Money does make you happier, new study finds.

[clifp]

"Does happiness continue to increase with income, as some have found, or is there a threshold, as others have found? The answer is that there's a threshold for the least happy people, but for the happiest, happiness continues to increase."

I found this to be a really fascinating study for a couple of reasons.
https://www.pnas.org/doi/10.1073/pnas.2208661120. It is relatively short and you can skip the math and still get the essence of the study. The study found for all but unhappiest 20% of people. having more money increases happiness. Second, they used an interesting adversarial approach to settle a disagreement between two studies that found seemingly opposite conclusions. Income increase happiness only up about $75k, and other another study found it didn't plateau. Rather than look at happiness it looked unhappiness

One of the most popular post I've ever made on this forum, is discussing happiness and early retirement. I said that I found the most fulfilling and happy weeks of my life, were while working. The external validation, being a part of team, and something greater than yourself, were all hard for me to replicate post-retirement. On the flip side, my most miserable MONTHs were all while I was working. The stress, dealing with a bad boss, or having to sacrifice family or personal time, for work are all pretty horrible feelings.

I think what that study shows is that having a more money, doesn't make you happier, it just makes it easier to deal with bad days.

Imagine the day you have a car accident or a major appliance breaks like AC or furnace. If someone asks you how your day one unless you have a grandkid, or a daughter getting married that day, you are almost lead with the bad news. Unless you are crazy rich and have a head housekeeper, you are going to spend the next day or two, dealing the hassle of getting car/AC fixed arranging for alternatives, and talking to repair people.
But there is also the expense, if it costs $2K fix and you make $50K, that 2 weeks pay and if you don't have saving, you face the added worry of struggling how to pay for it. If you make $500K/year or have $5 million portfolio, then the expense is pretty much immaterial.

This is one of the reasons I'm still actively involved in managing my investment, is because having more money, just means there are fewer things I have to worry about paying for.

 

[Koolau]

Yeah, within reason, it's the hassle factor that bothers me most. I've relayed my recent plumbing issue which has been relatively expensive, but dealing with the HOA and Insurance Co. has been worse than the $10K it looks like will be my final cost. Hours on the phone, days with people in and out, inflexible and tone-deaf "leadership" in unpaid positions (if you catch my drift): These all take from the FIRE experience, even though the money is really "just a number" at this point. YMMV

 

[Sunset]

Yes, I've been poor and rich, and I'd rather be rich !!

Life is much easier when rich.

When poor, I used to worry about food and in fact from those life experiences have left me with a weird behavior, I really get upset if I drop my food on the floor as it's wasted !
In the old days it could mean nothing to eat. Literally my parents would wash off my meat so I could eat it.

Now it's silly to feel that way as I can just pop out to a restaurant or cook up more food, but I have to remind myself sometimes, it's ok to throw out 1/2 a lunch.

 

[Sunset]

Yeah, within reason, it's the hassle factor that bothers me most. I've relayed my recent plumbing issue which has been relatively expensive, but dealing with the HOA and Insurance Co. has been worse than the $10K it looks like will be my final cost. Hours on the phone, days with people in and out, inflexible and tone-deaf "leadership" in unpaid positions (if you catch my drift): These all take from the FIRE experience, even though the money is really "just a number" at this point. YMMV

If you were wealthy, you could/would just hire someone to handle the situation for you, or have them on staff all the time, as groceries need to be purchased and cooked, and the house cleaned, doctor appt's to make, and travel arranged, etc...

 

[flyingaway]

Money does make me happy.

 

[DrRoy]

I can do more fun things if I can afford them.

 

[aja8888]

When poor, I used to worry about food and in fact from those life experiences have left me with a weird behavior, I really get upset if I drop my food on the floor as it's wasted !
In the old days it could mean nothing to eat. Literally my parents would wash off my meat so I could eat it.

In our house, the dog was on standby so you had to be quick to get that meat off the floor or you lost it.

 

[iloveyoga]

It sure makes things easier.

 

[marko]

I'm Guardian and Conservator for my brother who suffered a serious stroke six years ago. Thanks to a good paying job (prior to his injury) and the foresight of our great-grandfather, let's just say that he's "well resourced".

