money is key to happiness essay

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Does More Money Really Make Us More Happy?

• Elizabeth Dunn
• Chris Courtney

A big paycheck won’t necessarily bring you joy

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

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

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.

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Can Money Really Buy Happiness?

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

Updated November 10, 2023 | Reviewed by Chloe Williams

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

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

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

Higher earners are generally happier

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

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

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

Evaluative vs. experienced well-being

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

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

Material wealth is not associated with happiness everywhere in the world

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

But not so fast.

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

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

Earned wealth generates more happiness than inherited wealth

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

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

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

• Contentment
• Gratefulness

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Connection Between Money and Happiness Essay

Introduction, money and happiness, personal life’s experiences, life’s experiences of others.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Home — Essay Samples — Literature — Money and Class in America — The Complex Relationship Between Money and Happiness

The Complex Relationship Between Money and Happiness

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Published: Mar 8, 2024

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Connection between money and happiness, contribution of money to happiness, limited effect of money on happiness.

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Argumentative Essay about Money and Happiness

A common assumption in the media and everywhere else is that being rich means that one is happy. The debate on money and happiness has been going on for a while. There is a belief that the more money one has, the more comfortable he/she becomes. With money, one can buy the basic needs. Though money can satisfy our physical needs, we need to understand that happiness is not material. Instead, satisfaction is a more profound natural feeling that comes out of a person and is not necessarily dependent on money. What we need to understand, therefore, is that money does not bring happiness as many people would imagine.

For long, people have not understood that money can only help a person in making individual choices. Having large amounts of money does not necessarily lead to happiness. The belief that being rich is having a lot of money is often misconstrued (Badiou 75). Given a chance, it is evident that most people are likely to choose riches. However, we should ask ourselves if money can make others to love us. The desire of human beings is the need to love and be loved in return. It is the feeling that we possess that should be of importance compared to the financial status of an individual. Regardless of the amount of money that one possesses, happiness cannot be bought. Cases of pretense to get monetary gains from other people have been on the rise. People have shown superficial love to others to satisfy their selfish interest. In most cases, relationships of this kind do not end up in the best way. Therefore, the perception that riches bring happiness in a relationship should not be taken seriously.

Riches cannot be considered to be a source of happiness. Riches can enable a person to have access to more resources and luxuries in life. However, the excitement that is brought about by monetary gains temporary. In some instances, you might find people with riches indulging in precarious activities as a way of self-fulfillment. It explains that wealth only helps us to focus on wants instead of needs. Happiness is one of the requirements in n life which can only be fulfilled if one has peace of mind (Badiou 90). The misconception we have that money is the source of happiness ought to change if we are to experience the real meaning of happiness. Contrary to the popular belief that money can offer us happiness, the contrary has proven to be true. People with less money do not have many luxuries in life as rich.

In relationships, riches cannot guarantee a person the happiness they need. It is the personality of a person that matters. A person may be wealthy, but if his/her character is terrible, people may not want to be associated with them. A person with a better personality is likely to attract friends or lovers, who can, in turn, offer them the gratification that they may need thus leading to happiness. People with evil personalities, on the other hand, are likely to be shunned by other people. Few individuals can wish to be around a person with a lousy personality. Even when the person has money, the few friends who hang around them are likely to be there because of money.

Similar sentiments are evident when it comes to love (Pischke 120). Money cannot buy happiness or make people love you. Buying the feelings of another person is impossible. It is not strange to married people who do not love each other. They might be in the marriage because of monetary gains. In most cases, these marriages are likely to end up in catastrophe. In many relationships, it is the valuable time that a person spends with his/ her family that brings about happiness. Money can be a fuelling factor in the strengthening of a relationship but it ought not to be seen as the source of happiness. In all situations, the family has to be put in the front. The time an individual spends with his/her family is crucial I comparison to the amount of money that a person has. Though rich people think that money is a source of happiness, this notion is often misconstrued. For instance, a person can use the money to buy gifts and other presents for another but what matters in a relationship is the time and affection that people share. It is the time spent together in a relationship that gives people a sense of identity and selfhood.

