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Exploring the relationship between wealth and well-being – the impact of money on happiness.

Can money buy happiness essay

Discover the fascinating link between money and happiness with our new thought-provoking study!

Are you curious about how wealth impacts your overall well-being? Join us as we delve into the complex connection between money and happiness.

The Role of Money in Well-being

Money is often seen as a means to achieve happiness and well-being. It allows individuals to access basic needs such as food, shelter, and healthcare, which are essential for a good quality of life. Additionally, having money can provide a sense of security and stability, reducing stress and anxiety about financial obligations.

However, the relationship between money and well-being is complex. While having enough money to meet basic needs is important for well-being, research suggests that beyond a certain point, additional wealth may not necessarily lead to greater happiness. This phenomenon is known as the diminishing returns of money on well-being.

Moreover, the pursuit of wealth can sometimes detract from other sources of happiness, such as meaningful relationships, personal growth, and experiences. It is important to strike a balance between material wealth and other aspects of life that contribute to overall well-being.

In conclusion, while money can play a significant role in well-being by providing resources and security, it is not the sole determinant of happiness. It is essential to consider the broader aspects of life that contribute to a fulfilling and contented existence.

Understanding the Wealth-Happiness Connection

In today’s society, the question of whether money can buy happiness remains a topic of debate. Many studies have explored the relationship between wealth and well-being, attempting to uncover the secrets of a fulfilling life.

While financial stability can provide a sense of security and comfort, it is not the sole determinant of happiness. Other factors, such as relationships, health, and personal fulfillment, play a significant role in overall well-being.

Research suggests that there is a correlation between income and happiness up to a certain point. Beyond a certain threshold, additional wealth may not significantly increase one’s level of happiness. This phenomenon is known as the “satiation point,” where the pursuit of material possessions no longer brings greater joy.

It is essential to understand that true happiness comes from within and is not solely dependent on external factors like money. Cultivating positive relationships, finding meaning in life, and practicing gratitude are key components of a happy and fulfilling existence.

While wealth can certainly enhance one’s quality of life, it is important to strike a balance between financial success and personal well-being. By prioritizing experiences over possessions and focusing on what truly brings joy and fulfillment, individuals can unlock the true essence of happiness.

Factors Influencing Financial Satisfaction

Financial satisfaction is influenced by various factors that go beyond the mere possession of wealth. Understanding these factors can provide insight into how individuals can achieve greater well-being and contentment with their financial status:

  • Financial Goals: Setting clear financial goals and working towards them can contribute to a sense of accomplishment and satisfaction.
  • Financial Stability: Having a stable source of income and savings can provide security and peace of mind, enhancing financial satisfaction.
  • Financial Education: Understanding personal finance and making informed decisions about money management can lead to better financial outcomes and greater satisfaction.
  • Social Support: Having a supportive network of friends and family can provide emotional support and guidance during financial challenges, increasing overall satisfaction.
  • Financial Values: Aligning financial decisions with personal values and priorities can lead to a sense of fulfillment and purpose in one’s financial life.

Psychological Impact of Wealth

Psychological Impact of Wealth

While money can certainly bring comfort and security, its impact on our psychological well-being is more complex. Studies have shown that a certain level of income is necessary for basic needs and happiness, but beyond a certain point, the relationship between wealth and happiness becomes less clear.

For some, accumulating wealth may lead to feelings of accomplishment and success, but for others, it can create stress, anxiety, and a constant drive for more. The pursuit of wealth can sometimes overshadow other important aspects of life, such as relationships, health, and personal fulfillment.

Psychologists suggest that the correlation between wealth and happiness may be influenced by factors such as individual values, social comparisons, and the presence of meaningful goals. It is essential to strike a balance between financial success and emotional well-being to truly experience a fulfilling life.

Money and Mental Health

Money and Mental Health

Research suggests that there is a strong connection between a person’s financial situation and their mental health. While having enough money to meet basic needs can contribute to overall well-being, excessive wealth does not guarantee happiness. In fact, high levels of income can often lead to increased stress, anxiety, and even depression.

Many studies have shown that individuals who constantly chase after material possessions and monetary success are more likely to experience mental health issues such as low self-esteem, loneliness, and a lack of fulfillment. On the other hand, those who prioritize relationships, personal growth, and experiences over wealth tend to report higher levels of life satisfaction and mental well-being.

1. Financial stress can lead to anxiety and depression.
2. Constant comparison to others can cause feelings of inadequacy.
3. Excessive focus on money can lead to neglect of mental and emotional needs.

It is important for individuals to reflect on their relationship with money and prioritize their mental well-being over financial success. Seeking professional help and support can be beneficial in managing the psychological impact of financial stress and finding a balance between material wealth and mental health.

Emotional Benefits of Financial Stability

Financial stability can bring a sense of security and peace of mind to individuals. Knowing that you have enough money to cover your basic needs and emergencies can alleviate stress and anxiety, leading to improved emotional well-being. With financial stability, you may feel more confident in your future and less worried about unexpected financial challenges. This can contribute to a greater sense of overall happiness and contentment in life.

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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 Happiness & Subjective Wellbeing Exercises for free . These detailed, science-based exercises will help you or your clients identify sources of authentic happiness and strategies to boost wellbeing.

