can money buy you happiness essay

Does More Money Really Make Us More Happy?

by Elizabeth Dunn and Chris Courtney

Summary .

But even having just a little bit of extra cash in your savings account ($500), can increase your life satisfaction. So how can you keep more cash on hand?
Ask yourself: What do I buy that isn’t essential for my survival? Is the expense genuinely contributing to my happiness? If the answer to the second question is no, try taking a break from those expenses.
Other research shows there are specific ways to spend your money to promote happiness, such as spending on experiences, buying time, and investing in others.
Spending choices that promote happiness are also dependent on individual personalities, and future research may provide more individualized advice to help you get the most happiness from your money.

How often have you willingly sacrificed your free time to make more money? You’re not alone. But new research suggests that prioritizing money over time may actually undermine our happiness.

Partner Center

Skip to main content
Keyboard shortcuts for audio player

Planet Money

LISTEN & FOLLOW
Apple Podcasts
Amazon Music

Your support helps make our show possible and unlocks access to our sponsor-free feed.

Can money buy happiness?

Nick Fountain

Sean Saldana

Left to Right: Barb Mellers, Daniel Kahneman, & Matt Killingsworth. Courtesy of Barb Mellers; Andreas Rentz/Getty Images for Burda Media; Courtesy of Matt Killingsworth. hide caption

Left to Right: Barb Mellers, Daniel Kahneman, & Matt Killingsworth.

People often say that money can't buy you happiness. Sometimes, if you ask them to tell you more about it, they'll mention a famous 2010 study by Nobel Prize winners Daniel Kahneman and Angus Deaton. That study found that higher household income correlates with greater emotional well-being, but only up to around $75,000 a year. After that, more money didn't seem to matter.

This was a famous study by two famous academics. The result stood for over a decade. And it feels good, right? Maybe the rich aren't so much happier than anyone else. But researchers have recently done a complete 180 on this idea. In 2021, psychologist Matt Killingsworth found nearly the opposite: That more money does correlate with more happiness. And that the relationship continues well beyond $75,000 per year.

Today on the show: Does more money mean fewer problems? Two researchers with totally different takes come together to hammer out a better understanding of the relationship between money and happiness.

How To Measure Happiness

This episode was hosted by Sally Helm and Nick Fountain. It was produced by Sean Saldana, Sam Yellowhorse Kesler, and Emma Peaslee. It was edited by Meg Cramer and fact-checked by Sierra Juarez. Engineering by Cena Loffredo. Alex Goldmark is Planet Money's executive producer.

Help support Planet Money and hear our bonus episodes by subscribing to Planet Money+ in Apple Podcasts or at plus.npr.org/planetmoney .

Always free at these links: Apple Podcasts , Spotify , the NPR app or anywhere you get podcasts.

Find more Planet Money: Facebook / Instagram / TikTok / Our weekly Newsletter .

More Proof That Money Can Buy Happiness (or a Life with Less Stress)

When we wonder whether money can buy happiness, we may consider the luxuries it provides, like expensive dinners and lavish vacations. But cash is key in another important way: It helps people avoid many of the day-to-day hassles that cause stress, new research shows.

Money can provide calm and control, allowing us to buy our way out of unforeseen bumps in the road, whether it’s a small nuisance, like dodging a rainstorm by ordering up an Uber, or a bigger worry, like handling an unexpected hospital bill, says Harvard Business School professor Jon Jachimowicz.

“If we only focus on the happiness that money can bring, I think we are missing something,” says Jachimowicz, an assistant professor of business administration in the Organizational Behavior Unit at HBS. “We also need to think about all of the worries that it can free us from.”

The idea that money can reduce stress in everyday life and make people happier impacts not only the poor, but also more affluent Americans living at the edge of their means in a bumpy economy. Indeed, in 2019, one in every four Americans faced financial scarcity, according to the Board of Governors of the Federal Reserve System. The findings are particularly important now, as inflation eats into the ability of many Americans to afford basic necessities like food and gas, and COVID-19 continues to disrupt the job market.

