money can't buy happiness essay

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Money Can’t Buy Happiness Essay for Students and Children in English

Money Can’t Buy Happiness Essay: The proverb “Money Can’t Buy Happiness” states that money can buy all the materialistic things like cars, houses, and also you can live a luxurious life too but having all the materialistic things surely will not give happiness. Money can be used to buy anything in the world but there is no shop where you can walk and buy happiness and so they say money can’t buy happiness.

When it comes to the question of whether money can buy happiness or not the answer here is that money is just a tool to buy things that give us luxury which in turn will give us happiness. But it doesn’t necessarily increase our happiness. Buying more and more luxurious things won’t really bring you more joy. More money isn’t going to improve your mindset, nor will it bring peace to mind. In other words, you can say that more money can’t buy happiness. There are many aspects which money can’t give.

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Suppose you think a new 24” LED TV will bring you happiness but after having the same 24” LED you see a better option and it makes you feel sad. You want to have better than this. It is not actually the tv that gives you happiness, it is the human nature of having more. A human being is one who is never satisfied. Happiness is actually the state of mind which cannot be achieved by materialistic things. There are many reasons which prove that money can’t buy happiness.

Buying stuff won’t make us happy, because we tend to compare it with others. Comparisons are ridiculous and quite often harmful to us.

What is Happiness?

Is it a big car, a luxurious house, or a big-screen LED TV?  Buying any new stuff feels great at first.  But gradually months and years later, the excitement decreases. The bright, shiny, newness will eventually go down and you’ll want a new one or more.

Happiness is a feeling. Feeling that money can’t buy. If someone asks are you happy, what will you answer?.

Happiness means satisfaction. Be satisfied with what you have in your life.  Not to crave on the things that you don’t have.

Reasons Why Money Can’t Buy Happiness

There are some very good reasons why having more money doesn’t necessarily make a person happier. It can actually turn the opposite. Many wealthy people, for example, are actually under stress.

Here we mention few reasons why money can’t buy happiness

More Stuff More Work

Many think that if you get more luxurious stuff our life would be happier but that isn’t true. The more the stuff, the more work it takes to take care of it. Day by day everything has become larger. Today people want larger houses to live in but keeping it clean and maintained is again a challenge. It takes more time and effort to keep your mansions neat and tidy.

More Stuff Less Free Time

As you own more stuff, you will get less free time because you’ll be spending time in the maintenance of the things you bought. Time is very important for everyone, but much of our free time is spent doing house chores and taking care of our stuff. You can use the money to hire maids but that is not possible in every situation.

More Stuff More Expenses

The more stuff you own, the more money you will have to spend to maintain it.

For example, bigger houses need more repairs than smaller ones. Unfortunately, repairs are a necessary part and can be expensive.

The more stuff you own, the more work and money is spent to maintain it. Having less stuff can free up some of your time to do things you enjoy. So money cannot always bring you happiness.

Materialistic things give Temporary Satisfaction

Money can buy temporary happiness. Everyone experiences themselves on cloud nine when they’ve bought something they’ve been desiring. These feelings of happiness are usually temporary. This happiness soon fades away and that new thing is no longer interesting.

Scientists have proved that we get more happiness from our experiences but not from materialistic things. And also they don’t cost much.

Time spent with your loved ones will give you more happiness than buying a costly item that you were eyeing for a long time.

Money Can’t Buy Family, Friends and Love

Family, friends and your loved ones are the people who will make you special. They are the people whose surroundings will make you happy. And definitely, money cannot buy these relationships.

When people are dying and taking their last breath they don’t want to see the things they own or the achievements of their life. All they want to see are their loved ones.

It’s their relationships that really matter but not stuff.

True love doesn’t care whether your loved one is rich or poor. That person will value you for who you are and not money.

Money Can’t Give You Peace of Mind

A person can live without a big house, he can survive without driving a car but cannot live with a stressful mind. True happiness has nothing to do with the bank balance. More money also sometimes steals away the peace of mind because of insecurity.

Changing our outlook for money is the first step in achieving true happiness, the kind of happiness that comes from being satisfied with what you have.

In conclusion, once you have your basic needs like food, water, shelter, clothing and the feeling of safety, then money can’t buy happiness.

It’s up to you to build meaningful relationships, enjoy the little things in life, and start spending your money on experiences and other people rather than materialistic things.

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?

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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.

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Why Money Doesn't Buy Happiness

According to kahneman and deaton, money doesn't buy happiness. why not.

Posted August 25, 2022 | Reviewed by Michelle Quirk

• It's often said that money doesn't buy happiness, and, in a 2010 study, Kahneman and Deaton show that it doesn't.
• Nevertheless, most people apparently think that it does.
• Kahneman and Deaton found that "emotional well-being" is associated with social interaction rather than with higher income.

The old saw “money can’t buy happiness ” is often used, mostly by people who don’t have much, as a challenge to the importance of wealth in human society. But is it true? Does more money really not make people happier?

In a 2010 study, Nobel laureate Daniel Kahneman and Angus Deaton set out to answer this question. They explored two aspects of what’s known as “subjective well-being.” Importantly, they made a distinction between emotional well-being and life evaluation. Emotional well-being is defined as “…the emotional quality of an individual’s everyday experience—the frequency and intensity of experiences of joy, fascination, anxiety , sadness, anger , affection that make one’s life pleasant or unpleasant." Life evaluation “refers to a person’s thoughts about his or her life.” Here is what they found:

In the present study, we confirm the contribution of higher income to improving individuals’ life evaluation, even among those who are already well off. However, we also find that the effects of income on the emotional dimension of well-being satiate fully at an annual income of ∼$75,000… (Kahneman and Deaton, 2010, p. 16490).

In other words, getting more money makes us think our lives are better, but doesn’t make us feel any better.

To be sure, not having enough money negatively affects our emotional well-being. But once we have enough (about $75,000 in 2010), having more doesn’t positively affect it. So, while we think our lives would be better if we got a raise or hit the lottery jackpot, we’d be no happier than we were before the windfall. Now that’s interesting. Money really doesn’t buy happiness.

But why not? We think that Kahneman and Deaton’s distinction between life evaluation and emotional well-being might provide an answer.

Evolution of Emotional Well-Being

The emotions of well-being the authors identify—joy, fascination, anxiety, sadness, anger, affection—evolved over hundreds of thousands of years in hunter–gatherer bands. There was no money in these bands, of course, and, as we’ve noted in previous blogs, it was more important to use possessions as gifts than hold on to them. Well-being was having enough to eat and interacting with the other members of the band—hunting, gathering, quarreling, fighting, telling stories, dancing, healing.

However, since the agricultural revolution, human history has been in large part the story of acquisition—more land, money, possessions, power. Today, acquisition messages are all around us: Buy more and better things, get a higher-paying job. These messages address post-agricultural thinking but ignore ancient emotional needs.

Thinking about how your life is going or will go is another creation of our old friend and nemesis the neocortex. Given the obvious advantages of wealth and power after the agricultural revolution, the cortex turned them into ideas, things to aspire to, goals . Moving up was good, whether it made you happy or not.

As more and more opportunities to move up were created by the industrial revolution and the market economy, more and more people could rise. It was great to have enough—enough money, enough to eat, and a place to live. And it felt good to rise and have more status.