This Article Contains

What is happiness economics, theory of the economics of happiness, can money buy happiness 5 research findings, 6 fascinating books and podcasts on the topic, resources from, 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?

money can never buy happiness essay

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What is the relationship between income/wealth and happiness? To answer that question, we looked at studies to see where and how money improves happiness, but we’ll also consider the limitations to the positive effect of income.

Money buys access; jobs boost happiness

Overwhelming evidence shows that wealth is correlated with measures of wellbeing.

Wealthier people have access to better healthcare, education, and employment, which in turn results in higher life satisfaction (Helliwell et al., 2012). A certain amount of wealth is needed to meet basic needs, and satisfying these needs improves happiness (Veenhoven & Ehrhardt, 1995).

Increasing happiness through improved quality of life is highest for poor households, but this is explained by the starting point. Access to essential services improves the quality of life, and in turn, this improves measures of wellbeing.

Most people gain wealth through employment; however, it is not just wealth that improves happiness; instead, employment itself has an important association with happiness. Happiness and employment are also significantly correlated with each other (Helliwell et al., 2021).

Lockdown on happiness

The World Happiness Report (Helliwell et al., 2021) reports that unemployment increased during the COVID-19 pandemic, and this was accompanied by a marked decline in happiness and optimism.

The pandemic also changed how we evaluated certain aspects of our lives; for example, the relationship between income and happiness declined. After all, what is the use of money if you can’t spend it? In contrast, the association between happiness and having a partner increased (Helliwell et al., 2021).

Wealthier states smile more, but is it real?


If we took a snapshot of happiness and a country’s wealth, we would find that richer countries tend to have happier populations than poorer countries.

For example, based on the 2021 World Happiness Report, the top five happiest countries — which are also wealthy countries — are Finland, Iceland, Denmark, Switzerland, and the Netherlands (Helliwell et al., 2021).

In contrast, the unhappiest countries are those that tend to be emerging markets or have a lower gross domestic product (GDP), e.g., Zimbabwe, Tanzania, and India (Graham, 2005; Helliwell et al., 2021).

At face value, this makes sense: Poorer countries most likely have other factors associated with them, e.g., higher unemployment, more crime, and less political stability. So, based on this cross-sectional data, a country’s wealth and happiness levels appear to be correlated. However, over a more extended period, the relationship between happiness and GDP is nil (Easterlin, 2004).

That is, the subjective wellbeing of a population does not increase as a country becomes richer. Even though the wealth of various countries worldwide has increased over time, the overall happiness levels have not increased similarly or have remained static (Kahneman et al., 2006). This is known as a happiness–income paradox.

Easterlin (2004) posits four explanations for this finding:

  • Societal and individual gains associated with increased wealth are concentrated among the extremely wealthy.
  • Our degree of happiness is informed by how we compare to other people, and this relative comparison does not change as country-wide wealth increases.
  • Happiness is not limited to only wealth and financial status, but is affected by other societal and political factors, such as crime, education, and trust in the government.
  • Long-term satisfaction and contentment differ from short-term, acute happiness.

Kahneman et al. (2006) provide an alternative explanation centered on the method typically used by researchers. Specifically, they argue that the order of the questions asked to measure happiness and how these questions are worded have a focusing effect. Through the question, the participant’s attention to their happiness is sharpened — like a lens in a camera — and their happiness needs to be over- or underestimated.

Kahneman et al. (2006) also point out that job advancements like a raise or a promotion are often accompanied by an increase in salary and work hours. Consequently, high-paying jobs often result in less leisure time available to spend with family or on hobbies and can cause more unhappiness.

Not all that glitters is gold

Extensive research explored whether a sudden financial windfall was associated with a spike in happiness (e.g., Sherman et al., 2020). The findings were mixed. Sometimes, having more money is associated with increased life satisfaction and improved physical and mental health.

This boost in happiness, however, is not guaranteed, nor is it long. Sometimes, individuals even wish it had never happened (Brickman et al., 1978; Sherman et al., 2020).

Consider lottery winners. These people win sizable sums of money — typically more extensive than a salary increase — large enough to impact their lives significantly. Despite this, research has consistently shown that although lottery winners report higher immediate, short-term happiness, they do not experience higher long-term happiness (Sherman et al., 2020).

Here are some reasons for this:

  • Previous everyday activities and experiences become less enjoyable when compared to a unique, unusual experience like winning the lottery.
  • People habituate to their new lifestyle.
  • A sudden increase in wealth can disrupt social relationships among friends and family members.
  • Work and hobbies typically give us small nuggets of joy over a more extended period (Csikszentmihalyi et al., 2005). These activities can lose their meaning over a longer period, resulting in more unhappiness (Sherman et al., 2020; Brickman et al., 1978).

Sherman et al. (2020) further argue that lottery winners who decide to quit their job after winning, but do not fill this newly available time with some type of meaningful hobby or interest, are also more likely to become unhappy.

Passive activities do not provide the same happiness as work or hobbies. Instead, if lottery winners continue to take part in activities that give them meaning and require active engagement, then they can avoid further unhappiness.

Happiness: Is it temperature or climate?

Like most psychological research, part of the challenge is clearly defining the topic of investigation — a task made more daunting when the topic falls within two very different fields.

Nettle (2005) describes happiness as a three-tiered concept, ranging from short-lived but intense on one end of the spectrum to more abstract and deep on the other.

