No one wants to appear shallow, So it’s no surprise that there are countless books and articles out there that go to great lengths to convince us that money does not buy happiness.
The problem with the money-doesn’t-buy-happiness theory is that the facts don’t support it. A large body of empirical research reveals a strong positive correlation between money and happiness. Not everyone who is poor is unhappy and not everyone who is rich is happy. Nonetheless, the higher your annual household income, the more likely you are to report that you are happy on a day-to-day basis and that you are satisfied with how your life is going.
The bigger problem with the money-doesn’t-buy-happiness theory is that its well-intentioned efforts to remind us that there is more to life than money can take the focus off the ongoing need to create the jobs and economic conditions that facilitate happier lives.
Being rich not always the path to happiness, but…
A recent piece by Robert Fulford in the National Post entitled “Explaining the rich man’s misery” is a case in point.
Fulford is right: some rich people are very unhappy. This should not be a big surprise to anyone. Unless you are like Scrooge McDuck and enjoy diving into piles of coins, you probably agree that money alone is not enough to ensure a happy life. Good relationships, a sense of purpose, time to relax and genetics are just some of the other factors that affect an individual’s happiness.
But this does not mean, as Fulford suggests, that “psychologists, sociologists and other social scientists have discovered that money does not in fact bring happiness.”
A 2009 Gallup survey that included 450,000 interviews with Americans was used by two Princeton happiness experts to show that day-to-day happiness grows with household income up to about $75,000. (Unfortunately, we don’t have good data like this for Canada, but the basic pattern is likely to be the same.) Day-to-day happiness is measured by asking respondents a battery of questions about how they felt the day before the survey such as did you feel joy, were you stressed-out and did you laugh and smile a lot?
Because it’s often left out when the Princeton study is cited, it’s important to note that day-to-day happiness plateaus, but does not drop, after $75,000. More money does not lead to more misery.
According to the same study, a second measure of happiness – a person’s sense of satisfaction with their life overall – rises with income and keeps rising past $75,000.
These statistics are averages, so there are exceptions. Nonetheless, someone with a household income of $20,000 is more likely to say they are less happy (on both a day-to-day basis and in terms of life satisfaction) than someone with a household income of $40,000 or $80,000 or $160,000.
Admittedly, we do not fully understand the relationship between happiness and income. This is especially true when comparing the average happiness levels of different countries. Paraguay, for example, is the happiest country in the world in terms of day-to-day happiness, but it doesn’t even make the top 100 when it comes to per capita GDP.
Despite this, we know that money and happiness are linked on an individual level for most people.
Money just makes life better
It may not be intentional, but the mantra that money does not buy happiness implies that being poor may not be such a bad thing and that efforts to raise incomes are misguided.
It’s easy for the guy who has quit his well-paying job and retired to his mortgage-free cabin to denounce soul-destroying materialism and celebrate the joys of a more simple life. It’s a lot harder to take this path when you are working two low-paying jobs just to make the rent and feed your kids. For most of us, money makes life better.
Robert Roach is a Senior Analyst and Thought Leader with ATB Financial’s Economics and Research Team and a Senior Fellow at the Atlantic Institute for Market Studies. The opinions expressed in this column are his own
*This article appeared on the Troy Media website