A Moving Goal

Unfortunately, there was an unintended consequence: The goal kept moving. There was always a better position, a better salary, higher status. Thinking about well-being became associated with making more money. When Donald Trump was asked about what money meant to him, he said “Money was never a big motivation for me, except as a way to keep score.” He didn’t mention happiness.

So, here we humans are, stuck again between ancient emotions and an environment that pushes us to achieve and acquire. As Kahneman and Deaton note in their study, when asked the question, “What made you happy yesterday,” most people emphasized time with family and friends, taking care of a relative, working on a project with others, etc. When asked what they thought would make them happier, most said, “Having more money.”

Kahneman, D. and Deaton, A. 2010. “High Income Improves Evaluation of Life, But Not Emotional Well-Being.” PNAS. September 21, 2010, vol. 107, no. 38, pp. 16489-16493.

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I Don’t Believe Money Can Buy Happiness Essay

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Happiness is very essential in each and everyone’s life as it makes life enjoyable and motivates someone to move on. There are many factors that contribute to an individual’s happiness, for instance, satisfaction in one’s family life, work, love relationships and even good academic performance.

Money is also a contributing factor but only when combined with other aspects like mentioned above. This paper gives an insight on why I don’t believe that money can buy happiness. I don’t believe that money can buy happiness since some aspects that leads to happiness for example respect, power love and a feeling of appreciation and belonging cannot be bought but rather attained naturally.

The more one earns, the more the needs that are to be satisfied and so money is essential to a certain level after which it becomes a problem and make people less approachable and more egocentric affecting their social life negatively hence hindering happiness in their lives. Money also impairs people ability to enjoy life and the many things they have acquired through their wealth despite being in a better position to purchase items of choice because life’s little pleasures are overlooked.

Money helps us to have a comfortable life as we can be able to cater for our needs but it surely cannot buy us happiness. This is because happiness in our lives is brought about by the little pleasures that life holds for us for example the joy attained through socialization with others, satisfaction in work and family life among others and not in the big pleasures attached to wealth and money.

Materialistic people are generally unhappy as they tend to ignore the little things that bring about happiness in life in search of bigger things with the hope of being happier which does not come to pass.

According to Luscombe (2010), money contributes happiness when it is acquired to a certain amount ($ 75,000) in a year after which no greater happiness is attached to the money. He argues that the lower an individual’s income falls below $75,000 per year, the unhappier he or she may be but at the same time, earning more than this does not guarantee any much happiness.

This shows that as much as money is essential in acquisition and satisfaction of our needs, it does not guarantee our happiness by its own and other aspects of life have to be incorporated to attain happiness.

Happiness can be viewed as the way one feels at a particular moment for example either emotionally well or not. It can also be viewed as the inner satisfaction an individual feels about his or her life in general in regard to what is happening. Money seems to make life appear to be working out well but it actually does not contribute to a person’s emotional well being that leads to total happiness.

Lower income does not in itself lead to sadness but make people stressed up by the problems that face them. For instance those with family problems like those who are sick, separated or divorced are not happy irrespective of the amount of income they earn hence money just help improve living conditions and brings a person to a life he or she thinks is better but do not necessarily lead to happiness.

There is more to happiness than money and there are people who are without money but are happier than those with lots of money depending on the circumstances that face them and the conditions in which they live.

People who delight in their work for example those who are involved in more social work and lot of human contact seem to achieve much higher levels of happiness as compared to those whose work involves dealing with machines and less human interaction since there is a good feeling that comes along with sharing of experiences, ideas and opinions with others.

For example hairdressers, doctors, nurses, teachers and social workers tend to be happier due to the strong social relations they develop in their work between their colleagues and also with their clients. This shows that although income matters, our attitude towards life is essential plus the consideration of other factors that may lead to our happiness like love, respect and recognition.

The key issue towards attainment of happiness is the ability to have just enough money to cater for the basic needs for instance food, clothing, shelter and health and some little more for emergency and concentrating on how you spend your time and not what you can acquire.

One should work on his or her strengths, purpose, the people and things that make life worth living and not on the items perceived to bring happiness but in reality do not. This is because happiness is an attitude and making enough to facilitate basic needs and a little surplus creates some peace of mind hence happiness and lack of it causes pain and stress as one tries to make ends meet.

Luscombe, B. (2010). Do We Need $75,000 a Year to Be Happy? . Web.

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Money Can T Buy Happiness

This essay will explore the adage “Money can’t buy happiness.” It will discuss the relationship between wealth and well-being, examining how and why increased income does not necessarily lead to increased happiness, and the factors that contribute to genuine contentment and fulfillment. On PapersOwl, there’s also a selection of free essay templates associated with Happiness.

How it works

Since happiness is a unique experience, the factors that promote happiness can of course be different for everyone. However, scientific research in the last 20 years has come a long way to identify many common factors that contribute to our happiness. Money (or income) is one of them. When we encounter the questions if feeling happy is related with money or not, some will use their opt in favour of money. However, the others, including me, claim money has a tiny role and comes not in the leading positions when compared with other effects.

In its simplest form, we can say: Yes, money is affecting our happiness. However, after this sentence, I can add a sentence that starts with “but’’.

What dimension of happiness is affected by money? There are many answers to this question. Because different theories and different disciplines (such as psychology, economy) can define in different ways. However, there is a general definition that is now accepted in the field of psychology. In fact, if we look at the dimensions of happiness rather than definition, we can better understand this concept.

Happiness is a concept with both emotional and cognitive dimensions. Emotionally feeling good means experiencing positive emotions frequently rather than experiencing negative emotions less often. Some experts define this as emotional balance. In the cognitive sense, happiness reflects the person’s perception of his / her life as satisfying. Many studies show that emotional and cognitive aspects of happiness can be affected by different factors. Money is one of these factors. For example, the monthly income of a person is important for life satisfaction and does not show a meaningful relationship with the emotional dimension of happiness. So as our income increases, we are beginning to perceive our lives as more satisfying. However, increasing income does not affect our daily emotional state much. Therefore, it may be important to know in what sense our income makes us happy.

If the quantity of money increases, does your level of happiness also increase? The answer to this question can be summarized as follows: While more money does not bring happiness, little money can make you feel emotionally worse. Therefore, making less money than a certain income level can reduce our quality of life. On the other hand, excess money after reaching a certain economic standard can increase our life satisfaction. The surplus money that comes after reaching a certain economic standard may not be emotionally happy. For example, in a study conducted by Kahneman and Deaton in 2010, it was seen that the winners of more than US $ 75,000 a year in the US compared to the winners of 75,000 US Dollars and the winners above this figure were not happier, or rather, their daily emotional states did not change.

In fact, the main point here is that if our earnings are enough to capture the living standards of our own, then this encourages us to feel good. However, gaining more than this income does not give us any extra happiness. In other words, I would not be very happy if I made so much money, it might not be meaningful to make guesses. Connecting our happiness to money may leave us completely powerless. Because when we get it and catch it, we feel happy but then we start searching for more.

Why is earning a lot of money problem for happiness? After a certain level of income (I said this is an average of $ 75,000 a year for America), there are a few reasons why money doesn’t make us happy in the emotional sense after a certain amount of money. One of these is that when people earn more money, people start to feel less gratitude for small things. There are also researches that support the fact that people can not really be happy with some tiny things as they earn more money. Another reason is that as income increases, people stop doing activities that will make them feel good in everyday life. For example, people with high incomes spend more time on working, shopping, child care or other obligatory jobs than being interested in socializing or hobbies or leisure activities that make them feel good. This can restrict their happiness.