The first tier refers to transitory feelings of joy, like when one opens up a birthday present.

The second tier describes judgments about feelings, such as feeling satisfied with your job. The third tier is more complex and refers to life satisfaction.

Across research, different definitions are used: Participants are asked about feelings of (immediate) joy, overall life satisfaction, moments of happiness or satisfaction, and mental wellbeing . The concepts are similar but not identical, thus influencing the results.

Most books on happiness economics are textbooks. Although no doubt very interesting, they’re not the easy-reading books we prefer to recommend.

Instead, below you will find a range of books written by economists that explore happiness. These should provide a good springboard on the overall topic of happiness and what influences it, in case any of our readers want to pick up a more in-depth textbook afterward.

If you have a happiness book you would recommend, please let us know in the comments section.

1. Happiness: Lessons from a New Science – Richard Layard


Richard Layard, a lead economist based in London, explores in his book if and how money can affect happiness.

Layard does an excellent job of introducing topics from various fields and framing them appropriately for the reader.

The book is aimed at readers from varying academic and professional backgrounds, so no experience is needed to enjoy it.

Find the book on Amazon .

2. Happiness by Design: Change What You Do, Not How You Think – Paul Dolan

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


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 for our readers to use in their professional and personal development.

In this section, you’ll find a few that should supplement any work on happiness and economics. Since the undercurrent of the topic is whether happiness can be improved through wealth, a few resources look at happiness overall.

Valued Living Masterclass

Although knowledge is power, knowing that money does not guarantee happiness does not mean that clients will suddenly feel fulfilled and satisfied with their lives.

For this reason, we recommend the Valued Living Masterclass , for professionals to help their clients find meaning in their lives. Rather than keeping up with the Joneses or chasing a high-paying job, professionals can help their clients connect with their inner meaning (i.e., their why ) as a way to find meaning and gain happiness.

Three free exercises

If you want to try it out before committing, look at the Meaning & Valued Living exercise pack , which includes three exercises for free.

Recommended reading

Read our post on Success Versus Happiness for further information on balancing happiness with success, in any domain . This topic is poignant for readers who conflate happiness and success, and will guide readers to better understand their relationship and how the two terms influence each other.

For readers who wonder about altruism , you would find it interesting that rather than hoarding, you can increase your happiness through volunteering and donating. In this post, the author, Dr. Jeremy Sutton, does a fabulous job of approaching altruism from various fields and provides excellent resources for further reading and real-life application.

Our last recommendation is for readers who want to know more about measuring subjective wellbeing and happiness . The post lists various tests and apps that can measure happiness and the overall history of how happiness was measured and defined. This is a good starting point for researchers or clinicians who want to explore happiness economics professionally.

17 Happines Exercises

If you’re looking for more science-based ways to help others develop strategies to boost their wellbeing, this collection contains 17 validated happiness and wellbeing exercises . Use them to help others pursue authentic happiness and work toward a  life filled with purpose and meaning

money can never buy happiness essay

17 Exercises To Increase Happiness and Wellbeing

Add these 17 Happiness & Subjective Well-Being Exercises [PDF] to your toolkit and help others experience greater purpose, meaning, and positive emotions.

Created by Experts. 100% Science-based.

As you’ve seen in our article, the evidence overwhelmingly clarifies that money does not guarantee more happiness … well, long-term happiness.

Our happiness is relative since we compare ourselves to other people, and over time, as we become accustomed to our wealth, we lose all the happiness gains we made.

Money can ease financial and social difficulties; consequently, it can drastically improve people’s living conditions, life expectancy, and education.

Improvements in these outcomes have a knock-on effect on the overall experience of one’s life and the opportunities for one’s family and children. Nevertheless, better opportunities do not guarantee happiness.

Our intention with this post was to illustrate some complexities surrounding the relationship between money and happiness.

Knowing that money does not guarantee happiness, we recommend less expensive methods to improve one’s happiness:

  • Spend time with friends.
  • Cultivate hobbies and interests.
  • Stay active and eat healthy.
  • Try to live a meaningful life.
  • Give some love (go smooch your partner or tickle your dog’s belly).

Diamonds might be a girl’s best friend, but money is a fair weather one, at best.

We hope you enjoyed reading this article. Don’t forget to download our three Happiness Exercises for free .

