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!)