The Tiny Correlation between Income and Happiness: Money CAN buy you happiness, but only up to a certain amount

‘Money makes the world go around’, a phrase most of us have believed since we were children.

We are all spurred on by the simple fact that we believe that money can buy us happiness… but is the link between how much money we earn and our happiness really just an illusion?

Well, it is undeniable that money will make you happier, hence the popular and generations-long belief. In fact, a huge survey in 2010 in the United states found that household income was indeed related to our life satisfaction.

However, despite our ingrained belief that we can only be happy if we earn a lot of money, when a deeper look was taken at the results of the study it was proved to not be as simple as that.

It was actually found that our happiness increased significantly to earnings of around $75,000 a year. After this, there was not much further progression in life satisfaction and happiness with an increase of earnings. This concludes that, unfortunately, you can work your socks off to earn more money, but statistically speaking, you won’t be much happier.

Furthermore, Martin Seligman and Ed Diener collected data in 2004, that was published in the Psychological Science in the Public Interest Report’. This data explained, again, that money will make you happy, but only to a certain pay range.

The analysis of the data also showed a strong correlation between the wealth of nations and the average happiness found in them. Perhaps rather unsurprisingly, the unhappiest nations are the former soviet-bloc countries (e.g. Mongolia, Vietnam, Lao etc), where political and economic systems are disintegrated. This would suggest that not only is low income a key factor to unhappiness, but so is instability and loss of income.

The very same study also found that if you earn $20,000, regardless of your gender, you will spend more time on passive leisure activities than people earning more than $100,000. So, less money actually means more time for leisure, who could complain?!

Why does the search for money not make us happy?

There have been a few small studies to suggest that it perhaps the pursuit for money is detrimental to our happiness because it leads us to think that money is more important than other values, such a strong social or family relationships.

What’s more is that the pursuit of money is an open-ended goal. Our aspirations for money can rise forever and ever, making it more difficult than other goals to achieve and leading to us feeling unsatisfied.

It does make sense that money will only increase our happiness to a certain extent. With higher earnings typically comes more stability, more luxurious things and more security. I suppose, more money gives you less worry about your life (how to pay for health care, when the next meal is coming in or what you will do if your car breaks down).

Perhaps, this is why money only increases happiness to a certain amount; once you have enough money to promise stability and security and to ensure you can handle the unexpected, then the rest is just an added bonus.

So, what can make us happy?

Even despite the evidence to suggest that money cannot buy us happiness, a lot of us are so obsessed with increasing our income that we forget about things other than the money we make that can make us happy.

As highlighted in my post on ‘what makes a dream job’ [link to blog post], there are other things that have been proven to allow us to lead a happy and fulfilled life.

We should aim to do work that is engaging. This type of work grabs our attention, has autonomy, offers clear tasks, receives feedback from others and offers variety in tasks.

We should also aim to do work that helps others; which has been found over and over again to increase life satisfaction.

Perhaps seemingly obvious, we should also pursue work that we are good at. This not only leaves us feeling satisfied, but it also the gateway to a more control and mission in our career.

Seek to work with people you like, which is a no brainer. If we work with people we like, we are happier as this helps us seek social support and advice from our co-workers.

Finally, we should also do work that meets our basic needs. We should look for jobs with reasonable working hours (or one’s that we are willing to work), work that has good job security, a place of work that is a short commute from where we live and work where we are paid fairly in comparison to others.

Wrapping up

What we can conclude is that it is not completely true that money can buy you happiness. There is indeed a relationship between the two; annual earnings to a certain amount does increase our satisfaction with our life.

As always, let me know your thoughts in the comments section below. Are you happy despite what you earn? Do you think earning more will increase your happiness?

 

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