Money does buy independence, and independence is one aspect of happiness. But when you’ve covered your basic financial necessities, does more money make you happy?
Much of the research into the field of happiness — to say nothing of simple common sense - suggests that at the level of the individual, happiness is heavily influenced by life events (Did you get the big promotion? Have a fight with your boyfriend?) as well as by psychological traits (self-esteem, optimism, a sense of belonging, the capacity to love, etc.)
The correlation between happiness and family income is very strong indeed - reported happiness rises in a nearly straight line through eight levels of annual family income. At the highest income category — $150,000 and above - fully 50% of respondents report being very happy; by contrast, just 23% of those who have a family income below $20,000 say they are very happy.
Why does increased income have so little effect on happiness? Research shows that:
- Relative income, rather than any certain level of income, affects well-being. If you get richer than your peers, you may feel you’re better off than they are. But soon you’ll make richer new friends, so your relative wealth won’t be greater than it was before.
- People quickly get used to all the new stuff their money can buy. • The amount of money people say they need rises along with their income.
- When you start making more money, you spend more time making money — and have less leisure time — than you did before.
People surveyed about their own happiness and that of others with varying incomes tended to overstate the impact of income on well-being, according to a new study. Although income is widely assumed to be a good measure of well-being, the researchers found that its role is less significant than predicted and that people with higher incomes do not necessarily spend more time in more enjoyable ways.
The bottom line: The bigger the trade-up in lifestyle, the bigger the monthly nut — and the harder we have to work to achieve material goals. Since there are only 24 hours in a day, we end up sacrificing other aspects of life that actually do create lasting happiness (at least according to scientists): Spending time with family and friends, exercising, or volunteering.
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