“Can money buy happiness?” This question has existed for thousands of years. Psychologists, economists, and philosophers have hotly debated the answer.
Even we laymen consider the question often. “If only we had more money,” we tell ourselves, “we could achieve our goals and finally relax!”
While many argue that money can’t buy happiness, others believe that money can buy happiness to some extent. Unhappy with mere debates, many experts have set out to conduct studies that can settle the argument once and for all.
“What did they find in those studies,” you ask?
Today, we’re looking at the relationship between money and happiness, what the studies say on that topic, and what we can learn from them.
Answer: Money Doesn’t Buy Happiness
Many studies have shown that money doesn’t buy happiness beyond a certain point. For instance, economist and psychologist Daniel Kahneman helped conduct a 2010 study for Princeton University.
The study found that as income increases, so does happiness—to a point. Once an individual’s annual income reaches around $75,000, their happiness plateaus. Any additional income beyond that has diminishing returns on happiness.
Kahneman noted that while people with higher incomes reported greater life satisfaction, they did not necessarily report greater happiness on a day-to-day basis.
This creates an important distinction. While money could help someone create a satisfactory living situation, accruing wealth might not help them feel any happier.
Answer: Money Can Buy Happiness
On the other hand, several studies suggest that money can buy happiness.
Matthew Killingsworth, a happiness researcher at the University of Pennsylvania, conducted a study contradicting the idea of a happiness plateau. His research found that life satisfaction increases as individuals earn more money, with no plateau at $75,000.
But do these two contradictory studies cancel each other out? Or can we combine the two to find a deeper truth about humans and their money?
Answer: It’s Complicated
Clearly, the relationship between money and happiness is complex. Various factors are at play, with separate studies coming to different conclusions.
And the reason is simple: humans are complicated!
For example, a study from the University of British Columbia found that happy people tend to prioritize time over money. This means they’re less likely to focus on making more money. Instead, they’re more likely to spend time with family and friends, partaking in their favorite hobbies or other activities they enjoy.
A study from the Wharton School found that people who prioritize experiences over material possessions reported greater happiness. For instance, you might experience greater happiness by spending your money on vacations, concerts or plays, or going out to eat rather than on a TV, clothes, or jewelry.
This seems to be backed up by a joint study conducted by Kahneman and Killingsworth. They aimed to reconcile their conflicting findings on the relationship between income and happiness. They developed a mobile app that prompted participants to rate their happiness at random moments throughout the day, ranging from “very bad” to “very good.” Their study included over 33,000 participants across a broad range of incomes.
Their results revealed that the impact of rising income on happiness depends on a person’s baseline happiness, irrespective of their earnings. Generally happier individuals experienced increased happiness as their income grew, even up to and beyond $200,000. In contrast, those facing daily “miseries” such as heartbreak or grief saw their happiness plateau at around $75,000.
These findings suggest that a mix of factors influences happiness, including income, personal circumstances, and individual outlook. For those struggling with unresolved miseries, money can only alleviate stress up to a point. Once basic needs are met, further income does not increase happiness. On the other hand, for naturally happier individuals, a higher income can continue to boost happiness by providing more opportunities to engage in activities they enjoy.
In simple terms, the more a person prioritizes their own happiness, the more likely they are to use an increased income on things that make them happy.
What does this mean?
While money can buy happiness, it can only do so up to a point. It’s our responsibility as individuals to find the people, things, and activities that make us happy. We also must make an effort to include those things in our lives.
Building strong relationships, pursuing personal passions, and spending money on experiences that foster happiness may be more important for achieving a fulfilling and happy life.
Despite the limits income has on our happiness, it can contribute to greater happiness when used wisely and intentionally. So, the question might not be, “Can money make me happy?” Instead, it seems to be, “If money weren’t an issue, how would I like to spend my time?”
