Money makes you think you’re happy
Does money make you happy? It's an age-old question, and two American researchers think they have the answer: it does... and it also doesn't. Andrew Letten reports.
SYDNEY: Does money make you happy? It’s an age-old question, and two American researchers think they have the answer: it does… and it also doesn’t.
More money may bring a life you think is better, but on an everyday basis you won’t actually be any happier for it, according to Daniel Kahneman and Angus Deaton from Princeton University, who authored the study in the Proceedings of the National Academy of Sciences.
Previous studies have found the relationship between wealth and well-being to be fairly weak.
Two types of happiness
Kahneman and Deaton, however, made a subtle but important distinction between two types of well-being: life evaluation, which is a person’s thoughts about their life over a long period, and emotional well-being, which is a measure of their daily emotions, such as joy, affection, anger and anxiety.
By distinguishing between these two different factors they discovered that the relationship between wealth and well-being is much more complex than previously thought.
Above an income of USD$75,000 per year, people in different wealth brackets experience the same ratio of positive and negative emotions on a daily basis. But significantly, life evaluations increased steadily with greater wealth.
450,000 responses analysed
To differentiate between the two types of well-being, the authors analysed 450,000 individual responses made in 2008 and 2009 to the Gallup-Healthways Well-Being Index (GHWBI) – a daily survey of 1,000 U.S. residents. The survey measures life evaluations by asking respondents to rate their lives on a scale of zero to 10, and their emotional well-being based on the different positive and negative emotions they experienced the previous day.
Overall, the results implies that once people exceed a certain level of income, emotional well-being is constrained by factors other than wealth, such as illness or stress, according to the researchers.
However, the relationship doesn’t hold below an income of $75,000, with respondents reporting decreasing levels of happiness, and diminished ability to deal with life’s misfortunes. In other words, painful experiences have a lesser impact on the rich.
Against the dominant view
Mark Wooden from the Melbourne Institute of Applied Economic and Social Research, who researches the relationship between wealth and well-being, told Cosmos “the study is interesting because it goes against the dominant view in the literature that money can’t buy happiness. It also clearly shows that how you measure well-being is very important.”
“It’s important to note this study does not address the issue of how emotional well-being and income correlate over time. And it’s possible that such an analysis could yield a very different result,” he said.