Buying less stress

The inspiration for researching how money alleviates hardships came from advice that Jachimowicz’s father gave him. After years of living as a struggling graduate student, Jachimowicz received his appointment at HBS and the financial stability that came with it.

“My father said to me, ‘You are going to have to learn how to spend money to fix problems.’” The idea stuck with Jachimowicz, causing him to think differently about even the everyday misfortunes that we all face.

To test the relationship between cash and life satisfaction, Jachimowicz and his colleagues from the University of Southern California, Groningen University, and Columbia Business School conducted a series of experiments, which are outlined in a forthcoming paper in the journal Social Psychological and Personality Science , The Sharp Spikes of Poverty: Financial Scarcity Is Related to Higher Levels of Distress Intensity in Daily Life .

Higher income amounts to lower stress

In one study, 522 participants kept a diary for 30 days, tracking daily events and their emotional responses to them. Participants’ incomes in the previous year ranged from less than $10,000 to $150,000 or more. They found:

Money reduces intense stress: There was no significant difference in how often the participants experienced distressing events—no matter their income, they recorded a similar number of daily frustrations. But those with higher incomes experienced less negative intensity from those events.
More money brings greater control : Those with higher incomes felt they had more control over negative events and that control reduced their stress. People with ample incomes felt more agency to deal with whatever hassles may arise.
Higher incomes lead to higher life satisfaction: People with higher incomes were generally more satisfied with their lives.

“It’s not that rich people don’t have problems,” Jachimowicz says, “but having money allows you to fix problems and resolve them more quickly.”

Why cash matters

In another study, researchers presented about 400 participants with daily dilemmas, like finding time to cook meals, getting around in an area with poor public transportation, or working from home among children in tight spaces. They then asked how participants would solve the problem, either using cash to resolve it, or asking friends and family for assistance. The results showed:

People lean on family and friends regardless of income: Jachimowicz and his colleagues found that there was no difference in how often people suggested turning to friends and family for help—for example, by asking a friend for a ride or asking a family member to help with childcare or dinner.
Cash is the answer for people with money: The higher a person’s income, however, the more likely they were to suggest money as a solution to a hassle, for example, by calling an Uber or ordering takeout.

While such results might be expected, Jachimowicz says, people may not consider the extent to which the daily hassles we all face create more stress for cash-strapped individuals—or the way a lack of cash may tax social relationships if people are always asking family and friends for help, rather than using their own money to solve a problem.

“The question is, when problems come your way, to what extent do you feel like you can deal with them, that you can walk through life and know everything is going to be OK,” Jachimowicz says.

Breaking the ‘shame spiral’

In another recent paper , Jachimowicz and colleagues found that people experiencing financial difficulties experience shame, which leads them to avoid dealing with their problems and often makes them worse. Such “shame spirals” stem from a perception that people are to blame for their own lack of money, rather than external environmental and societal factors, the research team says.

“We have normalized this idea that when you are poor, it’s your fault and so you should be ashamed of it,” Jachimowicz says. “At the same time, we’ve structured society in a way that makes it really hard on people who are poor.”

For example, Jachimowicz says, public transportation is often inaccessible and expensive, which affects people who can’t afford cars, and tardy policies at work often penalize people on the lowest end of the pay scale. Changing those deeply-engrained structures—and the way many of us think about financial difficulties—is crucial.

After all, society as a whole may feel the ripple effects of the financial hardships some people face, since financial strain is linked with lower job performance, problems with long-term decision-making, and difficulty with meaningful relationships, the research says. Ultimately, Jachimowicz hopes his work can prompt thinking about systemic change.

“People who are poor should feel like they have some control over their lives, too. Why is that a luxury we only afford to rich people?” Jachimowicz says. “We have to structure organizations and institutions to empower everyone.”

