Happiness Economics: Can Money Buy Happiness?

Happiness economics

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 Meaning and Valued Living Exercises for free . These creative, science-based exercises will help you learn more about your values, motivations, and goals and give you the tools to inspire a sense of meaning in the lives of your clients, students, or employees.

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.

Theory of the economy of happiness

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?

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?

World_Happiness_Report_2020_-_Ranking_of_Happiness_2017-2019_-_Top_20_Countries

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

Happiness

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

Happiness by Design

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

The Psychology of Money

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

Happiness

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.

Money Can't Buy Happiness

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 Meaning & Valued Living Exercises

Lastly if you’re looking for more science-based ways to help others discover meaning, check out this collection of 17 validated meaning tools for practitioners . Use them to help others choose directions for their lives in alignment with what is truly important to them and can make them happy.

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 Meaning and Valued Living 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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Does More Money Really Make Us More Happy?

  • Elizabeth Dunn
  • Chris Courtney

can money buy your happiness essay

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

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

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

Partner Center

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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Can money buy happiness? Scientists say it can.

can money buy your happiness essay

It’s a question that philosophers, economists and social scientists have grappled with for decades: Can money buy happiness?

For most people in the United States, the answer is, seemingly, yes.

Two prominent researchers, Daniel Kahneman and Matthew Killingsworth, came to this conclusion in a joint study published this month in the Proceedings of the National Academy of Sciences, overturning the dominant thinking that people are generally happier as they earn more, with their joy leveling out when their income hits $75,000.

This threshold was initially posited by Kahneman, a Nobel Prize-winning economist and psychologist, in a 2010 study that concluded that “emotional well-being [also] rises with log income, but there is no further progress beyond an annual income of $75,000.”

But in 2021, Killingsworth, a happiness researcher and senior fellow at the University of Pennsylvania’s Wharton School, found that happiness does not plateau after $75,000, and that “experienced well-being” can continue to rise with income well beyond $200,000.

Kahneman and Killingsworth said their latest study was an “adversarial collaboration” where they pitted their theories against each other with the help of an arbiter. The latest research adjusted for inflation, they said.

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In their study, Kahneman and Killingsworth surveyed 33,391 adults aged between 18 and 65 who live in the United States, are employed and report a household income of least $10,000 a year. The authors said they lacked substantial data for those earning over $500,000.

To measure their happiness, participants were asked to report on their feelings at random intervals in the day via a smartphone app developed by Killingsworth called Track Your Happiness . Killingsworth said in an email that the data came from “repeatedly pinging people at randomly-timed moments during daily life, and asking about their happiness at that moment in real-time.” Specifically, they were asked “How do you feel right now?” on a scale ranging from “very bad” to “very good,” he said.

The study reached two big conclusions: First, that “happiness continues to rise with income even in the high range of incomes” for the majority of people, showing that for many of us, on average having more money can make us increasingly happier.

But the study also found that there was an “unhappy minority,” about 20 percent of participants, “whose unhappiness diminishes with rising income up to a threshold, then shows no further progress.”

These people tend to experience negative “miseries” that typically cannot be alleviated by earning more money; the report cites examples such as heartbreak, bereavement or clinical depression. For them, their “suffering” may diminish as their income rises to about $100,000 but “very little beyond that,” the study said.

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“In the simplest terms, this suggests that for most people larger incomes are associated with greater happiness,” Killingsworth said in a statement about the study.

“The exception is people who are financially well-off but unhappy. For instance, if you’re rich and miserable, more money won’t help. For everyone else, more money was associated with higher happiness to somewhat varying degrees.”

The study acknowledges that happiness or emotional well-being is a changing daily scale for many people and that “happy people are not all equally happy” but argues that there are “degrees of happiness” and often a “ceiling” for happiness.

The study also found that money can affect happiness differently, depending on income. Among lower earners, “unhappy people gain more from increased income than happier people do,” it said. “In other words, the bottom of the happiness distribution rises much faster than the top in that range of incomes.”

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In his statement, Killingsowrth made clear that money isn’t everything — “just one of the many determinants of happiness.” He added: “Money is not the secret to happiness, but it can probably help a bit.”

