STUDIES show that for most people, happiness increases steadily as income rises and can even accelerate at higher earnings. For a small cohort of chronically unhappy people, money increases happiness but then plateaus completely. Research indicates that up to 74% of the link between money and happiness is driven by a greater sense of life autonomy and freedom from daily stress. Wealth brings happiness up to a certain point by removing financial stress and meeting basic needs. However, beyond achieving security, more money has a smaller impact and true well-being depends more on personal relationships, health and a sense of purpose. Money pays for food, housing and medical care, which lowers daily worry. Having savings give you choices and safety when unexpected problems happen. Income has the strongest and most direct impact when lifting individuals out of poverty, where money solves basic safety and survival challenges. However opinions are mixed, with users noting that while day-to-day emotional well-being can level off at higher brackets, overall life evaluation and satisfaction continue to scale with wealth.
Wealthy people may be happier. But a new study finds that money can’t buy a sense of purpose. New research report published in a journal “Emotion” by Aaker and her colleagues, they not only challenge the assumption that happiness is binary but also find that the relationship between happiness and our sense of meaning can change depending on our financial situation. In another interesting research by a Professor at Stanford Graduate School of Business, who has extensively studied happiness and money finds that when people get wealthier they experience greater happiness but this research suggests that the nature of happiness also shifts based on income. The researchers began by looking at the United States, where they first discovered the correlation between meaning and happiness as income decreases. At first, they wondered if this was particular to Americans. Yet as the team expanded its study to analyze large-scale datasets spanning more than 500,000 people from 123 countries on six continents, the same patterns emerged.
“The results were almost universally consistent across the United States and much of the world. Among low-income people, having a sense of meaning in one’s life is more closely associated with overall happiness.” Are people who earn more money happier in daily life? Though it seems like a straightforward question but research had previously returned contradictory findings, leaving uncertainty about its answer. Foundational work published from Princeton University had found that day-to-day happiness rose as annual income increased, but above $75,000 it leveled off and happiness plateaued. In contrast, work published later from the University of Pennsylvania found that happiness rose steadily with income well beyond $75,000, without evidence of a plateau. To reconcile the differences, the two paired up in what’s known as an adversarial collaboration. The resultant research shows that, on average, larger incomes are associated with ever-increasing levels of happiness. In the simplest terms, this suggests that for most people larger incomes are associated with greater happiness. However, it adds that for emotional well-being money isn’t the “be all end all. Money is just one of the many determinants of happiness. Money is not the secret to happiness, but it can probably help a bit”.
Fifty years ago, Richard Easterlin asked a fundamental question: does getting richer make us happier? His work gave rise to the Easterlin paradox: while the wealthy tend to be happier than poorer people, as countries get richer their populations don’t necessarily get happier. Recent analysis of international data shows the paradox still holds. International data on well being from over 150 countries provides insights into the relationship between income and happiness. For individual people the picture is clear – other things equal, richer people report higher well being on average than poorer people.
Among low-income countries, those with higher incomes report higher average well being. This is true both across countries and over time. But among high-income countries, this relationship no longer holds – richer countries are not happier than poorer countries, once ‘social variables’, like health and social networks, are accounted for. Nor do they become happier over time once these factors are accounted for. This supports the original Easterlin proposition for these countries. These findings have important implications for policy makers. Economic growth remains vital to improving well being for low-income countries. But for high-income countries, prioritizing policies that strengthen social support networks, improve public health and promote freedom and trust might have a more substantial impact on the happiness of their populations.
Ancient Greek philosophers generally viewed happiness (eudaimonia or human flourishing) as the highest goal of life, but they overwhelmingly agreed that wealth is not the source of happiness. While some saw a moderate amount of money as a useful tool, others viewed riches as a distraction or trap. True happiness comes from living a virtuous life in accordance with reason. Aristotle taught that a baseline level of external goods—including moderate wealth, health and friends—is helpful because poverty can prevent people from doing noble deeds (like being generous). Chasing excessive wealth for its own sake is a mistake because money is only a means to an end, not an end in itself.
Plato argued that true wealth does not mean having a large bank account, but rather living with minimal desires. He believed that an intense focus on commerce, money and luxury corrupts the soul and prevents a person from developing wisdom and moderation. Cynic philosophers like Diogenes of Sinope rejected wealth entirely, choosing a life of extreme voluntary poverty. They viewed money and material possessions as artificial chains that enslave people to society’s superficial expectations. True happiness comes from needing nothing.
—The writer is Former Civil Servant and Consultant (ILO) & International Organisation for Migration and author of seven books.
