 Items

Check Out: Owe Money to the IRS? Most People Don’t Realize They Should Do This One Thing

The Purdue study also included figures for being content at the “life evaluation” and “emotional well-being” stages. Globally, those were determined to be $95,000 and $60,000 to $75,000, respectively.

It’s important to keep in mind, though, that “happiness” is subjective . The cost of living comfortably can vary from person to person.

Keep reading to find out how much it takes to be happy in your state :

West Virginia

• Minimum salary needed to be happy: $89,460

The unemployment rate in West Virginia is at 3.8%, and the cost-of-living index is 14.8% lower than the national average.

Find Out: 6 Valuable Everyday Items You Should Never Throw Away

Read Next: 6 Unusual Ways To Make Extra Money (That Actually Work)

Mississippi

• Minimum salary needed to be happy:  $91,035

Mississippi’s low cost of living means you can stretch your paycheck that much farther. And while $91,000 is a lot more than most Mississippians earn in a year, the range the study sets for emotional well-being goes as low as about $52,020 a year.

Discover More: 5 Unnecessary Bills You Should Stop Paying in 2024

• Minimum salary needed to be happy:   $91,140

Oklahoma’s cost of living is 13.2% below the national average, and the unemployment rate is 3%. While you do need over $91,000 to be happy, you can settle for emotional well-being at as little as $52,080.

• Minimum salary needed to be happy:  $91,770

Kansas’ salary to be happy is about $13,000 a year below the rate quoted for North America as a whole, representing a cost of living that’s 12.6% below the national average. However, the salary needed for emotional well-being is as low as $52,440.

• Minimum salary needed to be happy:  $92,610

If you’re looking at a figure of $92,610 and thinking it’s just not realistic in the state, you should know that the study’s band of incomes allowing for emotional well-being runs as low as $52,920.

• Minimum salary needed to be happy:  $92,715

The “life evaluation” stage — in which you feel comfortable about providing for your basic needs and start considering other, bigger questions — would come at a more attainable $83,885 in the Show-Me State. In a state with a low unemployment rate of 2.9%, it’s a good place to be.

Learn More: 7 Appliances Frugal Homeowners Steer Clear Of

• Minimum salary needed to be happy:  $92,925

That $92,925 might seem out of reach for many Arkansas residents, but it’s notable that a range of $53,100 to $66,375 would get you to the emotional well-being stage.

• Minimum salary needed to be happy: $94,395

Iowans can enjoy lower costs than the nation on the whole — about 10% less. As such, Hawkeyes earning less than $94,395 a year have plenty of reasons to enjoy life. Those in a state of life evaluation can get by for $85,405.

• Minimum salary needed to be happy:  $94,920

Tennessee’s cost of living is 9.6% below the national average. Here, you only need to make $54,240 to achieve emotional well-being, though $85,880 is equated with the salary for being able to make a life evaluation.

• Minimum salary needed to be happy:  $95,235

While it takes nearly $96,000 to achieve happiness here, the cost of living in general is 9.3% lower than the national average. And the range for emotional well-being is a lot lower, from $54,420 to $68,025.

For You: Nearly Half of Americans Struggle To Pay Their Utility Bills: 5 Ways To Save

• Minimum salary needed to be happy: $95,445

Georgians can claim to have one of the most attainable levels of income to be happy. It takes even less to reach emotional well-being, just $54,540 to $68,175.

• Minimum salary needed to be happy:  $95,550

Nebraska’s normally low cost of living is looking even better right now, as its unemployment rate continues to lag way behind the rest of the country. Sitting at just 2.1%, it’s among the lowest in the country.

• Minimum salary needed to be happy: $95,550

The Great Lakes State has a lower cost of living than the rest of the United States by 9%. However, its unemployment rate is on the high side at 3.9% Still, emotional well-being can be had for as little as $54,600.

• Minimum salary needed to be happy:  $95,655

Hoosiers boast a cost of living nearly 9% below the national average. To achieve a state of emotional well-being only requires $54,660 at a minimum.

Trending Now: I’m a Frugal Shopper: 4 Items I Always Buy Secondhand To Save Money

• Minimum salary needed to be happy:  $96,390

Illinois’ unemployment rate hovers at 4.4%, suggesting that a lot of people there are currently focused on making ends meet for the present. However, people can still find emotional well-being at just $55,080.

South Dakota

South Dakotans can expect an easier time than the rest of the country when it comes to unemployment rates. It has an incredibly low unemployment rate of 1.9%, tied for second lowest on the list.

• Minimum salary needed to be happy:  $96,810

At the height of the COVID-19 pandemic, 13.7% of the Buckeye State was unemployed. However, that number has rebounded to 3.4%, hopefully improving the lives of many Ohioans.

• Minimum salary needed to be happy:  $97,650

Residents of the Lone Star State are fond of saying “everything’s bigger in Texas,” but that definitely doesn’t include prices. The cost of living there is 7% below the national average. Residents can find a state of emotional well-being for $55,800.