The study also made its way to social media Wednesday, with one Twitter user joking : “Anyone who says money doesn’t buy happiness just doesn’t know where to go for shopping.”

Another teased : “Money won’t make you happy, but it’s nicer to cry in a Ferrari.”

can money buy your happiness essay

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Research: Can Money Buy Happiness?

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

September 25, 2013

A boy holding a toy train

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

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

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

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

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

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

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

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

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

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

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

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

For media inquiries, visit the Newsroom .

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can money buy your happiness essay

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Can money buy happiness, three psychological principles to consider before you make your next purchase.

By Sarah Gervais, Associate Professor of Psychology, Social and Cognitive Program and Law-Psychology Program

11 Nov 2015

Sarah Gervais

We’re all familiar with the idea that money can’t buy happiness. Yet, the reality is that we all spend money and for most of us it is a limited resource. How can we spend our hard earned dough in ways that will maximize our happiness? Psychological research offers some useful insights about the connections between money and happiness to consider before you make your next purchase.

  • Being Rich Isn’t Necessarily the Path to Happiness. Money is important to happiness. Ask anyone who doesn’t have it. Having a higher income, for example, can give us access to homes in safer neighborhoods, better health care and nutrition, fulfilling work, and more leisure time. However, this only works up to a certain point. Once our income reaches a certain level and our basic needs for food, health care, safety, and shelter are met, the positive effects of money—such as buying your dream home—are often offset by the negative effects—such as working longer hours, or in more stressful jobs, to maintain that income.
  • Doing Makes us Happier than Having. Most people assume that “things” will lead to more happiness than “experiences.” Physical objects—such as the latest iPhone, handbag, or car—last longer than say going to a concert, taking a cooking class, or going on vacation. Buying things does make us happy, at least in the short term. In the long-term, however, we habituate to new things and even though they may have made us excited and happy at first, eventually the item becomes the new normal and fades into the background. The happiness that comes from purchasing experiences, however, tends to increase over time. One reason is that we often share experiential purchases with other people. Even when you’ve driven that new car into the ground, you’ll still be telling stories with your family and friends about that time when you went on vacation to Colorado and you’ll even be chuckling about when the car broke down and you had to spend the night in the shady motel
  • Consider Spending Money on Others. Most people think that spending money on themselves will make them happier than spending it on other people. Yet, when researchers assess happiness before and after people spend an annual bonus, people report greater happiness when they spend the bonus money on others or donate it to charity than when they spend it on themselves. This occurs regardless of how big the bonus was. One reason for this phenomenon is that giving to others makes us feel good about ourselves

So, before you pull out your wallet or click to order online, think about whether this purchase will really make you happy. If it will jeopardize your basic needs, think twice. If you have some disposable income, considering planning a trip or taking a class to learn a new skill. Finally, in this season of giving, know that if you spend your money on others or donate it to good causes, you may feel better than if you spend it on yourself.

Note: This article presents some basic principles for money and happiness. Individuals differ in their financial situation and psychological well-being. Consult a financial expert or behavioral health professional for guidance about finances and happiness.

Group of people at party laughing.

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

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

March 28, 2023 • 5 min read.

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

Person running over stacks of money to illustrate whether money can buy happiness

  • Finance & Accounting

The following article was originally published on Penn Today .

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

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

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

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

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

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

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

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

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

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

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

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

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

Does It Matter Whether Money Can Buy Happiness?

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

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

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

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

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Happiness Articles & More

Can money buy happiness it depends on why you’re spending it, according to new research, our purchases may make us happier when they're motivated by goals we care about..

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

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

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

can money buy your happiness essay

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

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

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

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

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

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

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

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

About the Author

Elizabeth hopper.

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

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How Much Money Do People Need to Be Happy?

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Here’s How Money Really Can Buy You Happiness

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

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

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

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

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

Money misery

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

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

1_TimeHappiness-Amazon-cover_nobarcode

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

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

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

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

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

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

Money bliss

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

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

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

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

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

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

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

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

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Flow takes work.

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

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

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

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

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

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

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Can money buy happiness? Income may boost emotional well-being more than we thought

New findings contradict widely reported study that happiness plateaus at $75,000.

can money buy your happiness essay

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can money buy your happiness essay

Money does indeed buy happiness, and it increases with a bigger paycheque more than economists previously believed, a recent analysis has found.

