Does money make you happy?  In short: Yes.

Does money make you happy? In short: Yes.

Our collective understanding of the relationship between money and happiness has taken an about-turn over the past few decades, as researchers increasingly discover strong links between people’s incomes and their daily happiness.

The old adage “money doesn’t buy happiness” over the past few decades has evolved to understand that individuals’ happiness increases with income – to a point of around $75,000 a year, thanks to a study very popular 2010 Princeton. In 2021, new research from the Wharton School at the University of Pennsylvania that found there was no such plateau changed public perception.

This research, led by Matthew Killingsworth, principal investigator at the Wharton School, collected 1.7 million emotional snapshots over the days from more than 33,000 participants and found that all measured forms of well-being continued to increase with income, regardless of dollar amount.

“There’s no critical income level that really changes that relationship,” Killingsworth says. And although happiness is correlated with other life factors, like education and marital status, he says his findings indicate that the relationship between income and happiness is stronger.

However, the close connection between money and happiness may have more to do with an individual’s desire for control than a desire for material possessions.

“Money gives people a sense of empowerment and freedom to live the life they want,” says Killingsworth. “It’s not necessarily because they buy more luxurious cars and have better meals, although they are, but a lot of what money does allows them to fulfill their intentions and desires by as agents in the world, instead of being too constrained by resources.

Another study published in January and led by Jon M. Jachimowicz, an assistant professor at Harvard Business School, further confirms the many ways money can be used as a problem-solving tool that results in more overall happiness.

In this study, 522 participants with incomes ranging from less than $10,000 to more than $150,000 tracked daily events and emotional reactions for 30 days in a diary. The results showed that although there was no significant difference in the frequency of stressful events experienced by participants across income levels, money was able to reduce the intensity of the emotional response to these. events.

And overall, the researchers determined that people with higher incomes report higher levels of life satisfaction.

“It’s not that rich people don’t have problems,” Jachimowicz told Harvard Business School’s Working Knowledge publication, “but having money allows you to solve problems and solve them faster. “.

Today, as inflation continues to eat away at Americans’ purchasing power, the cost of happiness could rise as well. Most U.S. wages haven’t kept pace with inflation, but principles revealed in the latest research on happiness and money can help individuals make the most of what they have .

“It’s very easy to get the wrong message out of this work,” says Elizabeth Dunn, a professor at the University of British Columbia and scientific director of Happy Money. “Money matters for happiness, it has never been in doubt. But it is not true that more money automatically brings happiness.

Instead, she says, consumers should take a closer look at how they spend their money.

“When inflation goes up, it’s like you have less money in your wallet, so you have to make more careful buying choices,” Dunn says. “People get more happiness from buying experiences than from buying material things.”

Additionally, Killingsworth’s research also found that the more people defined their personal success in terms of money, the less happy they were. Thus, he suggests individuals take a holistic approach.

“Some people might say, ‘What Matt’s study shows is that I should be making as much money as possible.’ I would say more money is better, but it’s one of many factors that matter,” Killingsworth says. “Even if my real dollars go down, especially in times of inflation, one way to thinking is that you can maintain a sense of control over your life in a way that doesn’t depend so much on money.”

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