Money is crucial since it enables people to cater for their primary needs. However, money should not form the basic underlying principle for our source of happiness. It is the reason why I believe that contrary to the belief by many people that money brings joy, happiness is not long lasting and can only be for a temporary period (Burke 100). Until we realize that money is just a source of temporary happiness, then we are likely to suffer heartbreaks. True happiness can only come from within a person. People who idolize money are likely to be frustrated in the long run. They are likely to focus more on looking for money and forget that their loved ones expect to be shown love. Money can be a cause of stress and frustrations in any relationship. People who have money often think that their money can buy them any form of happiness. However, in most cases, they end up with frustrations especially when they are rejected. Instead of using the money to gain happiness in a relationship, a person can try to adopt other means. For instance, developing hobbies that bring fun and relaxation can be a way of bringing happiness.

We often torture ourselves looking for happiness in the wrong places, yet there are better ways of creating our happiness. For instance, having time to relax is the best solution for a healthy life. We ought to learn therefore that though money is necessary, it should not be the definition of happiness in our lives. Wealthy people put emphasis more on their luxuries compared to the attention they give to their necessities. However, this perception ought to change since material things are likely to fade off over time. People also tend to look for other things that can get them occupied. In life, we should focus more on better ways of gaining happiness which is a primary need for every person.

Money has also been associated more with misery more than bringing happiness. While searching for more money, people are likely to compete against each other (Burke 150). As a result, they may end up looking for options of making more money and lose interest in the things that satisfy them. When a person is focused on searching for money he/she rarely finds time to do other things that can make them happy. It is because they usually spend all their time working and rarely have time to relax. Good health symbolizes happiness. However, most of us think that having more money is a guarantee that one can cover their health schemes. Though money can cater to good medical covers and pay for proper medical services, it is not a guarantee of happiness and good health for an individual.

It is clear that even if a person has money, the money cannot be a cure for certain terminal illnesses. Health is more important than money. One might have a lot of money, but if he or she is not healthy, then happiness remains an illusion. Therefore, good health is better than having lots of money in the banks. It is high time that people realize that money is not a source of happiness and look for other ways of finding happiness.

It is essential to notice that money can only contribute to the happiness of meeting the basic needs. A person’s level of income does not directly determine his/ her level of happiness. It is the way that the individual can channel the earnings to purposes that can probably bring satisfaction and happiness. People who have a lot of money have been known to get their comfort and happiness by giving to charity. There are satisfaction and gratuity in the act of giving. Having vast amounts of money does not guarantee happiness, but it is the deeds of an individual that matter.

Findings have shown that having large quantities of money does not guarantee happiness. Having vast social networks can be a better source of satisfaction. Strong social networks are likely to develop mutual affection among people compared to what money can do (Berk 78). Earning a lot of money can be significant. Equally essential however is having people who care and whose company one can enjoy. The satisfaction that is brought through bonding has longer lasting effects than what money can do for a person.

There have been cases of people who have a lot of money but lack happiness. When searching for money, most of us forget that we have people who love and care for us. The focus is normally on how to gain more money which in the end makes people to even lose their families. In some instances, rich people have committed suicide after missing people who are ready to bond with them (Burke 85). It is therefore important to realize that even though money is an essential part of our lives, it cannot give us all the satisfaction and happiness that we need.

Works Cited Badiou, Alain et al. Happiness. Bloomsbury Academic, 2019. Burke, Elaine A. “What is the Key to Happiness? Love or Money?” Psyccritiques, vol. 59, no. 25, 2014. Portico, doi: 10.1037/a0037105. Berk, Kiki. “Does Money Make Us Happy? The Prospects and Problems of Happiness Research in Economics”. Journal of Happiness Studies, vol. 19, no. 4, 2017, pp. 1241-1245. Springer Nature, doi: 10.1007/s10902-017-9857-y. Pischke, Jörn-Steffen. Money and Happiness. National Bureau of Economic Research, 2011.

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

March 28, 2023 • 5 min read.

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

• Finance & Accounting

The following article was originally published on Penn Today .

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

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

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

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

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

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

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

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

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

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

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

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

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

Does It Matter Whether Money Can Buy Happiness?

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

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

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

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

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