[Image: iStockphoto/mihtiander]

Rapport: The Hidden Advantage That Women Managers Bring to Teams

11 Jun 2024
In Practice

The Harvard Business School Faculty Summer Reader 2024

How transparency sped innovation in a $13 billion wireless sector.

24 Jan 2024

Why Boeing’s Problems with the 737 MAX Began More Than 25 Years Ago

27 Jun 2016

These Management Practices, Like Certain Technologies, Boost Company Performance

Social Psychology

Sign up for our weekly newsletter

Bipolar Disorder
Therapy Center
When To See a Therapist
Types of Therapy
Best Online Therapy
Best Couples Therapy
Managing Stress
Sleep and Dreaming
Understanding Emotions
Self-Improvement
Healthy Relationships
Student Resources
Personality Types
Guided Meditations
Verywell Mind Insights
2024 Verywell Mind 25
Mental Health in the Classroom
Editorial Process
Meet Our Review Board
Crisis Support

Does More Money Make You Happier? Yes, But It's Complicated

Research says it can help, but there are a few caveats...

Kendra Cherry, MS, is a psychosocial rehabilitation specialist, psychology educator, and author of the "Everything Psychology Book."

Dr. Sabrina Romanoff, PsyD, is a licensed clinical psychologist and a professor at Yeshiva University’s clinical psychology doctoral program.

Verywell Mind / Getty Images

Why We Think Money Might Buy Happiness

The relationship between money and happiness.

Limitations
The Role Money Plays
Finding Happiness Beyond Money

We've all heard the phrase: “Money can't buy happiness.” But how true is this, exactly? Growing up poor in rural Idaho, I often took comfort in this idea, reassuring myself that those with more money weren't necessarily any happier than I was. But sometimes I wondered: Am I just fooling myself?

Of course, money can't replace the deep joy and meaning we find in relationships and experiences. But there's no denying that financial security feels pretty darn good.

“Money can bring about happiness or a sense of satisfaction that can feel like happiness because it allows security and reduces constant financial anxiety and fear,” explains Sarah Whitmire , LPC-S, ATR-BC, a licensed professional counselor and founder of Whitmire Counseling and Supervision.

A Look Ahead

Many mental health experts will point out that money alone is no guarantee of happiness. Other factors like relationships, purpose, and personal growth have a more powerful impact.

But money does have some effect on happiness. How much? Keep reading on to learn more about this connection and whether a few extra dollars in your wallet truly translates to a joyful heart or if the key to happiness is something money can't buy.

When you think of happiness, things like friends, family, and life’s simple pleasures often come to mind—not money. So, where does the idea that money can buy happiness come from?

According to Kanchi Wijesekera , PhD, a licensed clinical psychologist and clinical director of the Milika Center for Therapy & Resilience , the origin of this idea is multifaceted. She notes that poverty itself is associated with more stress and a higher risk for mental health issues .

“There are some caveats, but it can be harder to feel happy when you're living under the chronic stress of poverty and all it entails,” she says. “You may not have the same time and energy to invest into your well-being as if you were to be financially well-off.”

She stresses that this doesn’t mean people with less financial means aren’t happy or can’t be happy. But it can be more challenging to feel happy compared to someone well-off.

Kristin Anderson , LCSW, a licensed psychotherapist and founder of Madison Square Psychotherapy , notes that the idea that money can buy happiness is often deeply engrained in many societies.

“These societies often equate financial success with a good life, and it can be easy to get caught up in that idea,” she says. “It’s the idea that financial resources can provide security, comfort, and opportunities, which are all associated with happiness.”

While money certainly does allow people to afford necessities that can improve their quality of life, such as healthcare and education, Anderson says these are no guarantee of greater happiness.

Money can enhance our living conditions, but it does not guarantee genuine happiness, which often comes from personal fulfillment, relationships, and emotional well-being.