How would spending money make us happy? Not having enough money is enough for a good life. The relationship between money and happiness is that a high income contributes to our happiness only when we spend it for those who need it or to buy gifts for our loved ones. For example, in a series of research by Professor Dunn and his friends, it shows that when university students spend about $ 10 or $ 20 of money to buy something for someone else, they feel better than spending time for themselves. Other studies show that they feel better when they use a certain amount of money given to them to experience experiences such as traveling or a little trip. His research in many rich and poor countries also shows that person is happier when almost everyone pays his / her money to a charity. Briefly, research tells us how our use of money is effective in our happiness.

Well, why do we choose to spend money for an article if it makes us happier to spend money for an experience or for someone else? One of the reasons for this is that our experiences are temporary and we think that what we buy is more permanent. For example, instead of spending money to go on a concert or a trip, we can choose to buy a new television which we think will be more permanent. So again, we can make mistakes when guessing what makes us happy.

Of course the outcome is not to spend our money for others and not to spend money. It is important for our happiness and life satisfaction to meet our own needs. It may not make sense to give our money to others in debt. I’ll talk about the details of the debt in the future.

Does it really make you happy to have something new? As I said, we’re pretty bad at predicting what makes us happy. We think we will be very happy when we have a new phone. So when our happiness increases with a new event, situation or something that we just have, we get used to the good feelings that we have experienced, and after a while we return to our old happiness level. Therefore, a new dress we bought brings a short time of happiness, and after a few days or even a few hours, we realize that we are not so happy or that our happiness lasts shorter than we expected.

Experiences are not like that. When we have a trip, a concert or a cinema experience, these experiences can help us to meet our psychological needs and make us feel better for longer. Because experiences are usually things we share with others, which brings us closer to others. We know that this kind of interpersonal relations has an important place in our happiness. Meeting the need for bonding with others is an experience that makes us feel good. This does not mean that the things we buy will not make us happy or give up on doing so. In fact, it is important to know that we are going to make a mistake when we guess what makes us happy. Moreover, we must be aware that our happiness may not be so long when we have something we desire, and that we may be disappointed that we are not happy again after we have reached the things we have been connected.

Does saving money make you happy? Our debts have a negative impact on our happiness. On the other hand, having an accumulation to keep us safe in the economic sense can contribute to our happiness. In fact, the debt causes conflicts in marriage and therefore negatively affects the happiness of couples. The negativity of being indebted has a stronger impact than the happiness of our experience. In other words, it may not make us happy to take a trip in debt and borrow again; The stress of debt can be more effective than the beauty of our experiences.

How accurate is it to compare ourselves with others? Another important factor in the relationship between money and happiness is relative income. Many people prefer to compare their earnings with the earnings of those around them (usually their peers). This situation, which is frequently seen especially among white-collar people, is not very useful. Research shows that the happiness of the group or the person we are comparing decreases as our income increases. But this is not always valid for everyone. For example, when comparing income in the early part of working life has a positive effect, a similar comparison in later times may adversely affect happiness. People’s income comparison with others at a young age and in their careers may be positive in terms of predicting their future earnings and increasing their motivation. However, the comparison of income after coming to a certain position may adversely affect happiness as it may lead to negative thoughts about the future.

On the other hand, according to the results of our research, it is better to see that our income is much more than one of our level (or our peers in general), especially in terms of career. However, social comparisons often rebound and leave a negative impact. Therefore, I cannot say that economic comparisons are very healthy.

Furthermore, your income from the past, your income today and the income you expect in the future can be quite important when looking at the relationship between money and happiness. Now it’s better to win more than we did in the past. I already mentioned above how the comparison affects happiness. If we are going to make us happy, we will be able to accept this idea even if we know that we won’t earn 8 billion a month. So even if it is not rational, we can hold onto a thought that makes us happy. For example, it is quite useful to appreciate what we have in economic terms and to remind them often. A materialist lifestyle may have negative consequences for psychological health. For example, when we look at America, people have more things (more cars or electronic goods per capita) compared to 50 years ago, but are they happier in the last 50 years? No. There is even the fact that they owe more. Especially nowadays it is quite natural to have more things to shop, to have more things and to take part in consumer culture. People may need it. However, it can affect our quality of life and relations badly. The life satisfaction of the people who make the habit of looking for riches decreases and they are less happy during the day.

In short, I can say that constantly thinking of making more money and looking for wealth, wishing to have more make us unhappy. Money is always a need but only enough to lead a good life. However, some people have different thoughts on this subject and these thoughts are actually confusing. For example, some say that expecting an increase in our financial situation has a positive impact on both general life satisfaction and economic satisfaction. So in the future – compared to today – we expect to be in a good economic situation, in other words, it is good to think optimistically about it. The financial situation that individuals think that they will have in the present and in the future contributes to their happiness. Another thing is that if there is an unexpected positive change in our income, our life satisfaction increases but in case of an unexpected negative change in our income, our life satisfaction is adversely affected. In other words, if we make an expectation error about our future financial expectations, this affects our life satisfaction badly.

What about comparing wealthy and prosperous countries with poor ones? I think that welfare countries are happier. Developed countries like Denmark, Finland, Norway and Canada are the happiest countries. Poor African countries appear to be at the end of the list. However, it should be kept in mind that the average levels of happiness in the country are taken into account. So there are unhappy people in rich countries, happy people in poor countries. In addition, while thinking about this issue in the framework of the above, it would be appropriate to make an evaluation. If we look at countries, the average income level is important for happiness and life satisfaction. But income, or money, is not enough to explain the difference in happiness between countries. In addition to income, factors such as democracy, social rights, human rights, security and trust are important factors in the level of general happiness of the countries.

As a consequence, the relationship between money and happiness is not that simple. Yes, money makes a sense of happiness, but there are many factors that prevent or allow it. Therefore, it is not quite right to make a comment without taking into account the circumstances and conditions. I believe that we can encourage our happiness for what we have. Because we know that we adapt to almost every situation. When we get a success, we are happy when we buy an item we want; but after a while we get used to it and we can return to our old level of happiness again. But it is also possible to slow down this harmony, or to be more realistic.

Work cites:

• https://wws.princeton.edu/sites/default/files/content/docs/news/Happiness_Money_Summary.pdf
• https://news.harvard.edu/gazette/story/2008/04/money-spent-on-others-can-buy-happiness/
• https://www.nytimes.com/2006/02/08/health/materialism-is-badfor-you-studies-say.html

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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.

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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.

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Money Does Not Always Buy Happiness, but Are Richer People Less Happy in Their Daily Lives? It Depends on How You Analyze Income

Laura kudrna.

1 Institute of Applied Health Research, University of Birmingham, Birmingham, United Kingdom

Kostadin Kushlev

2 Department of Psychology, Georgetown University, Washington, DC, United States

Associated Data

Publicly available datasets were analyzed in this study. These data can be found at: https://www.atusdata.org (The ATUS extract builder was used to create the ATUS dataset, see Hofferth et al., 2017 ). GSOEP data were requested from https://www.diw.de/en/diw_02.c.222516.en/data.html , see Richter and Schupp, 2015 .

