Can Money Buy Happiness?

Does money buy happiness? Maybe, but it’s not a simple question to answer. There are many studies on the topic and many factors that come into play, such as:

• cultural values

• where you live

• what matters to you

• how you spend your money

Some even argue that the amount of money matters, and that you may not feel additional happiness after amassing a certain amount of wealth.

Keep reading to learn what the research says about the connection between money and happiness.

What’s the connection between money and happiness?

Things that bring you happiness can be said to have intrinsic value. This means they’re valuable to you but don’t necessarily represent a standard value for happiness to others.

Money, on the other hand, has extrinsic value. This means that others recognize money has real-world value, too, and will (generally) accept it.

For example, you may find pleasure in the smell of lavender, but someone else might find it less appealing. Each of you assigns a different intrinsic value to the scent of lavender.

You can’t literally buy happiness at a store. But when money is used in certain ways, such as purchasing things that bring you happiness, you can use it to add intrinsic value to your life.

So, if the smell of lavender brings you joy, you could use money to buy it in various forms and keep it around your home or office. That, in turn, may increase your happiness. In this example, you’re using money to indirectly bring you happiness.

This can apply to numerous situations. But, while the things you buy may bring short-term happiness, they may not always lead to long-term or lasting happiness.

Here are some further arguments for and against money buying happiness.

Money may increase happiness and health for people affected by poverty

A 2018 study looked at what would happen over time if women in poverty-stricken households in Zambia were given regular cash transfers with no strings attached.

The most notable finding was that, over a 48-month period, many women had a much higher sense of emotional well-being and satisfaction about their health, for both themselves and their children.

A 2010 study based on a Gallup poll of more than 450,000 respondents suggests that making an income up to $75,000 a year may make you feel more satisfied with your life. This survey only looked at people in the United States.

Another Gallup poll from 2017 surveyed people from around the world and resulted in similar findings. According to survey results, emotional well-being may be reached when a person earns between $60,000 and $75,000. Satiation may occur when a person earns around $95,000.

Culture may affect this threshold. Depending on your culture, you may find happiness in different things than someone with different cultural values.

These studies and surveys suggest that money may help buy happiness when used to meet basic needs.

Access to healthcare, nutritious foods, and a home where you feel safe can improve mental and physical health and may, in some cases, lead to increased happiness.

Once basic needs are met, however, the happiness a person can gain from money may grow stagnant.

Does how you spend money matter?

Yes! This is the heart of the debate.

Buying “experiences” and helping others can lead to happiness. And there’s some actual research behind this.

Results from a survey of research on this topic suggest that spending money on experiences rather than tangible goods and giving to others with no thought of reward results in the greatest feelings of happiness.

This could take the form of going to a concert instead of buying a new TV, or buying someone you love a thoughtful gift rather than indulging yourself in an impulse buy.

And here’s another thing to think about: An extensive 2015 survey of literature about emotions and decision making found that your subjective judgement of the value of something has a lot to do with how you feel about the outcome. The authors called this the appraisal-tendency framework (ATF).

For example, if you’re afraid of your house being broken into, buying a state-of-the-art home security system may reduce your level of fear, which can then improve your happiness or emotional well-being.

In this case, your happiness is linked to your subjective experience of fear.

Is there a magic number?

Yes and no. Believe it or not, some research has been done on this.

A 2010 study by noted economist and psychologist Daniel Kahneman found that, where wealth is concerned, a person’s satisfaction with their life no longer increases after about $75,000 a year.

At this point, most people are better able to handle major life stressors like poor health, relationships, or loneliness than if they’re making less or are below the poverty line.

Beyond that, daily habits and lifestyle are the main drivers of happiness.

Results from a more recent study that looked at happiness in European populations points to a much lower dollar amount being equated to happiness: 27,913 euros a year.

That’s equivalent (at the time of the study) to about $35,000 a year. That’s half of the American figure.

This may have to do with relative costs of living in the United States compared to Europe. Healthcare and higher education are often less expensive in Europe than in the United States.

The researchers also mention several other cultural factors that may contribute to the lower correlation of money to happiness in these countries.

Other ways to increase happiness

Money may not buy happiness, but there are some things you can do to try to increase happiness. Consider the following:

• Write down what you’re grateful for. Literally “counting your blessings” can help you feel more positive. Instead of thinking about what you don’t have, think about the things you do have.

• Meditate. Clear your mind and focus on your inner self rather than your possessions. Focus on who you are versus what you own.

• Exercise. Exercise can help increase endorphins, which can lead to short-term happiness. Exercise may also help you feel more confident or comfortable in your own skin.

Takeaway

Money is unlikely to buy happiness, but it may help you achieve happiness to an extent. Look for purchases that will help you feel fulfilled.

And beyond that, you can find happiness through other nonfinancial means, like spending time with people you enjoy or thinking about the good things in your life.

Medically reviewed by Timothy J. Legg, Ph.D., CRNP — Written by Tim Jewell