Can money buy you happiness? Many people believe that wealth leads to greater happiness, others believe that while money is helpful, its ability to buy happiness is limited.
One of the best things people say money provides is a sense of security. The peace of mind that comes with money also contributes to lower stress levels, facilitating better mental and overall health.
Having a certain level of financial freedom alleviates anxieties related to paying bills, covering unexpected expenses, medical emergencies, etc., contributing to overall life satisfaction.
Is there a linear correlation between money and happiness?
In 2010, Daniel Kahneman and Angus Deaton, Nobel Prize laureates, published a study that showed a rise in income increased people’s wellbeing, but only to a certain extent, beyond which there was no increase in wellbeing.
According to the study High income improves evaluation of life but not emotional wellbeing, the relationship between money and happiness is not linear. While money temporarily boosts mood or allows you to buy certain things, it does not necessarily lead to long-term fulfilment. Beyond a certain threshold, in a phenomenon known as the hedonic treadmill, increasing income causes a decrease in happiness. This is because a person quickly adapts to a better standard of living and seeks even greater levels of wealth, leading to an endless cycle of greed and dissatisfaction.
This perpetual pursuit of wealth often comes at the expense of sacrificing other essential aspects of life, such as relationships with family, and friends, that contribute to our wellbeing. Our relationships with the people around us provide us with a sense of purpose. Using time and resources towards to improve our connections with others, and promoting personal growth ultimately leads to greater happiness.
So, how can you use the money you have to enhance your happiness? Research offers some insights:
Positive actions drive happiness
Sonja Lyubomirsky, an American professor, in her book titled The How of Happiness highlights how doing positive activities with a purpose can make you happier and boost your mood.
According to her research, happiness is mainly affected by three things: your genes, your life situations, and what you do on purpose. Genes play a crucial role and account for about half of your happiness. Life circumstances, such as your house, or job, make up about 10 per cent. But the most important part is that all actions you do with a purpose, such as choosing to be kind or grateful, account for the remaining 40 per cent. This means that you have a lot of power to make yourself happier through the things you actively choose to do and think about.
Research by Elizabeth Dunn on prosocial spending shows that spending money to help others can contribute towards your happiness. When we spend money on someone else, it makes us feel good, creating a sense of fulfilment and satisfaction. By prioritising prosocial spending, whether it be small or large amounts, we not only benefit others but also experience greater contentment in our own lives.
Materialism decreases happiness
Psychologist Dr Tim Kasser is known for his research on materialism and its impact on wellbeing. He has written extensively on the relationship between values, goals, and happiness, particularly emphasising the negative effects of materialistic pursuits.
Dr Kasser argues that an overemphasis on materialistic values, such as the pursuit of wealth, possessions, and status, can negatively impact overall wellbeing. He suggests that people who prioritise materialistic goals often experience lower levels of life satisfaction and happiness.
They also tend to have poor interpersonal relationships, contribute less to the community, and engage in more ecologically damaging behaviours.
Experiences form a big part of your happiness
A study conducted in 2014 by Thomas Gilovich showed that spending money on experiences makes people happier. This is mainly for three reasons: first, shared experiences help you connect with others better than materialistic things do. Experiences shape your thinking and become a big part of who you are. Third, experiences are judged on their own merits, so you tend to not compare them to others as much as you do with the things you buy.
Money can help fix problems
After examining the relationship between money and happiness, Harvard Business School professor Jon Jachimowicz concludes: “It’s not that rich people don’t have problems, but having money allows you to fix problems and resolve them more quickly”.
He asked 522 participants with incomes ranging from US$10,000 ($AU15,158) to more than $US150,000 ($AU229,000) to keep a diary for 30 days and record their emotional responses to events.
He found that:
1. Money reduces intense stress, especially around negative events.
2. Having more money brings you greater control over your daily life.
3. People with higher incomes are generally more satisfied with their lives.
Do you think money makes you happier? Why not share your thoughts in the comments section below?
Also read: Eighty-year study reveals the secret to happiness
I was happy when we didn’t have money when we were younger and I am happy when we have enough money to live on in our older age.