Widely reported findings by two Nobel Prize-winning economists in 2010 cemented the idea that money could buy happiness only to a certain point — and that point was said to be about $75,000 at the time.

"The [Daniel] Kahneman and [Angus] Deaton paper in 2010 found that the relationship between income and happiness, or emotional well-being, flattens out at around $75,000," said Kostadin Kushlev, a happiness researcher and assistant professor at Georgetown University's department of psychology in Washington, D.C.

Now one of those researchers says he was wrong about the $75,000 part — and not just because everything is so expensive these days.

A paper Kahneman co-authored with Matthew Killingsworth and Barbara Mellers in 2023 concluded that the 2010 research had overstated the plateau effect because it used an unreliable method of measuring happiness from a Gallup survey, which asked study subjects to recall if they smiled the previous day.

The newer conclusions are based on a more continuous measure of happiness, Kushlev told Cost of Living . The researchers would ping their subjects' phones randomly during the day to ask them, "How do you feel right now?" — rating their mood on a scale from "very bad" to "very good."

"So when you use this measure, there seems to be a linear relationship between income and happiness that does not level off at $75,000," Kushlev said.

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The 2023 paper found that most subjects reported increased emotional well-being all the way up to $500,000 in annual income.

In an interview with NBC, Killingsworth said that's because as people earn more money, they feel more in control of their lives.

"If you have more money, you can see organic raspberries in the grocery store and that's what you are in the mood for, so you buy it instead of buying a box of dry pasta," he said. "Or maybe if you're working in a job that you think is kind of unfulfilling, you can quit your job and you have sort of a financial cushion."

3 pillars of happiness

Kushlev said when researchers talk about happiness, they tend to use a term called "subjective well-being," which has three components.

"One component is how we look at our lives overall, and that's what we call life satisfaction. And generally speaking, when we talk about income and happiness, income does relate to greater life satisfaction."

But Kushlev said what's less clear from research is how money affects the other two pillars of emotional well-being: frequent positive feelings and relatively infrequent negative feelings.

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"Income might have this protective effect against experiencing certain negative emotions, but it doesn't necessarily bring us joy on a day-to-day basis," he said.

The 2023 study also found that among the least happy 15 per cent of people studied, happiness was unmovable beyond about $100,000 in annual income.

"This income threshold may represent the point beyond which the miseries that remain are not alleviated by high income," the authors wrote. "Heartbreak, bereavement and clinical depression may be examples of such miseries."

'Investing in relationships and people'

Peter Drummond has experienced both living in poverty and making it big as an entrepreneur.

Growing up in the United States, his family would go through real boom-and-bust cycles. As a result, they would live large at some times and sleep in the car at others.

It's hard to be happy when you're hungry. - Peter Drummond

"The biggest problem with poverty is, for me anyway, was a lack of food. Being hungry sucks. It's hard to be happy when you're hungry," he said.

Drummond moved north to Vancouver when he was 17 and got a job going door-to-door selling credit card machines to businesses. That started him on a career in financial technology, including getting a percentage of the profit when one company he worked for sold for $120 million.

As a young man making roughly $300,000 a year, he said there were years when he used his money just for "partying, drinking and engaging in hedonistic nihilism." He'd also do things like drop $5,000 or $10,000 at Holt Renfew on nice shoes and clothes.

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Those thrills quickly wore off, he said. But as he grew a little older and wiser, Drummond said he started to use his wealth in more meaningful ways. "And then my happiness skyrocketed. So not investing in material things; investing in relationships and people."

For Drummond, that has meant helping his parents and in-laws retire, taking his parents on vacations, mentoring young people to create their own wealth and choosing work that he finds rewarding.

"So now you're just significantly more constructive in the architecture of your life," he said.

Money provides freedom to choose

On the other side of the income spectrum, even a modest improvement in financial circumstances can contribute to a feeling of being more in control of your life.

Back in 2017, Jessie Golem, a photographer and videographer from Hamilton, was working four precarious jobs, including one for a volunteer organization that she hoped would open some doors.

"I just didn't have any free time because I was constantly going from one job to the other to the other," she said.

