Money alone does not make you happy?
The saying “money alone does not make you happy” is nonsense. I don’t know anyone who has ever claimed that money alone makes you happy. That would make as much sense as saying “health alone does not make you happy” or “sex alone does not make you happy.” That’s true, too. But are these really arguments against wealth, health and for an abstinent life?

Poets, bards and philosophers have coined numerous aphorisms to question the value of money and condemn the pursuit of earthly riches. “If your happiness depends on money, you will never be happy with yourself,” the Chinese philosopher Lao Tzu warned. The musician Bob Dylan asked: “What’s money? A man is a success if he gets up in the morning and goes to bed at night and in between does what he wants to do.” And Albert Einstein said: “Money only appeals to selfishness and irresistibly invites abuse.” 

On the other hand, there have always been poets and philosophers who viewed the matter in quite a different light. “A healthy person without money is half sick,” the great poet Johann Wolfgang von Goethe said. The American poet Gertrude Stein said: “I’ve been rich, and I’ve been poor. It’s better to be rich.” And the writer Oscar Wilde, who loved to exaggerate in order to provoke outrage and reveal simple truths, claimed: “When I was young, I thought that money was the most important thing in life; now that I am old I know that it is.”

New research: People who have more money are happier
What could be more important than the question of what makes people happy? This is the subject of an entire field of scientific research, known as “happiness research.” Again and again, there have been claims that scientific happiness research has concluded that money does not make people happy. 

As early as 1974, the economist Richard Easterlin claimed that there is no positive correlation between higher income and a greater level of happiness, at least above a certain annual income. The two Nobel Prize winners in economics, Daniel Kahneman and Angus Deaton, qualified Easterlin’s finding somewhat and related it only to certain expressions of the feeling of happiness. But they did also conclude that the correlation between higher incomes and greater happiness only applies up to a certain limit, namely an annual income of $75,000. Anything above that level, the two economists explained, no longer has a significant impact on a person’s happiness as they have already become accustomed to living in financial security and would only make minimal adjustments to their lifestyle with each subsequent salary increase.

New research has disproved this thesis. The most recent analysis comes from the psychologist Matthew A Killingsworth, who found that both “experienced wellbeing” and “evaluative wellbeing” did increase with income. “Experienced wellbeing” was measured by analyzing 1.73 million experience-sampling reports from 33,391 Americans. They were contacted at random times on their smartphones and asked the question, “How do you feel right now?” Their evaluative wellbeing was measured by the question: “Overall, how satisfied are you with your life?” The result: the $75,000 limit advanced in Kahneman and Deaton’s study did not exist. 

For incomes over $80,000, Killingsworth’s study also confirms a clear correlation between having a higher income and being happier. Methodologically, the study had some advantages over older studies. For example, in older studies, respondents could only answer “yes” or “no” to questions about their happiness, whereas the current study used a continuous scale. Another major advantage was that contacting respondents via their cell phones allowed the researcher to measure respondents’ current emotional states. In previous studies, people were merely asked to recall how they had felt at a given point in the past. However, such memories are often distorted and strongly coloured by respondents’ emotional states at the times they are asked.

What I would say to the lottery winner
Nevertheless, lottery winners should be careful. There are too many examples of lottery winners losing their entire winnings. People who become rich as entrepreneurs or investors have a certain personality structure, as I showed in my dissertation The Wealth Elite. But people who win the lottery are just lucky, and they are unlikely to have the knowledge and mental skills to manage money.

We also know this from the countless pop stars and elite athletes who came into a lot of money quickly – and then lost it all. But these people were not unhappy when they had a lot of money, they were unhappy when they lost it.

About the author

Rainer Zitelmann is a sociologist and wealth researcher. He is the author of the book The Wealth Elite, in which he scientifically analyzes the psychology of the super-rich. https://the-wealth-elite.com/  This news service reviewed the book here.