  • Brickman, P., Coates, D., & Janoff-Bulman, R. (1978). Lottery winners and accident victims: Is happiness relative? Journal of Personality and Social Psychology , 36 (8), 917.
  • Bruni, L. (2007). Handbook on the economics of happiness . Edward Elgar.
  • Clark, A. E. (2018). Four decades of the economics of happiness: Where next? Review of Income and Wealth , 64 (2), 245–269.
  • Csikszentmihalyi, M., Abuhamdeh, S., & Nakamura, J. (2005). Flow. In A. J. Elliot & C. S. Dweck (Eds.), Handbook of competence and motivation (pp. 598–608). Guilford Publications.
  • Diener, E., Sandvik, E., Seidlitz, L., & Diener, M. (1993). The relationship between income and subjective well-being: Relative or absolute? Social Indicators Research , 28 , 195–223.
  • Diener, E., & Oishi, S. (2000). Money and happiness: Income and subjective well-being across nations. Culture and Subjective Well-Being , 185 , 218.
  • DiMaria, C. H., Peroni, C., & Sarracino, F. (2020). Happiness matters: Productivity gains from subjective well-being. Journal of Happiness Studies , 21 (1), 139–160.
  • Easterlin, R. A. (1974). Does economic growth improve the human lot? Some empirical evidence. In P. A. David & M. W. Reder (Eds.), Nations and households in economic growth: Essays in honor of Moses Abramovitz (pp. 89–125). Academic Press.
  • Easterlin, R. A. (2004). The economics of happiness. Daedalus , 133 (2), 26–33.
  • Graham, C. (2005). The economics of happiness. World Economics , 6 (3), 41–55.
  • Haesevoets, T., Dierckx, K., & Van Hiel, A. (2022). Do people believe that you can have too much money? The relationship between hypothetical lottery wins and expected happiness. Judgment and Decision Making , 17 (6), 1229–1254.
  • Helliwell, J., Layard, R., & Sachs, J. (Eds.) (2012). World happiness report . The Earth Institute, Columbia University.
  • Helliwell, J. F., Layard, R., Sachs, J. D., & Neve, J. E. D. (2021). World happiness report 2021 .
  • Kahneman, D., Krueger, A. B., Schkade, D., Schwarz, N., & Stone, A. A. (2006). Would you be happier if you were richer? A focusing illusion. Science , 312 (5782), 1908–1910.
  • Nettle, D. (2005). Happiness: The science behind your smile . Oxford University Press.
  • Sherman, A., Shavit, T., & Barokas, G. (2020). A dynamic model on happiness and exogenous wealth shock: The case of lottery winners. Journal of Happiness Studies , 21 , 117–137.
  • Steptoe, A. (2019). Happiness and health. Annual Review of Public Health , 40 , 339–359.
  • Veenhoven, R., & Ehrhardt, J. (1995). The cross-national pattern of happiness: Test of predictions implied in three theories of happiness. Social Indicators Research , 34 , 33–68.

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Does More Money Really Make Us More Happy?

  • Elizabeth Dunn
  • Chris Courtney

money can never buy 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.

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Gary Bernhard, Ed.D. and Kalman Glantz, Ph.D.

Why Money Doesn't Buy Happiness

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

Posted August 25, 2022 | Reviewed by Michelle Quirk

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

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

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

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

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

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

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

Evolution of Emotional Well-Being

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

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

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

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

A Moving Goal

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

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

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

Gary Bernhard, Ed.D. and Kalman Glantz, Ph.D.

J. Gary Bernhard, Ed.D. has been involved in educational leadership for more than 40 years. Kalman Glantz, Ph.D. has spent nearly 30 years as a psychotherapist in private practice in Boston.

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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.

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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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.”


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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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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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 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.

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money can never buy happiness essay

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Greater Good Science Center • Magazine • In Action • In Education

Can Money Buy Happiness? It Depends on Why You’re Spending It

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.

money can never buy 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

Headshot of Elizabeth Hopper

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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One More Time, Does Money Buy Happiness?

  • Published: 19 September 2023
  • Volume 18 , pages 3089–3110, ( 2023 )

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money can never buy happiness essay

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This paper integrates multiple positions on the relationship between money and well-being, commonly referred to as happiness. An aggregation of prior work appears to suggest that money does buy happiness, but not directly. Although many personal and situational characteristics do influence the relationship between money and happiness, most are moderating factors, which would not necessarily rule out a direct link. Here, we discuss the cognitive and affective elements within the formation of happiness, which we propose play a series of mediating roles, first cognition, then affect, between money and happiness. The paper concludes with a discussion about how this proposal influences academic research and society as a whole.

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“As far as I am aware, in every representative national survey ever done a significant positive bivariate relationship between happiness and income has been found.” (Easterlin 2001 , 468). Easterlin supports this assertion with references to Andrews 1996 , xi; Argyle 1999 , 356–57; and Diener 1984 , 553.

A simple correlation of 0.2 is an oft-cited benchmark (cf. Easterlin 2001 , who labels it “highly significant”). At the same time, many researchers qualify the relationship, saying that income ultimately explains relatively little of the variance in self-reports of happiness: e.g., Ahuvia ( 2017 , 18) generalizes that “typically studies in developed economies indicate that income explains only about 3% of the difference in happiness.” Some twenty years prior to Ahuvia’s assessment, Frank ( 1997 ) offered a similar conclusion: the relationship between income and happiness is closer at lower levels of income than for middle- or upper-income households, where "variations in income explain less than 2% of variations in reported satisfaction levels” (citing Diener and Diener 1995 on 1835). Diener and Biswas-Diener ( 2002 , 123) summarize over a dozen correlations between income and subjective well-being, most ranging between 0.15 and 0.25. Kahneman and Deaton ( 2010 ) recommend that efforts to estimate the relationship between that subjective well-being and income should rely on a logarithmic transformation of income, providing a rationale based on Weber’s Law, having to do with the perception of change reflecting the percentage change and not the absolute change.