Do people who have more money feel happier during their daily activities? Some prior research has found no relationship between income and daily happiness when treating income as a continuous variable in OLS regressions, although results differ between studies. We re-analyzed existing data from the United States and Germany, treating household income as a categorical variable and using lowess and spline regressions to explore nonlinearities. Our analyses reveal that these methodological decisions change the results and conclusions about the relationship between income and happiness. In American and German diary data from 2010 to 2015, results for the continuous treatment of income showed a null relationship with happiness, whereas the categorization of income showed that some of those with higher incomes reported feeling less happy than some of those with lower incomes. Lowess and spline regressions suggested null results overall, and there was no evidence of a relationship between income and happiness in Experience Sampling Methodology (ESM) data. Not all analytic approaches generate the same results, which may contribute to explaining discrepant results in existing studies about the correlates of happiness. Future research should be explicit about their approaches to measuring and analyzing income when studying its relationship with subjective well-being, ideally testing different approaches, and making conclusions based on the pattern of results across approaches.

Introduction

Does having more money make someone feel happier? The answer to this longstanding question has implications for how individuals live their lives and societies are structured. It is often assumed that more income brings more happiness (with happiness broadly defined herein as hedonic feelings, while recognizing closely related constructs, including satisfaction and eudaimonia; Tiberius, 2006 ; Angner, 2010 ; Dolan and Kudrna, 2016 ; Sunstein, 2021 ). In many aspects of policy, upward income mobility is encouraged, and poverty can result in exclusion, stigmatization, and discrimination by institutions and members of the public. More income provides people with opportunities and, sometimes, capabilities to consume more and thus satisfy more of their preferences, meet their desires and obtain more of what they want and need ( Harsanyi, 1997 ; Sen, 1999 ; Nussbaum, 2008 ). These are all reasons to assume that higher income will bring greater happiness—or, at least, that low income will bring low happiness.

Some research challenges the assumption that earning more should lead to greater happiness. First, because people expect that more money should make them happier, people may feel less happy when their high expectations are not met ( Graham and Pettinato, 2002 ; Nickerson et al., 2003 ) and they may adapt more quickly to more income than they expect ( Aknin et al., 2009 ; Di Tella et al., 2010 ). Second, since the 1980s in many developed countries, the well-educated have had less leisure time than those who are not ( Aguiar and Hurst, 2007 ) and people living in high-earning and well-educated households report feeling more time stress and dissatisfaction with their leisure time ( Hamermesh and Lee, 2007 ; Nikolaev, 2018 ). The quantity of leisure time is not linearly related to happiness, with both too much and too little having a negative association ( Sharif et al., 2021 ). Evidence also shows that people with higher incomes spend more time alone ( Bianchi and Vohs, 2016 ). The lower quality and quantity of leisure and social time of people with higher incomes may, in turn, negatively impact their happiness, especially given there are strong links between social capital or “relational goods” and well-being ( Helliwell and Putnam, 2004 ; Becchetti et al., 2008 ).

At the same time, some—but not all—evidence suggests that working class individuals tend to be more generous and empathetic than more affluent individuals ( Kraus et al., 2010 ; Piff et al., 2010 ; Balakrishnan et al., 2017 ; Macchia and Whillans, 2022 ), and such kindness toward others has been associated with higher well-being ( Dunn et al., 2008 ; Aknin et al., 2012 ). Relatedly, psychological research suggests that people with lower socioeconomic status have a more interdependent sense of self ( Snibbe and Markus, 2005 ; Stephens et al., 2007 ). It is, therefore, possible that people high in income have lower well-being because they experience less of the internal “warm glow” ( Andreoni, 1990 ) benefit that comes along with valuing social relationships and group membership. In theory, therefore, there are reasons to suppose that high income has both benefits and costs for well-being, and empirical evidence can inform the debate about when and whether these different perspectives are supported.

Empirical Evidence on Income and Happiness

The standard finding in existing literature is that higher income predicts greater happiness, but with a declining marginal utility ( Dolan et al., 2008 ; Layard et al., 2008 ): that is, higher income is most closely associated with happiness among those with the least income and is least closely associated with happiness for those with the most income. Recently, this finding has been qualified by studies showing that the relationship between income and happiness depends on how happiness is conceptualized and measured: as an overall evaluation of one’s life or as daily emotional states ( Kahneman and Deaton, 2010 ; Killingsworth, 2021 ). In this vein, authors Kushlev et al. (2015) found no relationship between income and daily happiness in the American Time Use Survey (ATUS), which has recently been found for other happiness measures, too ( Casinillo et al., 2020 , 2021 ) The finding from Kushlev et al. (2015) was replicated in the German Socioeconomic Panel Survey (GSEOP) by Hudson et al. (2016) , and in another analysis of the ATUS by Stone et al. (2018) .

Some research has focused specifically on the effect of high income on happiness. Kahneman and Deaton (2010) conducted regression analyses using a Gallup sample of United States residents, finding that annual income beyond ~$75K was not associated with any higher daily emotional well-being. Income beyond ~$75K, however, predicted better life evaluations. Using a self-selecting sample of experiential data in the United States, Killingsworth (2021) conducted piecewise regressions and found no evidence of satiation or turning points. Jebb et al. (2018) fit regression spline models to global Gallup data, showing that the satiation point in daily experiences found by Kahneman and Deaton (2010) was also apparent in other countries. Unlike Kahneman and Deaton (2010) , however, Jebb et al. (2018) also found evidence of satiation in people’s life evaluations, and even some evidence for “turning points”—whereby richer people evaluated their lives as worse than some of those with lower incomes. A satiation point in life evaluations was also found in European countries at around €28K annually ( Muresan et al., 2020 ).

This pattern of findings could partly depend on the choice of analytic strategy. In analyses of the same dataset as Jebb et al. (2018) but using lowess regression, researchers found no evidence of satiation or turning points in the relationship between income and people’s life evaluations ( Sacks et al., 2012 ; Stevenson and Wolfers, 2012 ). These conflicting results suggest that the effect of analytic strategy on results deserves a closer examination.

The Research Gap

While there has been much research on income and happiness, including according to how happiness is defined and measured, we are not away of any studies that have compared the relationship between income and happiness according to how income is defined and measured. We propose that the relationship between income and happiness may depend not only on how happiness is measured, but also on how income is measured and analyzed. To improve our knowledge of the relationship between income and happiness, this paper, we focus on nonlinearities in the relationship between income and happiness and re-analyze the ATUS data used by Kushlev et al. (2015) and Stone et al. (2018) , as well as the GSOEP data used by Hudson et al. (2016) . Specifically, while Kushlev et al. (2015) analyzed income as a continuous variable in the ATUS, we treat income the way it was measured: as a categorical variable. We compare these results to GSOEP data where we re-code the original continuous measure of income into categorical quantiles. To further explore nonlinearities in the relationship between income and happiness, we also conduct local linear “lowess” and spline regression analyses.

