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Surprise, Surprise: Money Can Buy Happiness After All

A new study shows that more money does mean more happiness, no matter the income level.

Surprise, Surprise: Money Can Buy Happiness After All

Maybe that old saying about money not being able to buy happiness made sense in like 1812, when all you could buy were horseshoes, but today it just sounds silly. And in recent times, experts thought they’d figured out that it is silly—at least a little bit. The Easterlin paradox, an economic principle that became conventional wisdom over the last few decades, held that money could in fact buy happiness—but only to a point. Once you go beyond being able to pay for basic needs, the thinking went, money actually didn’t do much. In a way, the paradox added an asterisk to the old adage.

But now, a pair of economists from the University of Michigan want to make a further revision—more of a strike-through, really, than another amendment. Looking at a slew of new data sets from around the world, the researchers found no evidence of the Easterlin paradox’s existence. In other words, they determined that no matter where you lived in the world, more money did mean more happiness. Here’s Dylan Thomas breaking down the new findings over at the Washington Post:

The answer, economists Betsey Stevenson and Justin Wolfers found, was that Easterlin was just wrong. There is a clear upward relationship between income and happiness. It’s just logarithmic: the happiness value of the next dollar you earn is always worth less than the one you earned before it.

Further, there’s a difference between happiness (the answers people to give to questions like "Taking all things together, would you say you are: ‘very happy,’ ‘quite happy,’ ‘not very happy,’ ‘not at all happy?’") and life satisfaction (the answer they give to questions like "All things considered, how satisfied are you with your life as a whole these days?"). Easterlin treated the two measures as roughly synonymous (the graph above uses life satisfaction, for instance), but they’re not. Stevenson and Wolfers find a stronger correlation between income and life satisfaction than they do between income and happiness, for instance.

So, no huge surprise there. But it is interesting to think about why this might be the case. Is it really so universally obvious that more money will always mean more satisfaction? Or could it be a recent phenomenon—the product of a globalized economy that’s increasingly filled the world with new things to buy over the last half century? Or maybe we’re changing. Maybe accumulating wealth—not just enough to provide for our families but as much as we can possible snatch up—really is more important to us than it was our ancestors, like spending our entire existence in a materially obsessed society has rewired our brains to need stuff.

It’s hard to say. You do read a lot about people finding true happiness when they give away all their worldly possessions. But then again, a good deal of the time they’re people who are already filthy rich.

Read more about the study here.

[ILLUSTRATION: Emotions via Shutterstock]