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ChangingMinds Blog! > Blog Archive > 17-Feb-13

Sunday 17-February-13

Does money make you happy?

Ask anyone buying a lottery ticket and they will likely assure you that they would be very much happier if they won. Ask someone who has just won the lottery and they will tell you in no uncertain terms how joyful they are and how much happier their life will now be. But go back and ask them again in a year's time -- will their predictions of endless joy have come true? Will they be any happier at all than they were before their win?

It's a common perception, that money and happiness are positively correlated. Many studies have shown less connection and that, whilst 'enough' money is linked to happiness, more money is not. Being poor is not good, but being rich is not necessarily good either. Yet many of these studies were of middle-income subjects, opening them to doubt.

Now Lara Aknin and her colleagues have tested this with a survey of Americans of mixed age, gender and wealth. They found that people do indeed overestimate the link between money and happiness, but not in a consistent way.

When asked to estimate the happiness of people on lower or higher incomes than themselves, estimates by people on high incomes were largely accurate, but they were hugely underestimated by people on lower incomes.

Further analysis showed that people on higher incomes are more likely to overestimate the relationship between money and happiness, possibly because they have more to fear from losing the ability to maintain their current standard of living. Perhaps it's an American thing but many believed that earning less than the median household income is associated with severely diminished happiness.

It's a complex thing and perceptions of the happiness of other socioeconomic classes only muddies the water. Perhaps most significantly our actions towards money can be driven by fear and greed more than a purer seeking of happiness.

Reference:
Aknin, L., Norton, M., & Dunn, E. (2009). From wealth to well-being? Money matters, but less than people think. The Journal of Positive Psychology, 4 (6), 523-527 http://dx.doi.org/10.1080/17439760903271421