We chose to re-analyze these data to address the question of differences in the relationship between income and happiness according to the measurement and analysis of income because the ATUS and GSOEP provide nationally representative data on people’s feelings as experienced during specific “episodes” of the day after asking them to reconstruct what they did during the entire day. Thus, compared to data from Gallup, which measures affect “yesterday,” measurements in the ATUS are more grounded in specific experiences, and therefore, less subject to recall bias ( Kahneman et al., 2004 ). And unlike Gallup, which uses more crude, dichotomous (“yes-no”) response scales, ATUS measures happiness along a standard seven-point Likert-type scale. In the GSOEP, we were also able to analyze data from the Experience Sampling Methodology (ESM), which asks people how they are feeling during specific episodes during the day and, as such, is even more grounded in specific experiences.

Measuring and Analyzing Income

The original ATUS income variable—family income—contains 16 uneven categories (see Table 1 ). For example, Category 11 has a range of ~$10K, whereas Category 14 has a range of ~$25K. The increasingly larger categories are designed to reflect declining marginal utility as an innate quality of income. Based on this, Kushlev et al. (2015) analyzed income as a continuous variable using the original uneven categories. Continuous scales, however, assume equal intervals between scale points—a strong assumption to make for the relatively arbitrary rate of change in the category ranges. Is increasing one’s income from $20,000 to $25,000 really equidistant to increasing it from $35,000 to $40,000 ( Table 1 )? And can we really assume, for example, that adding $5,000 of additional income to $35,000 is the same as adding $10,000 of additional income to $40,000? Recognizing this issue, income researchers have adopted alternative strategies. For example, Stone et al. (2018) took the midpoints of each category of income, and then log-transformed it. Thus, they transformed the categorical measure of income into a continuous measure. This approach produced results for happiness consistent with the findings of Kushlev et al. (2015) .

The original categories of income in the ATUS family income measure with number of individuals in each income category in the ATUS 2010, 2012, and 2013 well-being modules.

Complete cases only for all variables analyzed.

Both the increasing ranges of the income scale itself and its log-transformations reflect an assumed declining marginal utility of income: They treat a given amount of income increase at the higher end of the income distribution as having less utility than the same amount at the lower end of the distribution. But by subsuming income’s declining utility in its very measurement (or transformation thereof), it becomes difficult to interpret a null relationship with happiness. In other words, we might not be seeing a declining marginal utility of income reflected on happiness because the income variable itself reflects its declining utility.

Even when the income variable itself does not reflect its declining utility, a null relationship between income and daily experiences of happiness has been observed. Hudson et al. (2016) used GSOEP, which contains a measure of income that is continuous in its original form. Whether analyzing this income measure in its raw original form or in transformed log and quadratic forms, a null relationship with happiness was observed. This approach, however, does not consider whether there might be nonlinear/log/quadratic turning or satiation points at higher levels of income—an issue also applicable to previous analyses of ATUS ( Kushlev et al., 2015 ; Stone et al., 2018 ). This is important because there are theoretically both benefits and costs to achieving higher levels of income that could occur at various levels of income; however, this possibility has not yet been fully explored in ATUS or GSOEP data.

In sum, past research using ATUS has treated categorically measured income as a continuous variable, either assuming equidistance between scale points or attempting to create equidistance through statistical transformations. By doing so, however, researchers may have statistically accounted for the very utility of income for happiness that they are trying to test. In both ATUS and GSOEP, the question of whether there might be satiation and/or turning points at higher levels of income has not been fully considered. The present research explores whether treating income as a categorical variable in both ATUS and GSOEP would replicate past findings or reveal novel insights, focusing on possible nonlinearities in the relationship between income and happiness.

Materials and Methods

We used data from ATUS well-being modules in 2010, 2012, and 2013. To facilitate future replications of this research, the ATUS extract builder was used to create the dataset ( Hofferth et al., 2017 ). 1 The ATUS is a repeated cross-sectional survey and is nationally representative of United States household residents aged 15 years and older. Its sampling frame is the Current Population Survey (CPS), which was conducted 2–5 months prior to the ATUS. Some items in the ATUS come from the CPS, including the household income item that we analyze.

Data from the GSOEP come from the Innovation Sample (IS), which is a subsample of the larger main GSOEP ( Richter and Schupp, 2015 ). The main GSOEP and the IS are designed to be nationally representative. The IS contains information on household residents aged 17 years of age and older. We used two modules from these data: the 2012–2015 DRM module, which is a longitudinal survey, and the 2014–2015 ESM module.

Outcome Measures

In ATUS, participants were called on the phone and asked how they spent their time yesterday: what activities they were doing, for how long, who they spent time with and where they were located. This information was used to create their time use diary. A random selection of three activities were taken from these diaries and participants were asked how they felt during them. The feelings items were tired, sad, stressed, pain, and happy. Participants were also asked how meaningful what they were doing felt.

In GSOEP, participants were interviewed face to face for the DRM questions and through smartphones for the ESM questions. In the DRM, as in the ATUS, they were asked how they spent their time yesterday and, for a random selection of three activities, they were asked further details about how they felt. In the ESM, participants were randomly notified on mobile phones at seven random points during the day for around 1 week. As in the DRM, they were asked how they were spending their time at the point of notification, as well as how they felt. Participants in both ESM and DRM samples were asked about whether they were feeling happy, as well as other emotions such as sadness, stress, and boredom.

The focus of this research is on the happiness items from both the ATUS and GSOEP to highlight differences according to the treatment of the independent measure of income rather than differences according to the dependent outcome of emotional well-being.

Data were analyzed in STATA 15 and jamovi. The Supplementary Material S1 file contains the STATA command file for the main commands written to analyze the data. In both ATUS and GSOEP, OLS regressions were conducted with happiness as the outcome measure and income as the explanatory measure. Following Kushlev et al. (2015) and Hudson et al. (2016) , the average happiness across all activities each day was taken to create an individual-level measure. Because the GSOEP DRM sample contained multiple observations across years, the SEs were clustered at the individual level for models using this dataset.

The treatment of income differed according to the dataset because income was collected differently in each dataset. In the ATUS, income was first analyzed in continuous, log, and quadratic forms in OLS regressions, as in other research ( Kushlev et al., 2015 ; Hudson et al., 2016 ). Next, it was analyzed as a categorical variable with 16 categories, preserving the identical format that it was originally collected in from the CPS questionnaire.

In GSOEP, the income variable in the dataset is provided in continuous form because participants reported their monthly income as an integer. To compare to the ATUS results, 16 quantiles of income were created and analyzed in GSOEP DRMs (see Table 2 - note that there were insufficient observations to conduct these analyses with GSOEP ESMs). This income variable was also analyzed in continuous, log, and quadratic forms.

The range and number of person-year observations of the GSOEP Income 4 variable divided into 16 quantiles.

Omnibus F -tests and effect sizes ( n 2 ) are also reported to compare the categorical, continuous, log, and quadratic approaches.

We conducted lowess and spline regressions to further investigate possible nonlinearities in the relationship between income and happiness. For the lowess regressions, the smoothing parameter was set at of 0.08. For the regression splines, we fitted knots at four quartiles and five quantiles of income. We also used the results of OLS regressions treating income as a categorical variable, as well as the results of the lowess regression treating income as continuous, to fit knots at pre-specified values of income (where these analyses suggested there could be turning and/or satiation points).

Complete case analyses were conducted with 33,976 individuals in ATUS, 6,766 individuals in German DRMs, and 249 individuals in German ESMs. There was item-missing data in some samples (ATUS, 1.7% missing; GSOEP DRMs, 8.2% missing; GSOEP ESMs data, and 6.0% missing). We make analytical and not population inferences and therefore do not use survey weights ( Pfeffermann, 1996 ).

