Can Money Buy Happiness?

July 19th, 2013 by Andrea Bennett

Research shows that money actually can buy happiness – as long as it’s spent in the right place.

Brought to you by Liberty Mutual's
The Responsibility Project

They say that money can’t buy happiness. But we wrote about a 2010 study conducted at Princeton University that claimed to be able to put a price tag on happiness. The Princeton researchers, Daniel Kahneman, the 2002 winner of the Nobel Prize in Economics, and Angus Deaton, former president of the American Economic Association, set the price of happiness at $75,000. Emotional well-being, they said, increased along with their income up to about $75,000 before leveling out.

However, recent research from the Wharton School’s Department of Business Economics and Public Policy disputes the plateau, asserting that people with more money have higher reported levels of well-being all the way up to the top 10 percent of earners. Authored by Daniel W. Sacks, Betsey Stevenson and Justin Wolfers, “The New Stylized Facts About Income and Subjective Well-Being” argues that richer countries are happier, and richer people within those wealthier countries are happiest of all.

But simply accumulating wealth isn’t the happy ending to the story, writes Derek Thompson of The Atlantic. “The evidence is unequivocal,” he writes. “Money makes you happy. You just have to know what to do with it.”

So what do you have to buy to make sure you’re buying happiness? Thompson maintains that buying experiences rather than things will result in longer-lasting happiness, asserting, “Happiness, for most people not named Sartre, is other people; and experiences are usually shared – first when they happen and then again and again when we tell our friends.”

As opposed to the lasting joy garnered as a result of memorable experiences, the rush you get when you buy an object will wear out quickly. In fact, for materialists, it could be wanting something, rather than buying it, that gives the little burst of happiness. Thompson’s article in The Atlantic cites Marsha L. Richins of the University of Missouri, whose recent paper in the Journal of Consumer Research contends, “Materialists are more likely to overspend and have credit problems, possibly because they believe that acquisitions will increase their happiness and change their lives in meaningful ways.”

Could it be true that money really can buy happiness – as long as you’re spending it in the right ways? Weigh in.