A woman with long hair looks over her shoulder at the camera in a portrait photo.

"It was so stressful and exhausting.... I was always thinking about, 'OK, can I pay rent?' So then any decision, even decisions about what food I could buy, was affected by this."

When Golem was enrolled in Ontario's basic income pilot program, she was able to focus on her better-paying work as a freelance photographer, knowing her rent would be covered regardless of whether her invoices had been paid promptly.

Asked if, based on her own experience, she believes money buys happiness, Golem said, "Absolutely, it does."

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She said it was satisfying to see her efforts on the business "turning into real-world money," and it helped that she was no longer in a constant state of worry about what she'd do if the car or computer she uses for work broke down.

Evan Hu said he didn't realize his family was living in poverty when he was growing up in the 1960s. But as a first-generation Canadian whose immigrant father was supporting family back home in China, he said there was only enough money for the very basics.

So when he landed his first entry-level engineering job in Calgary, making about $30,000 a year in 1988, he was "happy as a clam."

A man in a black collared shirt and glasses poses for a portrait.

Eventually, Hu was part of a successful startup that significantly improved his circumstances and launched his lucrative career in software engineering. "I was all of a sudden in a situation where I was drawing significantly more income, like, four or five times what a basic engineer [earns]."

To Hu, the bigger paycheque meant security.

"My backside's covered. I don't have to worry.... We could go to a restaurant now. We can buy a new car. We can take a vacation and not, you know, slum it, right?"

The financial freedom has meant that he's been able to spend the last 15 years choosing the work he finds interesting and spending a lot of time volunteering.

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Hu said he's seen a lot of people who are really driven by status, "always chasing the next carrot," and that it hasn't really made them happy.

That observation fits with what happiness researcher Kostadin Kushlev said has been shown to be much more critical to health and happiness than money and material possessions:  strong relationships with other people .

"So can money buy happiness? I would say yes, it can. But it's better to focus on other things that we know really bring you happiness — such as the people that are important in our lives."

can money buy your happiness essay

How journaling can make a difference, according to a happiness consultant

About the author.

can money buy your happiness essay

Brandie Weikle is a writer and editor for CBC Radio based in Toronto. She joined CBC in 2016 after a long tenure as a magazine and newspaper editor. Brandie covers a range of subjects but has special interests in health, family and the workplace. You can reach her at [email protected].

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Produced by Tracy Johnson and Jennifer Keene

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August 10, 2010

Can Money Buy Happiness?

By Sonja Lyubomirsky

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

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

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

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

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

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

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

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

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

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

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

  • spending our money on activities that help us grow as a person (taking guitar lessons, investing in an entrepreneurial venture), strengthen our connections with others (dinners with colleagues, car trips with friends, roller blades for mom and child), and contribute to our communities (catering a fundraiser, donating to the needy);
  • shelling it out on activities and experiences (e.g., rock climbing expeditions, wine tasting family reunions) rather than material possessions;
  • spending it on many small pleasures (e.g., regular massages, weekly delivery of fresh flowers, or frequent phone calls to our best friend in Europe) rather than on one big-ticket item (like a new car or flat-screen TV); and
  • splurging on something that we work extremely hard to get and have to wait for (whether it’s a concert, trip, or gadget) and relish the feeling of hard-won accomplishment and anticipation as we wait.

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

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

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

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

Does Money Buy Happiness? Essay

Whether or not money can buy happiness is a continued debate. Billions of people in all parts of the world sacrifice their ambitions and subconscious tensions on the altar of profitability and higher incomes. Millions of people dream to achieve the level of wellbeing, when earning money will no longer be a problem to them. Legal or illegal does not really matter, as long as these strategies lead individuals to the desired monetary outcomes.

Professional economists assert that more money does not buy happiness. As a result, it makes no sense for people to pursue money. Yet, the reality is quite different, as money, wealth, high incomes, and wide opportunities which they open make people extremely satisfied. Based on the current knowledge of economics, the opportunity costs of pursuing money can be extremely high. Therefore, it is better to pursue money for a purpose rather than for its own sake.