Whitmire explains that modern consumer culture has a role in creating this idea. By promoting the idea that buying goods and services can make us happier, we’re more likely to believe that having more equals being more fulfilled.

Dr. Wijesekera notes that our own hard-wired tendencies help fuel these beliefs. Even when we are comfortable, we might think we’d be even happier if we just had a little bit more , whether it’s a new car, a better job, or a bigger house. (Hint: it doesn't).

Money alone doesn’t bring happiness , but researchers have found evidence supporting the connection between financial security and increased happiness and well-being.

According to a 2010 study, higher income does indeed help increase subjective life satisfaction as money can help alleviate emotional pain associated with challenging life events like divorce and poor health. Other research supports the link between financial security and happiness. In fact, studies show that security is particularly connected to happiness in societies where financial instability is more common.

A recent 2023 study has added another layer to this age-old debate by suggesting that higher income levels are connected to increased happiness.

The study found that happiness increases don't plateau once you hit a certain income. Instead, these benefits continue to grow, albeit at a slower pace.

That said, researchers do note that money isn’t the only factor contributing to happiness. But money undoubtedly plays a huge in creating security, access to resources, and growth opportunities, all of which impact your overall well-being.

The Limitations of Money in Achieving Happiness

It’s tempting to think that earning a bigger paycheck will be the secret to a fulfilling life. But try not to hinge your happiness on your bank account. Having more money may help increase happiness, yes, but can also bring about diminishing returns if the pursuit of extra cash affects your quality of life.

Studies suggest that beyond a certain income threshold—often cited around $75,000 to $100,000 annually—the additional happiness gains from extra income begin to level off. A boost in salary can make a big difference if you are struggling with basic needs. But you’re less likely to notice the extra income if you are already comfortable or doing well.

We like to think that money solves all our problems, but the pursuit of financial rewards can be more harmful than good, especially if it costs us healthy relationships and social connections. Sure, having extra cash would be great, but if it means sacrificing meaningful connections with others, are the benefits even worth it?

Our emotional health and well-being thrive on strong relationships and social interactions. What good are financial rewards if they're overshadowing your relationships and experiences?

I know money solves a lot of problems, but it can't buy a sense of purpose and meaning. Think of it like this: if your job is financially rewarding but emotionally draining, burnout is inevitable. You can't appreciate all your hard work and reap the financial benefits if you're emotionally and mentally exhausted. And no amount of money can make your brain or body feel any less tired.

The Role of Money in Different Aspects of Life

The ability to afford what we want and need is often linked to a higher quality of life. Feeling financially secure can reduce anxiety since you’re less worried about how you’ll pay for life’s expected and unexpected expenses.

“We know financial stability also affords improved access to healthcare, leisure activities, and opportunities for personal growth, all of which contribute to better mental and emotional well-being,” Dr. Wijesekera says.

Financial stress can leave you in a constant state of fight or flight mode , she adds. Access to more money and resources shifts you from survivor mode into a space where you can focus on hobbies, friends, or things that make you happy.

Not having to worry about money allows someone to think about their mental health. They have time and an advantage to think about how they are feeling and doing. They do not have a survivalist mentality and can spend time thinking about their pursuits and how they can thrive.

In other words, not having to stress about money is what contributes to happiness the most.

“Imagine the difference between constantly feeling stressed about finances versus having peace of mind knowing your needs are met,” Anderson says. “While money itself is not a direct source of happiness, the security it provides can create a more stable environment for mental health to flourish.”

While it’s important to recognize the relationship between money and happiness, it’s not a silver bullet. True happiness comes from the often intangible things money can’t guarantee including happy relationships, a sense of purpose, and feeling connected to a community.

Strategies for Finding Happiness Beyond Money

There’s no question that financial security can offer comfort and ease stress, but it’s also true that the things that bring us happiness are immaterial.

