“Money can’t buy you happiness,” is a mantra we tell ourselves regularly, put on bumper stickers and even teach our children. But is it true?
Probably not, it turns out, as studies point to the positive correlation between income and levels of happiness. So having more money really will make us happier?
Somewhat, but there are certain important distinctions to make before we start blindly chasing dollar signs in hopes for inner bliss.
First, we’ll go over the research:
One of the first stabs at producing empirical data about money and satisfaction was a 2010 article in the New York Times that looked at consumption and how it relates to happiness.
The NYT writer annotated research that defined that categorized the top material things that produced happiness.
While you might venture a guess that the top categories that made people happy included big mansions, flashy sports cars, or priceless jewels, that wasn’t the case. In fact, the category that produced the highest reported levels of happiness was “Leisure Activities,” which included vacations, entertainment, sports and equipment used to enhance lifestyle like golf clubs, a surfboard or yoga mats.
In 2015, a study by Princeton University took the research into money and happiness much further, with fascinating revelations. The basic conclusion of this study was that happiness levels did rise as people earned more income and were in better financial situations, but only up until a point. In fact, after earning around $75,000 annual income, the effect on money on happiness had diminishing – and eventually, even negative – returns.
The study, conducted by economist Angus Deaton and psychologist Daniel Kahneman, was so vanguard in reversing societal conceptions that money can’t buy happiness that it eventually won a Nobel Prize for Economics.
By analyzing the responses of 450,000 Americans in a Gallup and Healthways survey, Deaton and Kahnerman were able to pinpoint two income metrics: $75,000 and $200,000.
It seems that for the average person, the more income we make, the happier we will feel. In fact, for every 10% more income they made, the higher they ranked for feelings of happiness – but only up to $75,000. After that, the levels of additional reported happiness will slow down drastically the more income we make.
Once people reached the $160,000 level of annual income, the effect of money on reducing negative emotions like stress, anxiety, and hopelessness, etc. – and replacing them with “happier” emotions – was greatly diminished. By the time the survey participants hit the $200,000 level of annual income, there was zero effect in reducing negative emotions and producing happiness. In fact, those negative feelings did start to reappear in greater proportion and happiness levels actually started to reverse in many cases.
The conclusion? Money does buy happiness, up to a point, probably because people had less financial stress, had the means to enjoy their lives more with experiences,
The study also found that about 85% of Americans – the vast majority – felt happiness every day regardless of their income. They also noticed that there were two measurable kinds of happiness: the day-to-day feelings that related to current mood and circumstances, and then the bigger-picture satisfaction and fulfillment with their life.
The study also found that people facing certain obstacles in life were less sad (and therefore, more happy we’d assume) the more income they earned. For instance, among divorced people, about 51% reported feeling sad or stressed the previous day if they made less than $1,000, but that number dropped to 24% if they earned more than $3,000 a month. Likewise, people with asthma that made less than 1k, 41% reported those negative feelings, versus only 22% in the higher income bracket.
Of course it’s important to note that these numbers just dealt on means of a large sample size, and other factors like culture, health, and the cost of living in their city or state influence the financial benchmarks.
Studies aside, this actually makes perfect sense.
Money itself might not make you happy, but it does afford you the opportunity to live a healthier, less stressed, more stable and comfortable life that you enjoy more.
For instance, if you are sick or facing medical difficulties, having money to visit the best doctors, get the best treatment, and afford necessary medications can only improve your overall positive feelings.
Mid and higher income brackets also have more money, time and flexibility to purchase healthy food (and eat less junk and processed food), invest in their health and fitness by joining a gym or engaging in regular exercise, have lower stress levels, participate in self help and self improvement, etc.
They can also afford gratifying experiences, a chance to pursue their passions and hobbies that are fulfilling long term, and go to concerts, sporting events, and other recreational opportunities.
When it comes to family, people in mid to upper income levels also can spend more time with children, have better relationships and marriages, and afford family vacations, celebrations, and the like.
It seems the key is using the money earned to take advantage of the right things in life that afford safety, comfort, health, personal relationships and spirituality and a balanced, fulfilled life.
When you think about it, money can at the very least buy the opportunity to pursue happiness – if not outright purchase it – at least up to a point.