People always wanted more money. Money inspired professional economists and bank robbers. Millions of people would even try to sell their souls for a reasonable sum of money. Nevertheless, the debate on whether or not money can buy happiness continues to persist. Globalization and consumerism have turned money into the main criterion of individual and professional success: the more money you earn the better person you are.

However, professional economists suggest that money does not make people happy. The current state of research claims that, despite the rapid increase in personal incomes, the percentage of people who consider themselves happy has not changed (Lee, 2005). Similar disconnects between income and happiness were found in most advanced economies, including Japan, Europe, and the United Kingdom (Lee, 2005).

However, the general inconsistency of these research results is too obvious to ignore. First, what does it mean for people to be happy? Professional economists may have profound knowledge of economic concepts but can hardly make happiness measurable. Second, can people be happy with their incomes if they always want more? Most probably, at any given point, individuals will feel dissatisfied with what they have and will try to obtain more.

I agree that money buys happiness, but this happiness is never constant. This idea is further supported by Lee (2005), who assumes that people will make all sorts of sacrifices to get money, but their happiness will be temporary at best. Lee (2005) relies on the two main premises.

First, “happiness people realize from having more income results from having more relative to others in some reference group, not from having more absolutely” (p.389). Simply stated, individuals always compare their incomes and positions to those of other individuals. They want to have more relative to what others have or can have. However, their happiness wanes as soon as others achieve a better social position, income, or level of wellbeing.

Second, the nature of sensory adaptation in humans explains why people are never happy with what they have: human receptors become irresponsive to the continuous presence of one and the same stimulus (Lee, 2005). As a result, the more money individuals earn the happier they become; however, with time, money turns into boredom and no longer brings happiness.

Obviously, it does make sense to make money, since money is the main instrument of exchange and the source of unlimited opportunities for everyone. Money opens the gateway to a broad range of material and nonmaterial values, including health and education.

We should never belittle the significance of money merely because it brings only temporary satisfaction (Lee, 2005). Yet, it is always better to pursue money for a purpose rather than for its own sake. Money for the sake of money makes little sense. Money is not the end but only the means of achieving some goal, like purchasing a new house or curing a sick child.

Moreover, a common increase in individual wealth is always a positive externality, as richer countries experience lower childbirth mortality, fewer traffic deaths, better health, and longer life expectancy (Lee, 2005). We live in society and our wealth necessarily benefits others, through taxes and charity. Therefore, it always makes sense to pursue money to improve individual and societal wellbeing.

The opportunity costs of pursuing more money can be extremely high. Opportunity costs are everywhere, as every decision necessarily involves tradeoffs. Individuals sacrifice their families and personal wellbeing to become successful, rich professionals. Others apply to illegal activities and decisions to earn their wealth. In my own life, my decision to become educated was associated with major opportunity costs. First, the costs of education impose a heavy burden of financial obligations on me.

I could use this money to meet other life goals. Second, I spend more time at work and earn more money; I lose considerable earnings each time I pursue a better grade. Third, not all courses are equally pleasant: some courses seem not to be tailored to the specific needs and demands of the student majority (Frank, 2005). I could use this time to improve my knowledge of the disciplines that are important for my future career. To a large extent, the dollar cost of education does not reflect all opportunity costs.

Yet, many students forget that higher education provides a variety of benefits that helps to decrease most, if not, opportunity costs. Statistically, college and university graduates earn $14,000 a year more compared with their non-educated counterparts (Anonymous, 2003). The social value of higher education is difficult to underestimate (Porter, 2002). Education enhances workplace productivity and stimulates professional growth. Therefore, the marginal utility of a university degree increases.

Almost all economists treat opportunity cost as the main economic concept (Frank, 2005). Every single decision is inevitably associated with one or more opportunity costs. These involve explicit and implicit costs of other opportunities (Arnold, 2008; Baumol & Blinder, 2008). Opportunity costs reflect the significance of the cost-benefit principle that governs most individual decisions (Frank, 2005). Introductory economics courses must place particular emphasis on teaching students how to weigh benefits and costs of various decisions (Frank, 2005). This knowledge of economics and economic principles will subsequently reduce the opportunity costs of education.

Whether or not money can buy happiness is a continued debate. Billions of people in all parts of the world sacrifice their ambitions and subconscious tensions on the altar of profitability and higher incomes. The current state of research claims that, despite the rapid increase in personal incomes, the percentage of people who consider themselves happy has not changed.

