Money Is One Ingredient for Happiness

We all like to believe that money doesn’t make us happy. We like to believe that living a good, simple, productive life is what makes us happy. However, that’s not quite the case. Recent research suggests that there are two key ingredients for a totally happy life: overall satisfaction with life and moment-to-moment enjoyment of life. Furthermore, the research indicates that the first ingredient is intricately tied to how much money you earn. So, although we need more than just money to make us happy, money is a key component of happiness for most people.

The Happiness Study

The study looked at data from the Gallup World Poll to get a better understanding of happiness around the world. More than 136,000 people from more than 130 different countries were asked to rate their levels of happiness. They were asked to use a 0-10 scale to rate their overall happiness. However, they were also asked questions about their moment-to-moment happiness and their positive/negative experiences. Furthermore, they were asked about whether they considered the basic physical and psychological needs to be met. And of course their income was recorded. The information was then assessed to draw conclusions about the relationship between money and the two different aspects of happiness (total and momentary).

Overall Life Satisfaction Increases with More Money

The study found that people tend to rate their total happiness with life higher when they are earning more money. This is true on two levels – individuals with higher incomes were happier and also individuals living in countries with higher average incomes were happier. It is believed that this has to do with the fact that most people want money and spend a significant amount of time pursuing it so they feel like they have achieved something when they get it. Having more money also generally makes people feel more secure which helps to increase total life satisfaction.

Moment-to-moment Happiness Doesn’t Require Money

The study found, however, that a person’s moment-to-moment happiness may not be tied to money. People who are relatively poor or who live in very poor areas may still be able to experience ongoing moment-to-moment happiness and to have more positive experiences than negative ones despite having a low income. Moment-to-moment happiness seems to be most closely linked with four things:

  1. Feeling respected by other people. Individuals who generally feel that others around them respect them tend to have more positive experiences.
  2. Having autonomy. It is important for most people to feel like they have independence and free will in their lives.
  3. Experiencing enough social support. Although people want to be independent, they need to be social with other people. A strong social support system can significantly increase how happy someone feels from moment-to-moment.
  4. Working at a job that feels fulfilling. It’s important to make more money but it’s also important to work at a job that is fulfilling.

At the Country Level

What the survey found was that there are some countries (like South Korea) where individuals tend to earn a lot of money but don’t get their other needs met. The result is that they may rank their total happiness high but their moment-to-moment happiness is lower. In contrast, a country like Costa Rica can have a lower average income (and therefore rank their total happiness lower) but experience more day-to-day positive feelings because of the fact that they have their other needs met.

The Key to Happiness

It turns out that the key to happiness is actually really simple: make a lot of money doing something that you love to do and that earns you respect and also learn to balance autonomy and socialization in your life. This sounds complicated when you’re trying to do it. However, if you can keep in mind that this is the key to happiness, you may be able to focus your goals better. It will always be tough to find the right balance but you’ll at least have the right ingredients.

7 Responses to Money Is One Ingredient for Happiness

  1. It is so hard to find and use “happiness” data, but I love your analysis! I remember another Gallup poll of a few years back that was similarly fascinating: they derived a Thriving-Struggling-Suffering index from surveys.

    The study found that 47% of Americans were “Struggling,” 4% were “Suffering,” leaving just under half as “Thriving.” There were a number of other variables–emotions, physical pain, daily moods, etc.

    I won’t link in the comment, but if interested, the summary is: ‘Nearly As Many Americans Struggling as Thriving’, published 4/29/2008 on the Gallup website.

  2. Great article! My mom always said “follow your passion and happiness and money will come,” not sure if she meant, follow your passion, be happy, become an expert and make lots of money or follow your passion and you’ll be happy with life and thus not care how much you make. But either way – it works for me!

  3. Odd, but a few years ago I was making a lot of money. And today, I struggle to make ends meet. Yet I’m happier now than I’ve ever been.

    The autonomy part of this is definitely a factor. Being much more aware of where I’m spending my money, and how I’m doing it, is empowering. For me, it’s definitely been a learning and growing experience.

  4. Often it is not possible to follow your passion and make a lot of money doing it. Very few are lucky to be able to do so. There are many struggling artists and entrepreneurs. Personally I do not place a large emphasis on money and only use it as a tool, as long as I do not have any debt. I keep my lifestyle simple and do not need to work 18 hours a day to pay my bills, I rather spend that extra time with family and friends.

    Most people have very expensive dreams and wants for which they need a lot of $$$ and when they dont have it they are “unhappy”. The trick is simple just lower your standards.

    Here is the link to the Thriving-Struggling-Suffering index Simple Cents pointed out

  5. I have not achieved much success in terms of career or income, but I’ve managed to feel a great deal of happiness and satisfaction with my personal relationships. Because I have a husband and friends who love and support me, I find myself feeling grateful for what I do have. Whether or not you need money to be happy is based upon whether you value those things that money can buy. Once your basic needs are met (and I guess basic varies for many people), having more does not necessarily make you happier.

  6. A wise blogger once said that money cannot buy happiness. But it can buy you peace.

    That’s the best way I look at it, I think. ^_^

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