Some research-backed ways to bring more happiness to your life (that, fortunately, don’t cost money):

Cultivate Positive Relationships

Research has consistently shown that having strong, supportive relationships is essential for mental health and life satisfaction. One 2023 study, in particular, found a significant positive relationship between social support and increased happiness.

Focus on cultivating stronger relationships with your family, friends, and community to gain greater emotional support and a sense of belonging . “Engaging in meaningful interactions and shared activities with loved ones can create lasting memories and strengthen bonds, leading to a sense of fulfillment and happiness that material possessions often cannot match,” Whitmire says.

Dr. Wijesekera suggests building a supportive social network by participating in free community events, joining support groups, or volunteering.

Find Meaning and Purpose

Pursuing a sense of purpose and meaning in your life can also play a pivotal role in your happiness and life satisfaction.

Interestingly, some research suggests that feeling a sense of purpose might be connected to financial success as well. In one study, people who felt a sense of purpose in their work earned more money than those who felt their work lacked meaning. (Of course, earning more might also help make your work feel more meaningful, too).

Some experiences like hobbies, volunteer work, and engaging activities can help you find purpose. Dr. Wijesekera suggests exploring inexpensive or free hobbies such as drawing, reading library books, and cooking new recipes. Being open to new experiences can bring a profound sense of fulfillment and meaning that will ultimately help you feel happier.

Practice Gratitude

Gratitude can be a powerful antidote to feelings of sadness and negativity. That’s because regularly reflecting on the things you love and appreciate can help shift your focus away from what might be lacking. Research has found that gratitude interventions such as gratitude journaling increase positive moods, subjective happiness, and life satisfaction.

“Taking time each day to appreciate the good things in your life, big or small, can shift your focus from what you lack to what you have,” Anderson says. “By acknowledging the positive aspects of your life, you can significantly boost your mood and overall well-being.”

Tip From a Clinical Psychologist

Practicing habits such as maintaining a gratitude journal, verbal affirmations, giving thanks, or reflecting on daily blessings can reduce stress and profoundly elevate one's well-being.

Practice Mindfulness and Other Self-Care Strategies

Mindfulness and other self-care practices are powerful tools for fostering better emotional well-being. Mindfulness centers on being fully present and engaged in the present moment without worrying about the past or future.

One study found that mindfulness was associated with various positive outcomes including higher levels of happiness and decreased anxiety and depression. Other self-care activities like meditation , exercise, and adequate sleep are also low-cost or free ways to enhance happiness.

Dr. Wijesekera recommends trying free apps or online videos to learn meditation techniques. She also says that simple mindfulness exercises like deep breathing and mindful walking can be beneficial.

Spending Time in Nature

Dr. Wijesekera recommends spending time outdoors in nature to help alleviate some of the physiological effects of stress. She points to research on the Japanese practice of shinrin-yoku or “ forest bathing .” This report found that spending just 20 minutes walking outdoors can lower your heart rate, blood pressure, and cortisol levels (a stress hormone).

“Visit local parks, hiking trails, or beaches, which are often free,” she says. “Gardening, even in small spaces or community gardens, can also be a low-cost way to connect with nature.”

Help Others

Anderson also recommends volunteering and finding ways to assist others in your life. “Volunteering your time or doing something kind for someone else can be incredibly rewarding,” she says. “It strengthens your sense of community and purpose, and seeing the positive impact you have on others can be a great source of happiness.”

While evidence suggests that money increases happiness, it isn’t the only thing that brings joy. Plenty of things bring fulfillment to your life that doesn’t involve boosting your financial bottom line.

Strengthening relationships, going after meaningful goals, and caring for yourself are all proven strategies for improving your happiness and well-being. Focusing on those areas can help you create a more fulfilling life, regardless of your finances.

Remember, happiness doesn't come from a single source. By incorporating these strategies into your life and building a fulfilling lifestyle, you can find joy and contentment, regardless of your financial situation.