However, these results do not reflect the real order of things in the world. Money buys happiness, but this happiness is never constant. The more money individuals earn the happier they become; however, with time, money turns into boredom and no longer brings happiness.

Moreover, a common increase in individual wealth is always a positive externality, as richer countries experience lower childbirth mortality, fewer traffic deaths, better health, and longer life expectancy. Yet, the opportunity costs of pursuing more money can be extremely high. Every single decision is inevitably associated with one or more opportunity costs. Knowledge of economics and economic principles will subsequently reduce the opportunity costs of education.

Anonymous. (2003). Report puts dollar value on education. Georgia College & State University. Web.

Arnold, R.A. (2008). Microeconomics. Boston: Cengage Learning.

Baumol, W.J. & Blinder, A.S. (2008). Microeconomics: Principles and policy. Boston: Cengage Learning.

Frank, R.H. (2005). The opportunity cost of economics education . The New York Times. Web.

Lee, D.R. (2005). Who says money cannot buy happiness? The Independent Review, X(3), 385-400.

Porter, K. (2002). The value of a college degree. ERIC Digest. Web.

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Yes, money can buy happiness — especially if you think you’re making more than other people

Hannah erin lang, the findings paint ‘a somewhat dismal outlook for society,’ the authors of a new study say, believing you earn more than your peers — defined as people of similar age, education, and marital and homeownership status — actually makes you happier, according to a new study..

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Maybe money does buy happiness, after all — especially if you can afford more of it than your pals. 

That’s according to the findings of a recent working paper distributed by the National Bureau of Economic Research. The paper, titled “Keeping up with the Jansens: Causal Peer Effects on Household Spending, Beliefs and Happiness,” used a survey of Dutch households to determine whether believing you’re in better financial standing than your peers can impact your beliefs and behavior. 

The most striking finding? Believing you earn more than your peers — whom researchers defined as people of similar age, education, and marital and homeownership status — actually makes you happier.

That impact was evident regardless of actual income, researchers said. In other words, it didn’t matter how much money respondents actually made, only how it compared with others’ earnings. 

“When you realize your [relative] position is good, then you’re more happy,” Bernardo Candia, one of the paper’s co-authors and a Ph.D. candidate at the University of California, Berkeley, told MarketWatch. “It’s not about the absolute number.” 

“ People who thought they had higher relative incomes were less likely to believe that wealth inequalities across society are too large, and less supportive of trying to reduce them. ”

Believing you’re more well-off has other impacts as well, researchers found: People who thought they had higher relative incomes were less likely to believe that wealth inequalities across society are too large, and less supportive of trying to reduce them. 

From the archives (January 2022): Racial and economic inequality persists. Why do many people deny it?

On the other hand, people who believed they earned less were more likely to spend more on durable goods like cars or household appliances — possibly “trying to show off,” Candia said. 

In that sense, the paper suggests that the pressure to “keep up with the Joneses” is a real one. 

The findings do paint “a somewhat dismal outlook for society,” the researchers wrote. In a world where not everyone can be above average, the relationship between happiness and relative earnings suggests that there will always be people who are “more unhappy than is warranted by the level of their income,” the paper said. 

“In a perfect world, you want everyone to be happy,” said Maarten van Rooij, another co-author of the paper and principal economist at the Amsterdam-based De Nederlandsche Bank. “But if we’re comparing ourselves, then not everyone can be perfectly happy in the end.”

Does money buy happiness?

Researchers have been trying for years to nail down the exact relationship between money and happiness. 

In one 2010 study, psychologist Daniel Kahneman and economist Angus Deaton of Princeton University found that more money is associated with greater happiness only up until a point: $75,000 in annual income, or just about $100,000 in today’s dollars.

Just over a decade later, Matthew Killingsworth, a researcher at the University of Pennsylvania’s Wharton School of Business, published findings showing that the correlation between earnings and day-to-day well-being keeps going even as you climb the income ladder. 

Last year, Kahneman and Killingsworth teamed up to publish new research showing that the correlation between financial health and overall happiness depends a good deal on how happy you are in the first place.