This literature review reflects the authors’ point-of-view that in answering the question of “how” money buys happiness economists have offered the highest-level, abstract answer (i.e., through a process of utility-maximization); psychologists and researchers into subjective well-being have sought a more precise accounting of what money buys vis-à-vis individual dispositions (e.g., personality) and motivations (e.g., materialism) as well as cultural or national determinants (e.g., individualism versus collectivism); and marketers and consumer researchers have inquired in the most detailed way as to how money delivers particular experiences and effects throughout the continuum of pre-purchase processes, the experience of consumption and post-purchase satisfaction.

Happiness data are a relative late-comers to economic analyses of this sort: “[T]he approach departs from a long tradition in economics that shies away from using what people say about their feelings. Instead, economists have built their trade by analyzing what people do and, from these observations and some theoretical assumptions about the structure of welfare, deducing the implied changes in happiness” (Di Tella and MacCulloch 2006 , 43). Kahneman and Krueger ( 2006 , 3) express a similar opinion: “[E]conomists have had a long-standing preference for studying peoples’ revealed preferences; that is, looking at individuals’ actual choices and decisions rather than their stated intentions or subjective reports of likes and dislikes.”.

An assertion strenuously challenged by Diener and Oishi 2000 and more modestly objected to by Frank ( 1997 , 1820), who interprets the data to say that there “is only slight evidence … that greater economic prosperity leads to more well-being in a nation.”.

Cummins ( 2000 ), in his review of personal income and subjective well-being, constructs a couple of straw men that reflect his estimation of how researchers into quality of life may view income ambivalently. At the outset of the review article, his abstract announces, "Conventional wisdom holds that money has little relevance to happiness." Later in the same review article, he identifies a bias "that can quite commonly be found within the QOL literature" (p. 139) that the rich are not as satisfied with their lot as commonly imagined. Chambers ( 1997 ) provides him with a suitable proof text in which "the link between wealth and well-being is weak or even negative" and therefore, "amassing wealth does not assure well-being and may diminish it” (at 1728 in Chambers). Cummins himself disavows this disciplinary tendency, ultimately labeling it “fanciful.”.

When it comes to terms like subjective well-being, life satisfaction, and happiness, there is some variation in the precision of the terminology. Thus, Kahneman and Krueger ( 2006 ) use life satisfaction and happiness as roughly synonymous in discussing the measurement of well-being and in emphasizing the measurement of emotional states. On the other hand, Diener may commonly use the term happiness as a convenient and widely used construct but will employ more precision in measuring or analyzing "types of well-being.".

E.g., basic needs met, psychological needs met, and satisfaction with living standards in Diener, Ng, Harter and Arora ( 2010 , 56).

E.g., pleasant affect, unpleasant affect, life satisfaction, and domain satisfaction in Diener, Suh, Lucas and Smith ( 1999 , 277).

Dunn et al. ( 2011 ) stake out this position with their article’s title “If money doesn’t make you happy, then you probably aren’t spending it right.”.

Thus, Scitovsky’s title, The Joyless Economy .

Actually, it is nice to be rich. (2023, March 24). The Week , 33.

Ahuvia, A. C. (2017). Consumption, Income and Happiness. In Alan Lewis (Ed.), The Cambridge Handbook of Psychology and Economic Behaviour, Cambridge. Cambridge: Cambridge University Press.

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Auerbach, A. J., Kotlikoff, L. J., & Koehler, D. (2016). US Inequality and Fiscal Progressivity: An Intragenerational Accounting. Available at SSRN 2747187 .

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Can Money Buy You Happiness? Essay

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I believe that money can buy a person happiness due to several reasons related to the costs of comfortable and healthy living. These costs include housing, medicine, and meaningful experience, which improve the quality of life. Despite the fact that luxury is often seen as an attractive point in favor of happiness via increased budget or spending, it is not necessary for well-being. Some researchers propose that happiness is dependent on the living standards and the perception of living circumstances, this is a theory of comparison (Muresan et al.). On the other hand, it is also possible to perceive happiness as the satisfaction of personal needs (Muresan et al.). Nevertheless, multiple factors are crucial to form a happy life which need to be reviewed in detail.

First of all, given that happiness is related to the satisfaction of personal needs, there is also a need to consider the essential need of human life such as housing, medicine, and food. These expenditures are continuous throughout human life. In order to be healthy, one needs medication and medical expertise to ensure long life without illnesses. Electricity and water bills need to be paid to ensure comfortable life at home, which includes cleanness, cooking, and entertainment in the form of TV programs or the Internet. Moreover, technological development led to the digitalization of numerous jobs and created the opportunity to interact with anyone despite the distance. This is essential because, without a job, there’s no source of income to pay the described bills, and connection with family and friends is known to improve life satisfaction and address humans’ social needs.

Other personal needs are often related to the purchase of things and meaningful or memorable experiences. It is well-known that a good experience may improve a person’s mood, resulting in satisfaction with life (Mogilner et al.). These experiences vary due to human individuality but are often connected to romance, socialization, personal development. Romance refers to the maintenance of a romantic relationship with a loved person. This indirectly incurs additional costs such as future marriage organization, dates, and small gifts, which contribute to the improvement of the mood. It is widely accepted that personal development leads to satisfaction with one-self. Personal development is related to the acquisition of new skills and broadening of one’s horizon or accumulation of knowledge. The services of trainers and teachers coupled with the purchase of books are not free and considered as spending outside of basic living needs. Furthermore, buying time or expenditures to free oneself from daily chores or unmeaningful but necessary tasks contribute to personal well-being (Mogilner et al.). Numerous researchers found that money spent on buying time alleviates time stress, and people who utilize these services feel happier (Mogilner et al.).