The answer to the question of whether money can buy happiness is, well, complicated. Research shows that money can alleviate stress and improve life satisfaction. But those benefits will start to taper off after a certain point. A higher income level provides financial security and access to resources and opportunities but doesn't guarantee enduring happiness.

Happiness isn’t just about what’s in your bank account. Finding happiness is an ongoing process that involves many facets. And while there’s nothing wrong with pursuing financial well-being, don't sacrifice your mental health in the long run. Instead, find a balance between your financial pursuits and relationships and experiences. That, we say, is the best approach for unlocking lasting happiness.

Kahneman, D., & Deaton, A. (2010). High income improves evaluation of life but not emotional well-being . Proceedings of the National Academy of Sciences , 107 (38), 16489–16493. https://doi.org/10.1073/pnas.1011492107

Ek, C. (2017). Some causes are more equal than others? The effect of similarity on substitution in charitable giving . Journal of Economic Behavior & Organization , 136 , 45–62. https://doi.org/10.1016/j.jebo.2017.01.007

Buttrick, N., & Oishi, S. (2023). Money and happiness: A consideration of history and psychological mechanisms . Proceedings of the National Academy of Sciences , 120 (13), e2301893120. https://doi.org/10.1073/pnas.2301893120

Beygi, Z., Solhi, M., Irandoost, S. F., & Hoseini, A. F. (2023). The relationship between social support and happiness in older adults referred to health centers in Zarrin Shahr, Iran . Heliyon , 9 (9), e19529. https://doi.org/10.1016/j.heliyon.2023.e19529

Hill, P. L., Turiano, N. A., Mroczek, D. K., & Burrow, A. L. (2016). The value of a purposeful life: Sense of purpose predicts greater income and net worth . Journal of Research in Personality , 65 , 38–42. https://doi.org/10.1016/j.jrp.2016.07.003

Cunha, L. F., Pellanda, L. C., & Reppold, C. T. (2019). Positive psychology and gratitude interventions: A randomized clinical trial . Frontiers in Psychology , 10 , 584. https://doi.org/10.3389/fpsyg.2019.00584

Crego, A., Yela, J. R., Gómez-Martínez, M. Á., Riesco-Matías, P., & Petisco-Rodríguez, C. (2021). Relationships between mindfulness, purpose in life, happiness, anxiety, and depression: Testing a mediation model in a sample of women . International Journal of Environmental Research and Public Health , 18 (3), 925. https://doi.org/10.3390/ijerph18030925

Park, B. J., Tsunetsugu, Y., Kasetani, T., Kagawa, T., & Miyazaki, Y. (2010). The physiological effects of Shinrin-yoku (Taking in the forest atmosphere or forest bathing): Evidence from field experiments in 24 forests across Japan . Environmental Health and Preventive Medicine , 15 (1), 18–26. https://doi.org/10.1007/s12199-009-0086-9

By Kendra Cherry, MSEd Kendra Cherry, MS, is a psychosocial rehabilitation specialist, psychology educator, and author of the "Everything Psychology Book."

A business journal from the Wharton School of the University of Pennsylvania

Does Money Buy Happiness? Here’s What the Research Says

March 28, 2023 • 5 min read.

Reconciling previously contradictory results, researchers from Wharton and Princeton find a steady association between larger incomes and greater happiness for most people but a rise and plateau for an unhappy minority.

Person running over stacks of money to illustrate whether money can buy happiness

Finance & Accounting

The following article was originally published on Penn Today .

Does money buy happiness? Though it seems like a straightforward question, research had previously returned contradictory findings, leaving uncertainty about its answer.

Foundational work published in 2010 from Princeton University’s Daniel Kahneman and Angus Deaton 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 in 2021 from the University of Pennsylvania’s Matthew Killingsworth found that happiness rose steadily with income well beyond $75,000, without evidence of a plateau.