Results are presented without and with controls for demographic and diary characteristics. Following Kushlev et al. (2015) , Hudson et al. (2016) , and Stone et al. (2018) , these controls were age, gender, marital status, ethnic background, 2 health, 3 employment status, children, 4 and whether the day was a weekend. We also control for the year of the survey in ATUS DRM data to address the issue that our results are not due to new data but rather how we treat the income variable.

The list of variables we use in analyses are in Table 3 .

List of variables used in analyses in ATUS and GSOEP.

In both ATUS and GSOEP, daily happiness was analyzed using a 0–6 scale (in GSOEP scale points 1–7 were recoded to 0–6 to match ATUS). The ATUS mean happiness was 4.38 (SD = 1.33). The GSOEP DRM mean happiness was 2.91 (SD = 1.46), and the GSOEP ESM mean happiness was 2.65 (SD = 1.03).

The magnitude of our results can be considered in the context of effect sizes from other research on demographic characteristics and daily happiness ( Kahneman et al., 2004 ; Stone et al., 2010 ; Luhmann et al., 2012 ; Hudson et al., 2019 ). For example, the effect size for the relationship between age and daily experiences of happiness was 0.16 in Stone et al. (2010) . Our effect sizes range from 0.06 to 0.37. Throughout, we focus on coefficients, their 95% CIs, and visualizations of these coefficients and CIs, rather than on their statistical significance ( Lakens, 2021 ). The purpose of this is to highlight how analytic treatments of income affect the magnitude and precision of the relationship between income and happiness.

When treating the 16-category family income variable as continuous in OLS regressions, there was no substantive relationship between income and happiness as in other prior research ( Kushlev et al., 2015 ; Hudson et al., 2016 ; Stone et al., 2018 ). Out of the linear, squared, and log coefficients without and with controls, the largest and most precise coefficients were with controls; for linear income it was ( b  = −0.006, 95% CI = −0.01, −0.002), squared income ( b  = −0.0001, 95% CI = 0.0003, 0.00006), and log income ( b  = −0.03, 95% CI = −0.05, 0.001). The omnibus F -test (without controls) for linear income was F  = 0.28, n 2  = 0.000008 (95% CI = 0.00, 0.0002), for income squared was F  = 1.60, n 2  = 0.00005 (95% CI = 0.00, 0.0003), and for log income was F  = 0.23, n 2  = 0.000006 (95% CI = 0.00,0.0002).

The categorization of income focused attention on those with incomes of $35–40K, who appeared substantively happier than some of those with higher incomes (and lower incomes; see Figure 1 ). For example, with controls, those with incomes of $35–40K appeared happier relative to those with incomes of $150K+ ( b  = 0.16, 95% CI: 0.08, 0.24) and $100–150K ( b  = 0.14, 95% CI: 0.07, 0.221). The omnibus test for categorical income was F  = 1.61, n 2  = 0.007 (95% CI = 0.00, 0.0009).

Predicted values of average individual happiness in the American Time Use Survey (ATUS) at the 16 values of the family income variable without and with controls. Covariates at means. 95% CI.

Results from regression splines and a lowess regression suggested null results overall (see Figure 2 ). Further details of the analyses are in Supplementary Material S2 .

Line graph of predicted values from lowess regressions explaining variance in happiness from income treated as a continuous variable in ATUS.

When treating the continuous household income variable as continuous (in €10,000s) in OLS regressions, there was no substantive relationship between income and happiness as in other prior research ( Kushlev et al., 2015 ; Hudson et al., 2016 ; Stone et al., 2018 ). The association with the largest magnitude and most precision was for log income with controls ( b  = −0.08, 95% CI = −0.18, 0.01). 5

As in ATUS, treating the variable as categorical suggested some relationships between income and happiness. These results drew attention to those third quantile (~€14–18K), who seemed happier than those both higher and lower in income (see Figure 3 ). For example, with controls, they were happier than those in quantiles 13 (€42.6–48K, b  = 0.46, 95% CI = 0.25, 0.67), seven (~€24–27K, b  = 0.34, 95% CI = 0.13, 0.56), and one (€2.40–11,520K, b  = 0.28, 95% CI = 0.05, 0.51). The omnibus test for categorical income was F  = 4.00, n 2  = 0.009 (95% CI = 0.003, 0.01), whereas the omnibus test for linear income was F  = 0.09, n 2  = 0.00001 (95% CI = 0.00, 0.0007). The omnibus for log income was F  = 1.42, n 2  = 0.0002 (95% CI = 0.00, 0.0001) and for income squared it was F  = 0.96, n 2  = 0.0001 (95% CI = 0.00, 0.001).

Predicted values of average person-year happiness from GSOEP DRMs at 16 quantiles of income (Income 4) without and with controls. Covariates at means. 95% CI.

The lowess and spline regressions suggested null results overall, as the coefficients were small in magnitude (see Figure 4 ). Further details of the analyses are in Supplementary Material S3 .

Line graph of predicted values from lowess regressions explaining variance in happiness from income treated as a continuous variable in GSOEP DRMs at 16 quantiles of income.

There was no evidence to suggest any substantive association between income and happiness in ESM data for linear income, income squared, log income, in the lowess regressions, or regression splines. A visualization of the lowess results are in Figure 5 and further details of the analyses are in Supplementary Material S4 .

Results of local linear “lowess” regression from GSOEP Experience Sampling Methodology (ESM) data with happiness as the outcome and continuous annual income as the explanatory variable.

The omnibus F -test for linear income was F  = 0.53, n 2  = 0.002 (95%CI = −0.00, 0.03), and for log income it was F  = 0.12, n 2  = 0.0005, 95%CI = 0.00, 0.02. For income squared it was F  = 0.63, n 2  = 0.003, 95%CI = 0.00 0.03.

Is income creating a signal in these data on daily experiences of happiness, or is it all simply noise? The present results suggest that whether income can be concluded as being associated with daily experiences of happiness may depend on how income is analyzed. When income in ATUS is analyzed in its original, categorical form, there is some evidence that some people with higher incomes feel somewhat less happy than some of those with lower incomes. When the continuous income variable in GSOEP is split into categories, a similar pattern is observed. This is not inconsistent with the findings of Kushlev et al. (2015) , Hudson et al. (2016) , and Stone et al. (2018) , who found no relationship between income and daily feelings of happiness in the same data when income was analyzed as a continuous variable. It simply illustrates that a relationship between income and happiness could be interpreted when treating income categorically rather than continuously.

There are at least three possible interpretations to our overall results. One interpretation tends toward conservative. We conducted multiple comparisons of many transformations of income, which might inspire some to question whether we should have accounted for this in some way by adjusting for multiple comparisons. Although we found some evidence of differences in happiness according to income, such an adjustment might lead to an overall null conclusion when characterizing the relationship between income on happiness. A second interpretation is more generous. Within this perspective, one might emphasize the fact that because our income measures were correlated, no correction for multiple comparisons was required. It could then be argued that because we found some evidence for the relationship between income on happiness, there is good evidence that the overall effect is not null. A more moderate perspective, and the one adopted in this paper, is that because the overall pattern of our results showed mixed null and nonnull results, we can make an overall conclusion of some differences in happiness according to income. We also noticed that equivalizing income in the German data strengthened the relationship of income and happiness, further supporting the conclusion of some differences—and that the analytic treatment of income matters.

