There are a lot of conversations, arguments, and statements on the topic of the correlation between happiness and income. Even celebrities don’t miss the opportunity to joke about it. For example, Arnold Schwarzenegger once said: “Money won’t make you happier. I have 50 million, and I am as happy as I was when I had 48 million.”
Wealth is no guarantee of happiness. People love doing things that don’t bring them money but still make them happy, for example, watch matches through a betting app, cook their favorite meal, or chat with friends. However, scientists have long investigated the relationship between income and life satisfaction. Let’s find out what conclusions scientists have come to and whether there is actually a connection between money and happiness.
The Economics of Happiness
People began to study the dependence of happiness on the level of income back in the 1970s of the last century. American scientists led by Richard Easterlin found that the population’s income has grown significantly over the past few years. But the level of happiness has not changed and has even become lower. Scientists became interested in this phenomenon and conducted a broader study to form the famous Easterlin paradox.
“At a certain point, happiness may depend on income, but in the long run, this connection disappears.”
The scientific community did not stop there, they tried to determine the boundary at which the link between income and happiness breaks down. As a result of new research in 2010, scientists Daniel Kahneman and Angus Deaton identified the average boundary for American citizens — $75,000. According to scientists, after this mark, increasing income has no effect on a person’s satisfaction.
In the 2022 study, this figure was adjusted to $100,000, which showed a direct correlation with the country’s GDP. However, the main findings remained unchanged. Money plays a big role in shaping happiness, especially for low-income people. However, the rich don’t experience greater satisfaction as their income rises.
Easterlin’s paradox has been refuted many times by different researchers. For example, Matthew Killingsworth, a senior researcher at the Wharton School of Business at the University of Pennsylvania. He used a more precise methodology to determine happiness levels. Instead of a general satisfaction survey, he recorded the state of the respondents at different periods, forming a picture of life satisfaction.
In the end, the scientist found out that there is no certain amount that defines the income boundary. In general, happiness is not related to the amount, but to the feeling of freedom and the possibility of choice that comes with money.
What Psychologists Think About This
Studies on happiness and money are difficult to call objective because scientists have not agreed among themselves what to mean by “happiness.” In a broad sense, this concept is invested in how a person assesses his own life, how satisfied he is with his social and economic situation. From the point of view of psychology, this methodology isn’t entirely incorrect, since satisfaction isn’t the only factor that forms the feeling of happiness.
Psychologists differ in the definition of happiness. Some see happiness in self-realization, others — in satisfaction with life. But one way or another, they associate happiness with the satisfaction of their deepest desires and needs. The difficulty is that not everyone is able to understand their desires. Often, a person’s needs aren’t true but merely serve as a reflection of their environment. They are a series of stereotypes, attitudes, and ideas imposed by society and family.
Remember that a person quickly gets used to good things, and what brought happiness before, loses its novelty. This is how people come to be disappointed by big money. “My income has increased, I can buy myself anything I want. Why do I feel sad and irritated with my life?”
Psychologically speaking, money cannot be a source of happiness in itself. But they can be an instrument of achievement. For example, a person feels an inexplicable elation when climbing another mountain. At that moment, he really felt happy. On the one hand, his happiness is not directly related to money. On the other hand, he bought the equipment, paid for the trip, and hired a guide. And all this helped him to experience the very feelings for which he earned the money.
The Relationship Between Low Income and Happiness
Despite the differences in approach and research, both scientists and psychologists emphasize one common detail — low income almost always makes people unhappy. Poverty causes chronic stress, which in turn leads to depression and even puts a strain on the heart.
But the main reason why low-income people are unhappy is that they can’t even meet their basic needs and fulfill their dreams. All the money is spent on loans, rent, groceries, and travel. Any unexpected expense, for example, if the washing machine breaks down or a jacket tears, causes the need to save money.
Financial freedom, on the contrary, gives a certain level of happiness. A person stops thinking only about survival and can direct his attention and efforts to understand what he really wants and how to achieve it. For example, to spend a vacation at the sea, to learn to play the guitar, or to move to a big, beautiful house to meet the dawn on your own porch.
By satisfying even their small desires, people gradually approach happiness with any level of income. After all, you don’t always need money to be happy. Sometimes it’s possible to experience a sense of deep satisfaction from even simple things. Although a high income makes it easier to access the things that make us truly happy.