Check Out: 5 Frugal Habits of Mark Cuban

• Minimum salary needed to be happy:  $97,860

Wyoming has a median unemployment rate of 2.9%. While closing in on $100,000 seems a high bar to be happy, emotional well-being is equated with as low as $55,920.

• Minimum salary needed to be happy: $97,860

Being able to stretch your paycheck farther than much of the rest of the country has got to make life easier for all Kentucky residents — even those making well under $97,000 a year. However, residents can also achieve emotional well-being at $55,920.

• Minimum salary needed to be happy:  $98,595

New Mexico’s cost of living of 6.1% below the national average makes it a decent place to live. However, while it takes close to $100,000 to be happy here, you can settle for emotional well-being at $56,340.

South Carolina

• Minimum salary needed to be happy:  $99,015

In the Carolinas, it is less expensive to live in South Carolina than in North Carolina. The state also has a lower unemployment rate than its northern neighbor — 2.9% compared to 3.4%.

Read Next: 10 Things Frugal People Always Buy at Yard Sales To Save Money

North Dakota

One of those lucky states where unemployment has remained low, North Dakota has a 1.9% jobless rate, just like South Dakota. Residents still are looking at a considerable sum to reach happiness, though. However, they can achieve emotional well-being at a minimum of $56,580.

• Minimum salary needed to be happy:  $99,120

In Minnesota, the cost to find happiness is nearly $100,000. If that is out of reach, emotional well-being can be had at $56,640.

Pennsylvania

• Minimum salary needed to be happy:  $99,540

Pennsylvania’s economy was hit harder than many others during the pandemic years — its unemployment rate, though lower than its peak of 13.1%, is still higher than many others at 3.4%.

• Minimum salary needed to be happy:  $100,170

Plenty in the Badger State might view a salary of over $100,000 outside of what they can expect from their career, but that doesn’t mean they’re doomed to a life of being overworked. For a state of emotional well-being, anywhere from $57,240 to $71,550 will suffice.

Explore More: Mark Cuban Reveals Why He Keeps a Strict Budget Everyday

North Carolina

• Minimum salary needed to be happy:  $101,010

Making over $100,000 a year is often considered a long-term goal for many Americans, and North Carolina is among those states where you need to make at least $101,010 a year to be happy. But here, you can still achieve emotional well-being at $57,720.

• Minimum salary needed to be happy:  $103,950

The people of Idaho certainly don’t think of $103,950 as small potatoes, but a salary ranging from $59,400 to $74,250 is enough to achieve emotional well-being status.

• Minimum salary needed to be happy: $105,840

Delaware is the first state on the list where the cost of living exceeds the national average. The amount needed to be happy is $840 above the national average. The cost of reaching emotional well-being is more than $60,000, making Delaware the first state over that benchmark, too.

• Minimum salary needed to be happy: $106,050

The Sunshine State is doing pretty well, despite previously high unemployment during the COVID-19 pandemic. Now, unemployment is at 2.8%. While you do need to make a bit more than $106,000 to be happy here, well-being is possible at $60,600.

Discover More: How To Earn $750 a Week in Passive Income

• Minimum salary needed to be happy: $106,155

With its strong association with the hospitality industry, Nevada was among those hit hardest by the COVID-19 pandemic. It has the nation’s highest unemployment rate at 5.4%. However, you can achieve emotional well-being for $60,660.

• Minimum salary needed to be happy:  $106,470

Virginia has a cost-of-living index that is 1.4% above the national average. Here, even the salary to achieve life evaluation is high, at $96,330.

• Minimum salary needed to be happy:  $108,255

Montana residents need a salary approaching $110,000 to be happy, but jobs should be available. The unemployment rate is 2.7%.

• Minimum salary needed to be happy:  $109,725

While that six-figure income might leave some Utahans feeling a little intimidated, it should be noted that it only takes $62,700 to achieve emotional well-being.

Check Out: 29 Best Games That Pay Real Money in 2024

• Minimum salary needed to be happy:  $112,245

Colorado is higher than the norm both in terms of cost of living and salary needed to be happy, but you can still expect to find emotional well-being in an income range starting at $64,140.

• Minimum salary needed to be happy:  $115,500

Arizona is 10% higher than the national average for cost of living. The state’s 4% unemployment rate is not as low as other states, but Arizonans can get by on just $66,000 for “emotional well-being.”

• Minimum salary needed to be happy:  $115,815

The Garden State has a high cost of living — 10.3% higher than the national average — as well as a relatively high unemployment rate of 4.4%. However, you can achieve emotional well-being at $66,180.

Read Next: Tony Robbins: 10 Passive Income Ideas To Build Your Fortune

• Minimum salary needed to be happy:  $116,235

New England remains one of the most expensive places to live in the U.S., and Maine’s cost of living is no exception, at more than 10% over the national average. You can still achieve emotional well-being at a more moderate $66,420.