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

Some age groups may put an even higher price tag on contentment: In one November survey conducted by the Harris Poll and shared by the financial-services company Empower, millennials said they’d need a $525,000 salary to achieve financial happiness.

How does money affect your happiness? Let us know at [email protected]. One of our reporters might reach out to you to learn more.

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About the Author

can money buy your happiness essay

Hannah Erin Lang is a personal finance reporter for MarketWatch, based in New York. Previously, she covered banking and finance for The Charlotte Observer in her home state of North Carolina. She graduated from UNC-Chapel Hill with a degree in business journalism and grew up in the same town as her alma mater.

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Essay on Money Can Buy Happiness

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

Let’s take a look…

100 Words Essay on Money Can Buy Happiness

What money can buy.

Money is important because it can help us get things that make us happy. Imagine having enough money to buy your favorite toys, games, or books. It feels good, right? When you can buy what you want, you feel happy.

Experiences Over Things

Money can also let us have fun experiences. Think about going to a theme park or seeing a movie. These are special times that can make us smile and feel joyful. Having money to do these things can lead to happiness.

Helping Others

When we have money, we can help other people too. Giving money to those in need or buying gifts for friends and family can make us feel really good inside. Sharing can bring happiness to us and to others.

250 Words Essay on Money Can Buy Happiness

Money and happiness.

Many people think that money is a key to happiness. This idea might seem true because with money, we can buy things that make us happy. For example, if you love video games, having money means you can buy the latest games. This can make you feel happy because you are enjoying something you love.

Basic Needs

Money is important for happiness because it helps us buy basic things like food, a home, and clothes. Without these, life can be hard and stressful. When we have enough money to take care of these needs, we worry less. Less worry means more room for happiness.

Good Experiences

With money, we can also have good experiences like going on a trip or watching a movie. These fun activities often cost money, and they can create happy memories. When we look back at these times, we feel joy again.

Another way money can bring happiness is by giving us the chance to help others. Buying a gift for a friend or helping people who are less fortunate can make us feel good inside. This feeling of making someone else happy can increase our own happiness.

In conclusion, money can buy happiness in many ways. It lets us live comfortably, enjoy our hobbies, have fun experiences, and help others. While money isn’t everything, it does play a part in creating happiness. It is important to remember that being rich doesn’t mean you will be happy all the time, but it can help in finding some happiness in life.

500 Words Essay on Money Can Buy Happiness

Introduction to money and happiness.

Many people say that happiness cannot be bought with money. But if we think about it, money can actually help us feel happy in many ways. This essay will talk about how money can lead to happiness.

Buying What We Need

First, money helps us buy things we need, like food, a home, and clothes. When we have these things, we don’t have to worry about not having a place to live or being hungry. This makes us feel safe and comfortable, which is a big part of feeling happy.

Good Health and Money

Money can also help us stay healthy. We can pay for doctor visits, medicine, and healthy food. Being healthy makes us feel good and lets us do fun things, like playing sports or going for a walk. So, when we use money to take care of our health, we are using it to buy happiness.

Learning and Experiences

With money, we can also learn new things. We can buy books, go to school, or take classes in things like painting or dancing. Learning makes our brains feel good, and it can make us happy to know more about the world. We can also use money to have experiences, like going on a trip or to a concert. These fun times give us happy memories that can last forever.

One of the best ways money can buy happiness is by helping others. When we give money to people who need it, like in charities, it makes us feel good inside. It’s like when you share your lunch with a friend who forgot theirs. That feeling you get when your friend smiles and says thank you is a kind of happiness that money helped create.

Having Enough, Not Too Much

It’s important to know that having too much money doesn’t mean more happiness. Sometimes, people with a lot of money worry about it too much or don’t know what to do with it. Being happy with money means having enough to do what we talked about – buying what we need, staying healthy, learning, having fun, and helping others.

In the end, money can help us feel happy in many ways. It buys things we need, keeps us healthy, lets us learn and have fun, and helps us make others happy. But remember, it’s not just having money that makes us happy, it’s what we do with it that really matters. So, even though money can buy happiness, it’s up to us to use it in ways that truly make us and those around us happy.

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

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

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

Can Money Buy Happiness? An Argumentative Analysis

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