Retrospectacle: A Neuroscience Blog

Money Can Buy Happiness

You’ve all heard the old adage “Money can’t buy happiness.” But honestly, money can buy a Ferrari, and when was the last time you saw someone in a Ferrari who wasn’t smiling? Now, I’m surely not saying that money is everything. Its not by a long shot. However, we live in a material world, and we are all material girls…………or so says psychologist Dr. Ed Diener of the University of Illinois and economist Andrew Oswald. However, the effect of money on happiness seems to be small, and only effective up to a certain income level. While people who make $150,000 are consistently more happy than people who make $40,000, the average happiness of lotto winners 2 years post winning isn’t much improved. However people in lower income brackets like ‘$20,000 and less’ are half as likely to report being “very happy” as those in higher income brackets.

“People exaggerate how much happiness is bought by an extra few thousand,” Oswald said. “The quality of relationships has a far bigger effect than quite large rises in salary…. It’s much better advice, if you’re looking for happiness in life, to try to find the right husband or wife rather than trying to double your salary.”

This doesn’t come as a huge surprise to me that there is *some* effect—everyone is happier when their basic needs are met and they have the wherewithal for hobbies and vacations. Its unlikely that caviar and Kristal will make you significantly more happy that lasagna and beer, but it certainly would make you happier than kool-aid and ramen noodles. (I speak from experience!)

Comments

  1. #1 Mustafa Mond, FCD
    November 27, 2006

    I don’t want to buy happiness, I just want to look into short term leases.

  2. #2 NJ
    November 27, 2006

    The complete version of the old adage:

    Money cannot buy happiness; it will, however, allow you to buy the kind of unhappiness you prefer.

  3. #3 MarkP
    November 27, 2006

    Money may not buy happiness, but being poor sucks.
    Don’t knock ramon, it’s still great on a cold night – with a bottle of wine.

    Seriously I’d say the correlation in the study is backwards. It’s not that money makes people happy, it’s that happy people tend to make more money (correlation << 1). That’s why plopping lotto winnings into a poor person’s lap doesn’t change much. It’s the bad life habits and choices that got them to being poor in the first place that are the problem.

  4. #4 Shelley Batts
    November 27, 2006

    It’s not that money makes people happy, it’s that happy people tend to make more money

    I certainly think you’re onto something here. Happiness is a two-way street- being unhappy affects your job performance, relationships, self-worth etc which may serve as a feedback loop making you MORE unhappy. Likely the same goes for being happy. If you love your job, you’ll excel, be promoted, etc…..

  5. #5 dignam
    November 28, 2006

    Well, a guy in a Ferrari was smiling until he did this and wound up doing this. But then again, he was outrunning this so perhaps the question of money and happiness is moot when you look like you have lots of both but are in fact a double debtor.

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