Rhode Island

• Minimum salary needed to be happy:  $117,600

Tiny Rhode Island is one more New England state where it costs a lot to get by — and to be happy. The cost of living is $12,600 higher than the national average, but emotional well-being can be achieved at just $67,200.

Connecticut

• Minimum salary needed to be happy:  $119,595

Connecticut also has a high cost of living that is nearly 14% over the national cost of living. Even though it takes nearly $120,000 to be happy, you can achieve emotional well-being at just $68,340.

• Minimum salary needed to be happy:  $120,435

The cost of living is almost 15% higher than the national average, and the unemployment rate is not as low as some other parts of the country, at 3.5%. However, it’s possible to achieve emotional well-being for around $68,820.

Learn More: Barbara Corcoran’s 5 Best Passive Income Ideas

• Minimum salary needed to be happy:  $120,540

Maryland’s unemployment rates register at 1.6%, the lowest in the GOBankingRates study. While residents need more than $120,000 to call themselves happy, people can still find emotional contentment here at $68,880 per year.

• Minimum salary needed to be happy:  $120,645

While it takes a lot of money to be happy in Vermont, unemployment is low, at just 1.9%, one of three states tied for second. And emotional well-being is possible at $68,940.

New Hampshire

• Minimum salary needed to be happy:  $121,380

New Hampshire is yet another New England state with a high cost of living, 15.6% higher than the national average. However, unemployment is low at 2.0%, and you can achieve emotional well-being at $69,360.

• Minimum salary needed to be happy:  $121,485

While more than $120,000 per year might seem like a lot to achieve, residents here can still find emotional well-being at less than $70,000, making it the final state on the list where you can say that.

For You: 8 Ways To Make $200 (or More) a Day Working From Home

• Minimum salary needed to be happy:  $132,720

It takes a pretty penny to achieve happiness in The Last Frontier, and unemployment is 4.1%. To achieve emotional well-being takes a lot less, though: $75,840.

• Minimum salary needed to be happy:  $132,825

The Empire State comes with some empire-sized costs of living, with the average New York resident shelling out over $27,000 above the national average to be happy. And with an unemployment rate of 4%, times are tough for a lot of New Yorkers. However, one can still find happiness at $75,900.

• Minimum salary needed to be happy:  $143,220

California’s notoriously high cost of living is on display here, with just over $143,000 a year being needed to secure happiness. California’s unemployment rate of 4.7% trails only Nevada in the study.

Massachusetts

• Minimum salary needed to be happy:  $155,400

As in the rest of New England, the cost of living is high here — over $50,000 higher than the national average. However, it’s possible to achieve emotional well-being at $88,800.

Read More: 6 Cheap Hobbies To Start in 2024 That Will Make You Extra Money

• Minimum salary needed to be happy:  $188,160

The cost of living in Hawaii is a whopping 79.2% above the national average, making it especially costly to be happy there. You’ll need to plan on earning almost $190,000 a year to reach that state of bliss in the Aloha State, though you can settle for emotional well-being, which doesn’t seem as hard to achieve here, at $107,520.

Jami Farkas , Jordan Rosenfeld and Alexandria Bova contributed to the reporting for this article.

Methodology: GOBankingRates determined the cost-of-living-adjusted minimum salary needed to be “happy” based on income satiation levels identified by Purdue University researchers. Global income satiation levels are the following: $95,000 for “life evaluation” and $60,000 to $75,000 for “emotional well-being.” In North America, the income satiation level is $105,000 for finding happiness, according to Purdue. To get a state-by-state breakdown, we factored in each state’s cost-of-living index, sourced from the Missouri Economic Research and Information Center: Composite Cost of Living for Q3 of 2023. For supplemental data, GOBankingRates found each state’s September 2023 unemployment rate as sourced from the Bureau of Labor Statistics. All data was collected on and is up to date as of June 6, 2024.

More From GOBankingRates

• 5 Places in America To Retire That Are Just as Cheap as Mexico, Portugal and Costa Rica
• Living Frugally: Adopting Lessons From the Great Recession
• 5 Moves Every Woman Should Consider Before Retirement
• This is The Single Most Overlooked Tool for Becoming Debt-Free

This article originally appeared on GOBankingRates.com : The Minimum Salary You Need To Be Happy in Every State

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

More Related Articles

This data feed is not available at this time.

Sign up for the TradeTalks newsletter to receive your weekly dose of trading news, trends and education. Delivered Wednesdays.

To add symbols:

• Type a symbol or company name. When the symbol you want to add appears, add it to My Quotes by selecting it and pressing Enter/Return.
• Copy and paste multiple symbols separated by spaces.

These symbols will be available throughout the site during your session.

Your symbols have been updated

Edit watchlist.

• Type a symbol or company name. When the symbol you want to add appears, add it to Watchlist by selecting it and pressing Enter/Return.

Opt in to Smart Portfolio

Smart Portfolio is supported by our partner TipRanks. By connecting my portfolio to TipRanks Smart Portfolio I agree to their Terms of Use .