To reconcile the differences, Kahneman and Killingsworth paired up in what’s known as an adversarial collaboration, joining forces with Penn Integrates Knowledge University Professor Barbara Mellers as arbiter. In a new Proceedings of the National Academy of Sciences paper , the trio shows that, on average, larger incomes are associated with ever-increasing levels of happiness. Zoom in, however, and the relationship becomes more complex, revealing that within that overall trend, an unhappy cohort in each income group shows a sharp rise in happiness up to $100,000 annually and then plateaus.

“In the simplest terms, this suggests that for most people larger incomes are associated with greater happiness,” says Killingsworth, a senior fellow at Wharton and lead paper author. “The exception is people who are financially well-off but unhappy. For instance, if you’re rich and miserable, more money won’t help. For everyone else, more money was associated with higher happiness to somewhat varying degrees.”

Mellers digs into this last notion, noting that emotional well-being and income aren’t connected by a single relationship. “The function differs for people with different levels of emotional well-being,” she says. Specifically, for the least happy group, happiness rises with income until $100,000, then shows no further increase as income grows. For those in the middle range of emotional well-being, happiness increases linearly with income, and for the happiest group the association actually accelerates above $100,000.

Joining Forces to Ask: “Does Money Buy Happiness?”

The researchers began this combined effort recognizing that their previous work had drawn different conclusions. Kahneman’s 2010 study showed a flattening pattern where Killingsworth’s 2021 study did not. As its name suggests, an adversarial collaboration of this type — a notion originated by Kahneman — aims to solve scientific disputes or disagreements by bringing together the differing parties, along with a third-party mediator.

Killingsworth, Kahneman, and Mellers focused on a new hypothesis that both a happy majority and an unhappy minority exist. For the former, they surmised, happiness keeps rising as more money comes in; the latter’s happiness improves as income rises but only up to a certain income threshold, after which it progresses no further.

To test this new hypothesis, they looked for the flattening pattern in data from Killingworth’s study, which he had collected through an app he created called Track Your Happiness. Several times a day, the app pings participants at random moments, asking a variety of questions including how they feel on a scale from “very good” to “very bad.” Taking an average of the person’s happiness and income, Killingsworth draws conclusions about how the two variables are linked.

A breakthrough in the new partnership came early on when the researchers realized that the 2010 data, which had revealed the happiness plateau, had actually been measuring unhappiness in particular rather than happiness in general.

“It’s easiest to understand with an example,” Killingsworth says. Imagine a cognitive test for dementia that most healthy people pass easily. While such a test could detect the presence and severity of cognitive dysfunction, it wouldn’t reveal much about general intelligence since most healthy people would receive the same perfect score.

“In the same way, the 2010 data showing a plateau in happiness had mostly perfect scores, so it tells us about the trend in the unhappy end of the happiness distribution, rather than the trend of happiness in general. Once you recognize that, the two seemingly contradictory findings aren’t necessarily incompatible,” Killingsworth says. “And what we found bore out that possibility in an incredibly beautiful way. When we looked at the happiness trend for unhappy people in the 2021 data, we found exactly the same pattern as was found in 2010; happiness rises relatively steeply with income and then plateaus.”

“The two findings that seemed utterly contradictory actually result from data that are amazingly consistent,” he says.

Does It Matter Whether Money Can Buy Happiness?

Drawing these conclusions would have been challenging had the two research teams not come together, says Mellers, who suggests there’s no better way than adversarial collaborations to resolve scientific conflict.

“This kind of collaboration requires far greater self-discipline and precision in thought than the standard procedure,” she says. “Collaborating with an adversary — or even a non-adversary — is not easy, but both parties are likelier to recognize the limits of their claims.” Indeed, that’s what happened, leading to a better understanding of the relationship between money and happiness.

And these findings have real-world implications, according to Killingsworth. For one, they could inform thinking about tax rates or how to compensate employees. And, of course, they matter to individuals as they navigate career choices or weigh a larger income against other priorities in life, Killingsworth says.