Living standards vary from country to country due to the differences in economic conditions. Consequently, higher living standards refer to higher costs for basic needs. The theory of comparison suggests that an increase in a personal income would not lead to a significant increase in happiness, given that the income of others would similarly increase. Nevertheless, studies identified that a certain threshold exists after which the effect of income on happiness is significantly reduced. For example, in the US, it is equal to 75 000$ (Mogilner et al.), while in Europe, it is close to 35 000$ (Muresan et al.). This demonstrates that an excessive increase in income is not necessary for well-being. Simultaneously, it points to the fact that below this threshold, people are not as satisfied with life and happy as they could have been.

In conclusion, money can buy happiness but only if spent correctly. The correct spending of money involves improvement and maintenance of life via memorable experiences, meaningful things, and satisfaction of basic needs. Moreover, it is not necessary to have an excessive amount of money certain threshold exists, which demonstrates that money cannot amount to complete happiness but attributes to its significant portion.

Works Cited

Mogilner, C., Whillans, A., & Norton, M. I. “Time, money, and subjective well-being.” Handbook of well-being. Edited by E. Diener, S. Oishi, & L. Tay, DEF Publishers, 2018.

Muresan, Gabriela Mihaela, et al. “Can Money Buy Happiness? Evidence for European Countries.” Applied Research in Quality of Life , vol. 15, no. 4, 2019, pp. 953–970. Web.

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Money can buy happiness: Here's how much you need and how to spend it, according to a financial therapist

  • Money can buy happiness up to a point — studies indicate emotional well-being rises with income up to about $75,000.
  • Researchers have also found that experiences make people happier because they enhance social relationships and are a bigger part of one's identity.
  • Spending money on experiences or items that align with your values can increase your potential for happiness.
  • This article was  medically reviewed  by  Alisa Ruby Bash , PsyD, LMFT, in Malibu, California. 

Insider Today

You know the phrase: money can't buy happiness. It turns out, that's not entirely true. Money can buy a certain degree of life satisfaction, depending on how much wealth you have and how you spend it. 

Research shows that emotional well-being rises along with income, up to a point. A 2010 study looked at surveys of 450,000 Americans and found that participants with higher incomes reported higher emotional well-being, up to an annual income of $75,000. After that, it drops off. 

Beyond simply having money, here's why being able to meet your basic needs, enjoying life experiences, and having social ties are also important factors for satisfaction and happiness in life.

Basic Needs

Lindsay Bryan-Podvin, LMSW , a financial therapist and author of "The Financial Anxiety Solution" says an annual income of $75,000 may not be the threshold for everyone. Being able to meet basic needs like food, housing, and healthcare are top priorities.  Then, the amount of satisfaction derived from income varies depending on factors like the cost of living in your area and your personal interests.

"The data is pretty clear that when we can financially take care of ourselves, our mental health is better," says Bryan-Podvin. "It's stressful to be on the grind all the time."

In fact, according to the CDC , adults living below the poverty level were three to four times more likely to have depression than adults living at or above the poverty level. 

The ability to meet basic needs without working multiple jobs also means you are more likely to have time for your friends and family, which is important for happiness. A Harvard study , which started in 1938 and tracked hundreds of men for nearly 80 years, collected data on both physical and mental well-being. The researchers found that close relationships, more than money or fame, keep people happy throughout their lives. 

Experience vs materials

Once you cover basic needs, whether money buys happiness may depend on what you spend it on, says Bryan-Podvin. 

There is a common theory that spending money on experiences will make you happier than spending money on material objects. Some studies back this up. A 2014 review found that experiences make people happier because they enhance social relationships, are a bigger part of one's identity, and are less likely to be compared to other people's experiences. 

A poll of more than 2,000 millennials in 2014 found that 78% prefer spending money on experiences or events compared to a material object. It's not just millennials. The same poll found that consumer spending on experience and events is up 70% since 1987. 

For some people, though, it may be buying a tangible item that brings the most happiness. "What research shows is if we have a very strong affinity for something, then we do get a lot of happiness out of buying that thing," says Bryan-Podvin, who gives the example of someone passionate about cars. 

When money doesn't buy happiness

One reason more money doesn't always equal more happiness is a tendency for what Bryan-Podvin calls "lifestyle creep." Meaning that when you are making more money, your expenses often go up.

For instance, you may end up spending money on things like a country club membership or dinners at more expensive restaurants. If this is happening, you may not feel like you don't have enough money even though you are making a substantial salary.  

Happiness also depends on how much you have to work to make that money. "You might be pulling in $300,000, which sounds great in theory, but if you are working 80 hours a week and can't enjoy the money you are earning, then what is the point?" says Bryan-Podvin. 

Bottom line

How much money a person needs to be happy varies. Happiness may depend on how much money is required to cover your own basic needs and what brings you joy personally.

For one person, that might be season tickets to the Yankees. For someone else, it might be a massage once a month or a new pair of running shoes. 

Ultimately, money can increase the potential for life satisfaction, depending on how you spend it. If you spend money on experiences or items that align with your values, you will increase your happiness, says Bryan-Podvin.