Based on the moderate perspective, we conclude that there is very little evidence of any relationship between income and daily experiences of happiness—and any relationship that does exist would suggest higher income could be associated with less happiness. The results do not support the results of Sacks et al. (2012) or Killingsworth (2021) , where a greater income was associated with greater happiness, and there were no satiation or turning points (see also Stevenson and Wolfers, 2012 ). These results are more aligned with Kahneman and Deaton (2010) , who found a satiation point in the relationship between income daily experiences of happiness, researchers finding no association between income and happiness ( Kushlev et al., 2015 ; Jebb et al., 2018 ; Casinillo et al., 2020 , 2021 ), who found that higher income can be associated with worse evaluations of life. We suggest the analytic strategy for income could contribute to explaining discrepant results in existing literature, and researchers should be clear about the approaches they have tested, although we acknowledge that sampling differences could play a role, too.

Overall, the results were broadly consistent between countries because there was no substantive relationship between income and happiness when income was treated continuously but there appeared to be relationships when treating income categorically. Despite a similar overall pattern in the income results, there were other difference between countries. German residents rated their happiness as lower than United States residents (a difference of ~1.5 scale points out of seven). This could be because of different interpretations of the word “happiness” in Germany and the United States. The word for happiness in German used in the survey— glück —can mean something more akin to lucky or optimistic—which is different from the meaning of word “happy” in the United States. Despite this linguistic difference, those with higher incomes were still less happy than some of those with lower incomes in both samples.

Limitations

One limitation to our results is the representativeness of the income distribution. Household surveys like those that we used do not tend to capture the “tails” of the income distribution very well: People in institutions and without addresses are excluded from these sample populations, which omits populations such as those living in nursing homes and prisons, as well as the homeless. Moreover, people do not always self-report their income accurately due to issues such as social desirability bias ( Angel et al., 2019 ). Existing studies that have focused on those with very low incomes do tend to find that low income is associated with low happiness ( Diener and Biswas-Diener, 2002 ; Clark et al., 2016 ; Adesanya et al., 2017 ). In ATUS, the highest household income value available was $150K, whereas in GSOEP it was €360K. Thus, it is not always clear whether the very affluent, such as millionaires, are represented in these samples ( Smeets et al., 2020 ). Overall, our results cannot be taken as representative of people who are very poor or rich and should not be interpreted as such.

Another limitation is that the present results cannot be interpreted casually because there has been no manipulation of income in these data nor exploration of mechanisms and there was no longitudinal data in ATUS. As discussed by Kushlev et al. (2015) , there are issues such as reverse causality. Here, however, some of our results potentially suggest an alternative reverse causality pathway, whereby less happy people may select into earning more income. Because the counterfactual is not apparent—we do not know how happy people with high incomes would be without their higher income—it could also be that those with high incomes would be even less happy than they currently are if they had not attained their current level of income. In other words, people with high incomes may have started out as less happy in the first place and be even less happy if they did not have high incomes.

A further limitation is the time period of the data, especially that they were collected prior to the COVID-19 pandemic. This could be an issue because it is possible that the relationship between income and daily experiences of happiness has changed, such as due to the exacerbation of health inequalities and restrictions on freedom of movement due to nationwide lockdowns. Our study does not provide any information on the longer-term and health and well-being consequences of both COVID-19 itself and the policy response to COVID-19 ( Aknin et al., 2022 ). As one example, access to green space, which has health and well-being benefits, is lower among those with low income, and this mechanism between income and happiness may have become more salient during COVID-19 ( Geary et al., 2021 ). Overall, it is important to consider the regional, political, and socioeconomic contexts in which income is attained to understand its relationship with well-being, including levels of income in reference groups such as neighbors, friends, and colleagues ( Luttmer, 2005 ; De Neve and Sachs, 2020 ). It would be important to replicate the results in this research with more recent data to address the limitation that the data we used are not recent, considering our broader point that the measurement and analysis of income should be considered as carefully as the measurement and analysis of happiness.

Future Directions

This research points to several directions for future research. One direction relates to data and measures: Nonlinearities in the relationship between income and happiness could be examined using time use data from other countries, considered between countries and/or within countries over time ( Deaton et al., 2008 ; De Neve et al., 2018 ), and investigated for measures of emotional states other than happiness ( Piff and Moskowitz, 2018 ). In general, our results suggest that researchers should pay attention to how income is measured and analyzed when considering how it is related to happiness, which complements findings from other research that the way happiness is measured and analyzed is important ( Kahneman and Deaton, 2010 ; Jebb et al., 2018 ).

Future research could also explore mechanisms that may explain our findings. In addition to those mentioned in the Introduction—expectations ( Graham and Pettinato, 2002 ; Nickerson et al., 2003 ), time use ( Aguiar and Hurst, 2007 ; Hamermesh and Lee, 2007 ; Bianchi and Vohs, 2016 ; Nikolaev, 2018 ; Sharif et al., 2021 ); generosity ( Dunn et al., 2008 ; Kraus et al., 2010 ; Piff et al., 2010 ; Aknin et al., 2012 ; Balakrishnan et al., 2017 ; Macchia and Whillans, 2022 ), and sense of self ( Snibbe and Markus, 2005 ; Stephens et al., 2007 )—another is the identity-related effect of transitioning between socioeconomic groups. Though one might expect upward mobility to be associated with greater happiness, research suggests that some working class people do not wish to become upwardly mobile because it could lead to a loss of identity and change in community ( Akerlof, 1997 ; Friedman, 2014 ). Indeed, upward intergenerational mobility is associated with worse life evaluations in the United Kingdom—though not in Switzerland ( Hadjar and Samuel, 2015 ), although recent findings show substantial negative effects of downward mobility, too ( Dolan and Lordan, 2021 ). Over time, therefore, the degree of mobility in a population could influence the relationship between income and happiness in both positive and negative directions.

Additionally, social comparisons could drive the effects of higher income on happiness. Higher income might not benefit happiness if one’s reference group—that is, the people to whom we compare or have knowledge of in some form ( Hyman, 1942 ; Shibutani, 1955 ; Runciman, 1966 )—changes with higher socioeconomic status. As income increases, people might compare themselves to others who are also doing similarly or better to them, and then not feel or think that they are doing any better by comparison—or even feel worse ( Cheung and Lucas, 2016 ). This is one of the explanations for the well-known “Easterlin Paradox” ( Easterlin, 1974 ), which suggests that as national income rises people do not become happier because they compare their achievements to others. The paradox is debated ( Sacks et al., 2012 ). Additionally, some research shows that it is possible to view others’ greater success as one’s own future opportunity and for upward social comparisons to then positively impact upon well-being ( Senik, 2004 ; Davis and Wu, 2014 ; Ifcher et al., 2018 ). As with the role of mobility in the relationship between income and happiness, it is unclear whether the role of social comparisons would create a positive or negative impact over time and future research could explore this.

Final Remarks

Overall, our results provide some evidence that individual attainment in terms of income may not equate to the attainment of individual happiness—and could even be associated with less daily happiness, depending upon how income is measured and analyzed. These results suggest that how income is associated with happiness depends on how income is measured and analyzed. They provide some support to the idea that financial achievement can have both costs and benefits, potentially informing normative discussions about the optimal distribution of income in society.