However, he adds that for emotional well-being money isn’t the be all end all. “Money is just one of the many determinants of happiness,” he says. “Money is not the secret to happiness, but it can probably help a bit.”

More From Knowledge at Wharton

Woman working at a desk with computers screens showing financial information to show the potential of AI-powered financial advice

How AI-powered Financial Advice Will Help You

Man in a dark room analyzing stocks on his tablet screen

How Hidden Risk Factors in Corporate Securities Can Reveal Potential Upsides

Rich couple laughing on a yacht. Does money buy happiness for millionaires?

Can Money Buy Happiness for Millionaires?

Looking for more insights.

Greater Good Science Center • Magazine • In Action • In Education

Can Money Buy Happiness? It Depends on Why You’re Spending It

Imagine that someone gives you a cash gift and tells you that, instead of saving or investing it, you need to spend it right now. What should you put your money toward if you want to make yourself happiest?

According to past research , we’ll be happier if we spend money on an experience than if we buy a material object—like traveling or going out for a meal instead of buying the latest product we see on social media. For example, people report more gratitude when they spend on experiences rather than possessions.

On the other hand, we can all probably think of times when we’ve spent money on an experience that ended up not being worth it. Maybe you bought pricey event tickets to avoid missing out, only to realize on the day of the event that you’d much prefer a cozy night at home. Or perhaps you went out to dinner with a friend at a fancy restaurant, only to find that your friend was more focused on posting the meal to Instagram than having a deep conversation.

It turns out that there might be another factor at play beyond whether we spend money on an experience or a material item: According to a new study published in the British Journal of Social Psychology , it may also matter how our purchases align with our goals.

In the study, researchers asked 452 participants in an online survey to describe a recent purchase. They were asked to write about something they had spent money on in the last three months (ranging from about $60 to $1,200), excluding everyday expenses such as bills and groceries. After describing it, people were asked to indicate the extent to which the purchase helped to fulfill different goals. They also noted how much they felt the purchase contributed to their happiness and life satisfaction.

According to self-determination theory , goals reflect our intrinsic and extrinsic motivations. Extrinsic goals are things that other people expect for us: for example, working hard at a job not because you’re passionate about the work, but because you need the money or want a high-status job to impress others. Intrinsic goals, on the other hand, are ones that we have a strong internal motivation to pursue. In the survey, extrinsic goals included gaining wealth or social status, whereas intrinsic ones included cultivating relationships, helping other people, and contributing to growth, learning, and development.

The researchers found that, the more a purchase reflected people’s intrinsic goals, the more they thought it improved their well-being. In other words, the greatest well-being occurred when people spent money on something that was personally important to them.

To compare this finding with past research, the current study also asked participants to indicate to what extent their purchase was an experience or a material item. As in past research, participants did report higher well-being from experiences. However, when the researchers looked at both factors together, they found that how much a purchase reflected intrinsic goals explained more of the differences in well-being than whether something was material or experiential.

So, what does this research mean for our spending habits? Olaya Moldes Andrés, lecturer at Cardiff University and the study’s author, points out that we’re under a lot of pressure to spend money these days; just think about the number of targeted ads you see each time you open social media. However, this pressure to spend has a downside: In past research , Moldes Andrés has found that people who are exposed to more materialistic messages have lower well-being.

Before purchasing something, she recommends pausing to think about the reason for our purchase, and what use we will get out of it. If we’re spending money on trying to impress people or project a certain image (in other words, extrinsic goals), the purchase may not actually be worth it.

So, next time you’re planning to buy something, take a moment to think about whether it’s something you’re buying because you feel it’s what’s expected of you—or whether it’s truly something that you want.

About the Author

Elizabeth Hopper

Elizabeth Hopper, Ph.D. , received her Ph.D. in psychology from UC Santa Barbara and currently works as a freelance science writer specializing in psychology and mental health.