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money can never buy happiness essay

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June 28, 2024

Societies with Little Money Are among the Happiest on Earth

Wealth and well-being go together in many studies, but certain communities complicate this link

By Eric Galbraith

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You can’t buy happiness, as greeting cards and inspirational posters tell us, and the most important things in life are free . Yet the World Happiness Report , which is released every spring with widespread media coverage, consistently shows that the inhabitants of wealthy countries are at the top of its lists. What’s more, decades of psychological research have shown that individual wealth is strongly correlated with reported life satisfaction . And although it is often said that this effect is saturated at some level beyond which greater wealth has no effect , recent work in the U.S. has suggested that superwealthy people do actually tend to rate their life satisfaction higher than those who are just moderately wealthy.

So are the greeting cards or the statistical correlations right? Do human beings fundamentally need to be rich to be truly happy with their life?

To me, this perennial question is both fascinating and important. As a scientist studying the interplay between human behavior and sustainability issues, I would like to know whether the pursuit of greater wealth is truly required for humans to thrive. After all, the push to ensure economic growth is deeply rooted in industrialized societies. Many people have come to accept serious environmental consequences, including climate change, rather than take actions that might threaten their economy. As a result, our industrial civilization now threatens the future of all complex life on Earth. Are we on this self-destructive path because human happiness depends on making ourselves richer?

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To better understand this issue, I joined forces with an anthropologist, Viki Reyes-García of the Institute of Environmental Science and Technology at the Autonomous University of Barcelona. Most of the work on happiness to date has involved Western societies that are not representative of the broader human experience. We wanted to assess the happiness of people who had less need for money.

Reyes-García was preparing a large team to undertake an unprecedented survey of small-scale societies that was focused predominantly on understanding the impacts of climate change among people living in diverse settings on five continents. Many people in these groups identify as Indigenous, and all rely primarily on their local ecosystems for their livelihood, with little to no use of money on a day-to-day basis. We aimed to ask nearly 3,000 participants: “All things considered, how satisfied are you with your life on a scale from 0 to 10?” By asking the same question that has been used in many other global surveys, we’d be able to make a direct comparison to industrialized societies.

Visiting the communities was difficult, given that all are quite remote. Some were in South American jungles, others in arid African grasslands and still others in mountainous regions of South Asia. We translated surveys into local languages and conducted them through in-person interviews of roughly one hour in length, using randomly selected inhabitants from more than 100 villages. Because most of the people surveyed did not have a regular income, we estimated average monetary income from the value of household possessions that had been purchased (rather than made locally). For most of the communities, this indicated an average income of a few dollars per person per day.

The survey showed that, far from being miserable, the people in these small-scale communities report being just as satisfied as people in most countries of the world—despite having very little money. Although there was a lot of variation among interviewees, some communities reported very high levels of satisfaction (above 8 out of 10) that exceeded the national average in many wealthy countries. Our main finding indicates that despite having just a few dollars per day, many of these people are very happy, in their own estimation.

So how do we reconcile that finding with the many other studies that have consistently shown that people with more money tend to report being happier than those with less? The inhabitants of rich countries today enjoy a higher level of material wealth than anyone in history—how can it be that the members of some of these small-scale societies report being even more satisfied overall?

To begin with, our findings point to the danger of putting too much importance on a correlation, such as the one found between money and happiness. Money is an easy predictor to quantify, so it’s understandable that it’s studied frequently, but many other factors affect life satisfaction. In fact, we also found highly significant correlations between satisfaction and imputed wealth in the small-scale societies we visited, but it was an extremely small effect compared with other features of the societies. And as shown by a finding called the Easterlin paradox , increases in a society’s wealth over time do not consistently lead to increases in life satisfaction across that society.

These other features clearly matter a lot. Prior work has pointed, most importantly, to the role of social relationships . As deeply social animals, humans are tightly attuned to the security of their position within society, including the support they can count on from others. This primarily comes from the strength of interpersonal relationships and an assessment of one’s social standing. But social relations do not necessarily go together with wealth. What’s more, although the communities we studied have little money, they are not poor in the sense of lacking basic necessities, and many of the people in these societies spend their days in close contact with natural surroundings, something many studies suggest benefits well-being .

In addition, when it comes to the World Happiness Report specifically, its particular choice of survey question may contribute to wealthy countries topping its lists. Unlike our approach, which asked people to quantify overall life satisfaction, that report uses the “Cantril ladder.” Respondents imagine a ladder with their ideal life at the top and then decide on which rung they currently stand. Recent work has shown that the Cantril ladder tends to make people focus on their income relative to others —more than the basic life satisfaction question that we and other research groups used. As a result, the World Happiness Report may be telling us more about the degree to which people are satisfied with their income rather than their satisfaction with life overall. Another factor to consider—though it comes with additional nuances—is the lessening of well-being that comes from social comparison in highly inequitable societies. In general, the communities we studied have less financial inequality than many wealthy industrialized nations today.

So what does this mean for those of us living in industrialized countries? For most of us, money is required to meet basic needs, which are undoubtedly an essential foundation for happiness. Many low-income countries suffer from widespread corruption and intense inequality, with large numbers of people living in low-quality urban settings where access to basic facilities such as clean water, sewage and lighting is scarce. In a monetized society, money is essential, and having more of it usually helps.

