People think that money affects happiness more than it really does

With dogged determination we lie, rob, borrow, gamble and sometimes work too, in the hope of boosting our income. So zealous is our pursuit of money, it’s as if we think it will somehow make us happier. Strangely enough, whilst psychologists and economists have conducted numerous studies showing that the relationship between income and happiness is weak, only one prior study has asked what lay people really believe about money and happiness (and this was focused on middle-income, working women). It’s into this empirical desert that Lara Aknin and colleagues arrive with a survey of hundreds of North Americans of mixed age, gender and wealth. Aknin’s team have found that people do indeed overestimate the link between money and happiness, especially at lower levels of income.

The study worked by asking people what their own income and happiness levels were and then asking them to estimate the happiness of people on lower or higher incomes than themselves. The participants’ estimates of the happiness of people on high incomes was largely accurate, but they massively underestimated the happiness of people on lower incomes. The picture was the same in a second study that asked people to estimate how happy they’d be if they earned more or less than they really did.

More detailed analysis showed that people on higher incomes were more likely to overestimate the relationship between money and happiness, perhaps because they had more to fear from losing the ability to maintain their current standard of living.

“We demonstrate that adult Americans erroneously believe that earning less than the median household income is associated with severely diminished happiness,” the researchers said. “[This is] a false belief that may lead many people to chase opportunities for increased wealth or forgo a reduction in income for increased free time.”

Aknin, L., Norton, M., & Dunn, E. (2009). From wealth to well-being? Money matters, but less than people think The Journal of Positive Psychology, 4 (6), 523-527 DOI: 10.1080/17439760903271421

Related Digest posts:

How much money to make you happy?

Post written by Christian Jarrett (@psych_writer) for the BPS Research Digest.

5 thoughts on “People think that money affects happiness more than it really does”

  1. I'm pretty much dirt poor right now, and I've seriously never been happier, despite stressors most people would find overwhelming. Living outside the typical economic structure gives me more freedom to pursue my dreams (less to lose, they're right). However, I do sometimes lament a certain lack of control over my and my family
    s life. Travel is limited. My husband is very sick, too, and depends on inadequate care from a local volunteer clinic. We do a lot more financial paperwork than middle-income people in order to get free medical for my husband, to have my emergency medical bills written off by the local hospital, for state-sponsored health insurance for my daughter, and for food stamps. But the other 90% of life is pretty darn good. I still don't want to be a mooch forever, which is why I'm in school.

  2. Money to me only effects my happiness in terms of an added stress, extra money would be a bonus, but happiness to me is linked to love, friends, family and doing something you enjoy.

  3. Hi,
    Interesting thoughts! I believe it’s not possible to make a general statement on whether money makes people more or less happy.

    Money comes with a whole set of new elements that may have good or bad impact on our happiness, and depending on how susceptible we are to every one of them, the conclusion will go one way or the other (i.e. different from person to person). I recently made an effort to provide a more comprehensive picture of what these ad- and disadvantages are. I invite you to have a
    look at Money and

    Happiness and tell me what you think!
    Thank you, Nick

Comments are closed.