Data Availability Statement

Ethics statement.

Ethical review and approval was not required for the study on human participants in accordance with the local legislation and institutional requirements. Written informed consent from the participants’ legal guardian/next of kin was not required to participate in this study in accordance with the national legislation and the institutional requirements.

Author Contributions

LK and KK contributed to conception and design of the study. LK organized the data, performed the statistical analysis in STATA, and wrote the first draft of the manuscript. KK performed additional statistical analysis in jamovi and wrote sections of the manuscript. All authors contributed to the article and approved the submitted version.

LK was supported by a London School of Economics PhD scholarship during early work and later by the National Institute for Health Research (NIHR) Applied Research Collaboration (ARC) West Midlands. The views expressed are those of the author(s) and not necessarily those of the NIHR or the Department of Health and Social Care.

Conflict of Interest

The authors declare that the research was conducted in the absence of any commercial or financial relationships that could be construed as a potential conflict of interest.

Publisher’s Note

All claims expressed in this article are solely those of the authors and do not necessarily represent those of their affiliated organizations, or those of the publisher, the editors and the reviewers. Any product that may be evaluated in this article, or claim that may be made by its manufacturer, is not guaranteed or endorsed by the publisher.

Acknowledgments

LK thanks Professor Paul Dolan and Dr Georgios Kavetsos for their support early on in conducting this research, as well as Professor Richard Lilford for insights about multiple comparisons.

1 https://www.atusdata.org

2 In the ATUS this was Hispanic and Black, in GSOEP this was German origin.

3 In the ATUS this was whether the respondent had any physical or cognitive difficulty (yes/no), in GSOEP this was self-rated general health (bad, poor, satisfactory, good, and very good).

4 In the ATUS this was presence of children <18 years in the household, in GSOEP this was number of children.

5 This association was stronger and more precise when equivalizing income (dividing by the square root of household size), b  = −0.16, 95%CI = −0.06, −0.27, underscoring the importance of transparency in the treatment of income.

Supplementary Material

The Supplementary Material for this article can be found online at: https://www.frontiersin.org/articles/10.3389/fpsyg.2022.883137/full#supplementary-material

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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]

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Home — Essay Samples — Literature — A Hunger Artist — Money Can’t Buy Happiness: Analysis Of The Examples From Literature

Money Can't Buy Happiness: Analysis of The Examples from Literature

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Money can't buy happiness, a neuroscientist explains why

We all need enough funds to cover our basic needs, but beyond that the connection between wealth and wellness is less clear.

Dean Burnett

"Money can’t buy you happiness" is either a widely accepted insight or a tired cliché. Is it right , though? Scientifically speaking, the answer is… mixed.

A recent study carried out at the University of Bath has once again looked at the relationship between income and happiness .

It seems that, up to a point and within a specific set of circumstances, money can buy happiness. But beyond that, the relationship between money and happiness becomes much looser and uncertain.

What makes us happy?

At the most immediate and fundamental levels, the things that make us happy, or at least the provoke a positive, reward response in our brains, are those that satisfy our basic biological needs. Put simply, we humans, living organisms, need many things to ensure our survival, such as food, water, air, sleep, and security. Our brain recognises these things as being ‘biologically significant’, so if we obtain them, we experience a sense of reward.

Because the human brain can make intuitive and abstract leaps, it can easily recognise that receiving money means we can now more easily obtain food/water/shelter etc. This, as a study carried out by the Wellcome Trust in 2007 found, can be both rewarding and motivational , two things that could fall under the umbrella of happiness.

However, this doesn’t mean ‘more money’ automatically means ‘more happiness’. Money may be recognised by our brains as biologically significant, but there’s an upper limit on how rewarding even biologically significant things can be. For example, eating food can often be pleasurable, but at some point you’ll be sated, after which point eating more causes actual discomfort. Same with drinking. Even things like shelter and security; build too many barriers around yourself and you can feel isolated and oppressed.

There’s also the phenomenon of habituation, where the fundamental parts of our brains learn to not react to things that occur predictably and reliably. As evidenced in a 2011 study carried out by Dr Ruth Krebbs at Ghent University, this is why things that are novel, as in surprising and unexpected, are often more rewarding than familiar things .

In many cases, the same thing happens with money. Receiving your regular pay is reassuring, but receiving unexpected money, even if it’s much less, often makes you much happier.

Also, when we actively and tangibly need it for our survival, obtaining money is very rewarding. But when we go beyond that point, when we’re ‘financially secure’ as they say, money can still be rewarding, but it’s power to make you happy is significantly reduced , a study carried out at San Francisco State University found. More psychological, experience-based stimuli (e.g. travelling, forging new relationships, helping others etc.) have a greater ability to make you happy.

Granted, in the modern world you usually need money to do all those things too, but this ultimately means money’s link to happiness is more indirect, as a means to an end, rather than directly rewarding in its own right.

Is there a threshold amount of money that can make us happy?

That there’s a certain cut-off amount of money where it stops making people has a lot of implications, particularly in the present day. With much talk of wage stagnation, rising prices, and trials of universal basic income becoming increasingly common, the question of how much money people need to be happy is an increasingly salient one.

Unfortunately, there can be no easy answer, at least not one that applies to all people equally, because the factors that determine how much money is ‘enough’ for security and happiness are highly subjective, and vary considerably from person to person.

Some people feel they’d be happy for life with surprisingly modest sums, others don’t think they’d ever feel they had ‘enough’ money. Studies carried out by researchers at the University of Bath have also found that these significant variations are even more apparent when you compare people from different cultures , suggesting the link between money and happiness is at least as much learned as it is ‘innate’.

But even within the same capitalist culture, people’s ideas about financial security can differ drastically, with people who have ample money sometimes being much less happy than those with far less money because they have more worries about.

Can too much money make us unhappy?

This introduces another factor; money can make you unhappy . Or reduce happiness in other ways. Studies have shown that being paid to do something you enjoy can make you less motivated to do it, suggesting it actively reduces potential happiness. This would explain why people are often reluctant to turn a hobby into a job, or actively regret doing so.

Also, in our modern world, money is not static. If we have more money than we strictly need, we don’t hoard a big pile of gold coins in our spare room like modern-day dragons. Money is fluid, often intangible, and typically ends up being tied up with things like investments, stocks, properties, savings accounts, and more.

All these things are subject to the whims of politico-economical factors and more, meaning the person whose money it is has less control over it and less certainty than if they’d gone for the ‘big pile of gold’ option. Loss of control and uncertainty are two reliable sources of stress and unhappiness for the human brain.

Ultimately, rather than “money can’t buy you happiness”, it might be better to say “money can buy you safety and security”, and these things make it easier for us to be happy. But there’s no direct one-to-one relation between money and happiness, and how it affects us ultimately depends on who we are and how we’ve been raised.

Read more about happiness:

• Is waving back at a stranger on a bridge a sign of happiness?
• National happiness mapped over the last 200 years
• Why does chocolate make us happy?
• Could being happier help you fight infectious disease?

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Home / Essay Samples / Life / Money / Can Money Buy Happiness? An Argumentative Analysis

Can Money Buy Happiness? An Argumentative Analysis

• Category: Life , Education
• Topic: Happiness , Money , Personal Statement

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