But our findings underscore that fulfilling these basic needs—to the point where humans can lead a happy or satisfying existence—requires much less material wealth than industrialized societies are pursuing at present. And that’s good news for our planet. As an analysis published last year suggests, it is possible for all nations to meet their basic needs, including those related to education, health care and mobility, while achieving climate-stabilization goals.

My work with Reyes-García and our colleagues suggests that many countries and communities may be able to learn from the successful features of small-scale societies to improve aspects that are weak or missing. The Western focus on the individual , the moral acceptance of self-interested material accumulation and the increasing disconnection with other humans as people spend more time in the virtual world may all undermine happiness. It may be that at this point in history, the surest way to increase satisfaction with life in wealthy countries is to forget about economic growth and focus on growing a shared humanity. That shift might also be the key to securing the future of complex and beautiful life on Earth.

Are you a scientist who specializes in neuroscience, cognitive science or psychology? And have you read a recent peer-reviewed paper that you would like to write about for Mind Matters? Please send suggestions to Scientific American ’s Mind Matters editor Daisy Yuhas at [email protected] .

This is an opinion and analysis article, and the views expressed by the author or authors are not necessarily those of Scientific American .

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Money can't buy happiness, a neuroscientist explains why

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

Dean Burnett

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

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

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

What makes us happy?

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

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

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

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

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

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

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

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

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

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

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

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

Can too much money make us unhappy?

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

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

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

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

Read more about happiness:

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

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money can never buy happiness essay

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Essay on Money Can’t Buy Happiness

Students are often asked to write an essay on Money Can’t 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’t Buy Happiness

The meaning of happiness.

Happiness is a feeling of joy that comes from within. It’s when we feel good about our lives and the people around us. It’s not something you can go to a store and buy like a toy or a candy bar.

Money’s Role

Money is useful. It helps us buy things we need like food and a home. It can also help us have fun, like when we buy a game or go on a trip. But these things only make us happy for a short time.

Riches and Smiles

Some rich people have lots of money but are not happy. They may feel lonely or worried. This shows us that even with all the money in the world, you can’t buy a happy heart.

Lasting Joy

True happiness comes from love, friendship, and good memories. These are things that money can’t buy. Doing kind things for others or spending time with family and friends makes us truly happy.

250 Words Essay on Money Can’t Buy Happiness

What is true happiness.

True happiness is a feeling of joy, contentment, and well-being that comes from within. It’s not something you can pick up from a store or order online. Happiness is about feeling good inside your heart and mind, not about how much stuff you have.

Money and Things

Money can buy a lot of things like toys, games, and candy. But these things only make us happy for a little while. After some time, new toys become old, and the excitement fades. The joy that comes from things you can touch and buy does not last forever.

Love and Friendship

Think about the times you laugh with your friends or get a hug from your family. These moments give you a warm feeling that stays with you much longer than the happiness you get from a new toy. Love and friendship are priceless, and you cannot buy them with money.

Helping Others

Have you ever helped someone and seen them smile because of what you did? This kind of joy comes from giving, not getting. When you help others, you feel good on the inside. You can’t put a price tag on the happiness that comes from being kind.

The Simple Things

Often, the best things in life are free. Playing outside, talking with friends, or reading a good story can make you very happy. These simple pleasures do not cost anything, yet they fill us with happiness.

500 Words Essay on Money Can’t Buy Happiness

The meaning of true happiness.

Many people think that having a lot of money means you will be happy. They believe that when you are rich, you can buy anything you want, and that will make you happy. But true happiness is not something you can buy with money. True happiness comes from love, good health, and being content with what you have.

Love and Relationships

Think about the times you feel the happiest. Is it when you get a new toy, or is it when you are playing with your friends? For most of us, being with our family and friends makes us feel good. Laughing, playing games, and sharing stories are moments that make us happy. These moments do not cost anything. Money cannot buy the love of your family or the fun times with your friends.

Health is Wealth

Being healthy is very important for happiness. Sometimes, rich people are not healthy. They may have money to go to the best doctors, but they cannot buy good health. Eating well, getting enough sleep, and playing outside can keep you healthy. These things are better than any medicine and they do not need a lot of money.

Contentment is Key

Contentment means being happy with what you have. It does not matter if you do not have the newest video game or the latest sneakers. Being thankful for what you have is a big part of being happy. If you always want more, you will never be happy. Even if you have a lot of money, you will always be looking for the next thing to buy. But if you are content, you can find joy in the simple things in life.

The Best Things in Life Are Free

Some of the best things in life do not cost any money at all. Watching the sunset, playing in the park, and reading a good book are things that can make you very happy. You do not need to spend money to enjoy these things. Nature, art, and imagination are always there for you to enjoy.

Money and Happiness

Money can help you live comfortably. It can buy you a home, food, and clothes. But after your basic needs are met, more money does not mean more happiness. People with less money can be just as happy, or even happier, than rich people. When you have a lot of money, you might worry about it too much. You might be afraid of losing it or think about how to make more. This can make you feel stressed and not happy.

In conclusion, happiness is not something you can buy at a store. It comes from love, health, being content, and enjoying the simple things. Remember, the most precious moments in life are often the ones that money cannot buy. So, smile, play, and enjoy every day, and you will find that happiness is all around you.

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money can never buy happiness essay


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