Can Money Buy You Happiness?

happy-moneyThe question of whether or not money can buy happiness has been around since the beginning of time. For centuries, people from all walks of life have held money up as the single key to their ideal, happy life. The theory goes: The more money you have, the happier you are.

Gallup poll backs up the theory

Admit it: There have been times when you thought that your life would be easier, and therefore better in some way, if you had more money, right? These thoughts are very natural and common to have -- think about the term "keeping up with the Joneses." And now, evidence gathered in the first Gallup World Poll and published in the July issue of the Journal of Personality and Social Psychology lends credence to the age-old belief that money can buy happiness.

"We knew from earlier research that money to some degree is associated with happiness, although the effects are often fairly weak. So the answer to the question, 'Does money make us happy?' was, 'Yes, a bit.' But we see a much more interesting pattern than that simple answer," said Ed Diener, professor emeritus of psychology at the University of Illinois and lead scientific researcher for this Gallup study. "We must say it [money] increases the likelihood that they will be satisfied a lot, but it only somewhat increases the probability they will enjoy life."

The study's findings

In the largest study of its kind ever conducted, Diener and his team interviewed 136,000 people in 132 countries to examine the relationship between income (money) and a person's overall well-being (happiness and emotional satisfaction).

The study found that: first, money across all nations has a large effect on how people evaluate their lives and therefore, what they use to determine their level of life satisfaction. "In this paper we focused on the universals -- things that influence the well-being of most people," Diener said.

Second, the answer to the money-equals-happiness question depends largely on what a person means by the word "happiness." If people happiness to describe their satisfaction with their lives, then the association between money and happiness was "robust," Diener said, but if people associated their happiness with positive feelings such as enjoyment, then the link between money and happiness was much weaker.

Third, the study showed that it is possible to predict positive feelings if you look at two types of indicators -- social capital and mastery.

Social capital and mastery

Social capital essentially means having positive social feelings and security from the social aspects of your life. For example, having peers and family members that you can count on during a tough time is one form of social capital, along with being respected by friends and family and having a wide social network.

Mastery is about using your ability to learn new things -- and just like social capital, this too can be a predictor of a person's positive feelings.

Social capital and mastery are important to think about because they offer another answer or source of happiness for people to consider. Having these various reasons or causes of happiness provides a format to help weigh the values about which type of happiness is most vital and most important: Is happiness about life satisfaction and one's well-being, or is it about positive feelings of success that come with social capital and mastery? Which type of happiness do you seek or use to describe your life?

According to Diener, "the life satisfaction type of judgments help people know if overall they are on the right track in a big-picture sense of life. In contrast, positive feelings tend to tell people that things are going well now, and reflect responses about one's current resources and activities." Are you a long-term thinker or big-picture sort of person, or are you a live-in-the-moment type of person?

National rankings

While Diener found out lots of information about which nations were happiest or unhappiest based on life satisfaction and positive feelings, he pointed out: "What our findings show clearly is that 'what nation is happiest' is oversimplified."

This happens because nations sometimes bunch together, meaning that a ranking of 1 or 10 out of 100 nations may not represent that large of a difference. Additionally, the study also showed that "no nation is lowest in all types of happiness." Certain rich nations (such as South Korea) do not do as well as expected, while less wealthy nations in terms of income (e.g. Costa Rica), perform well on the happiness scale -- because "there are some exceptions [to the rule]" and the quality of social relationships can positively affect the happiness factors in nations.

For example, Denmark tends to rank on the high end of the scale for most happiness categories ( No. 1 for life satisfaction, and No. 7 for positive feelings), while the Unites States ranked only No. 16 in life satisfaction and No. 26 in positive feelings, even though it is ranked as the nation with the highest income of all 132 countries that were examined.

Diener's recommendations for happiness

"What our study clearly shows is that there is not a single prescription for happiness. Although making a lot of money might help many people's life satisfaction, it is important for positive feelings to develop one's abilities and use them, and have close and supportive social relationships," Diener said.

"What you need to know is that money makes a bigger difference to happiness among poorer people, but it takes a lot more additional money to change the happiness of a well-off person."

While there is no guarantee that more money will make your life easier, or better, the evidence says that it sure won't hurt to have a little extra coin in your pocket to make your smile a little wider and your definition of happiness a little more apparent.

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