This has made his and my life considerably easier and more convenient than what others in his situation must go through. He is able to private pay for attendants, household help, drivers and such. If he had to rely on social services, I suspect the quality might be a little less and less reliable. Just going to our Florida home was so much more convenient with him sitting in a First Class seat than a middle seat in "29B" would have been.

In short, we/he can be a little less efficient financially for the sake of convenience, ease and comfort. We don't have to shop around.

I'm sure he'd trade it all for his health, but at least his life is a lot easier than it could be.

As Cindy Lauper once said "Money changes everything"

 

[Gumby]

I will never have enough money to knowingly waste food.

 

[old medic]

Yes, I've been poor and rich, and I'd rather be rich !! Life is much easier when rich.

I will have to agree... We have been at some low points over the years, and managed to pull things together between hard work and luck to get where we are now. And thanks to great info here, the future looks even brighter for us.

But those terms can be viewed differently between people. I'm pretty sure there are a few on here would look at our overall situation and finances and considerate it poor if they fell to that. Lord knows I've read many "Do I have enough" post that have me drop my jaw.

 

[finnski1]

I will never have enough money to knowingly waste food.

+1

 

[Andre1969]

Naturally I'd rather be rich, than poor, although I guess both has their own set of problems. In my own case, I'd say I'm reasonably happy. I'm not downright giddy, but not depressed, either. More money would make me happy, but I could definitely see a diminishing return.

For instance, if $1M was suddenly added to the value of my invested assets, I probably WOULD be downright giddy. However, a second million, on top of that, most likely wouldn't have the same effect. And, if I already had $20M, an additional $1M is nothing more than a couple of good days in a row on the stock market, so it's all relative.

And then there's hedonistic creep, or whatever they call it. Basically, where you get accustomed to your improved standing in life, and what once seemed luxurious now just seems "normal", and not so special anymore. For instance, when I was 20 years old, if I had a car with power windows/locks/seat, a nice sound system, that could do 0-60 in around 8 seconds, I would've felt on top of the world. Yet, I have that now, and it's like meh, whatever. Or, a few years back when I moved to a much larger house, with a pool, on a larger lot. Felt like the lap of luxury at first, but now, it just feels like a regular house. And there are times I wish I had a bigger house, even though I don't really need one.

 

[Andre1969]

I will never have enough money to knowingly waste food.

Yep, same here. Although, sometimes I'll admit I probably take it too far. For instance, my house mate made some kind of macaroni/tuna dish, and he had chopped up some celery in it. Well, the parts of the celery stalks he didn't use, he put in a bowl, and I ended up eating them.

I had gotten "organic" celery because Aldi didn't have the regular stuff that time, so it was a bit more expensive. And, it didn't have some of the extremities that most people would cut off of celery, anyway, although my house mate still cut some of it off. In the overall scheme of things, I'd imagine that parts he was going to throw away amounted to less than 10 cents, but I just could not stand seeing that food go to waste.

I think with the way my mind works, it has nothing to do with what something cost. I just hate seeing something get wasted.

 

[scrabbler1]

After I paid off the mortgage on my apartment in 1998, I was able to live on one of my biweekly paychecks per month, with the other one being used to replace the money I used to pay off the big loan. This was in the booming late 1990s, so market gains actually paid off the mortgage (i.e. playing with the house's money).

Living off one of 2 monthly paychecks also showed me that I didn't need to be working full-time. I used this revelation 3 years later to basically "buy" my way out of the misery (read: burnout) which had been building from working full-time for the previous 16 years, halving my weekly hours worked. I recovered my personal life and soon began figuring out how to eliminate the other half of those weekly hours worked (when the commute, even only a few days a week, became too much for me).

I was still earning more than I needed to pay the bills, and that didn't include market gains and the exploding value of the company stock whose shares I acquired during my peak earnings years from 1997-2001. The latter would greatly allow me to retire 7 years later, in 2008.

So, money did make me happy because of the huge "purchase" I made with it - buying my way out of the misery and burnout which had build up over most of the 23 years I worked.

 

[steelyman]

I only skimmed the article in the opening post but I didn’t see any mention of debt. I do think (instinctively) that there is a plateau reached as income increases.

 

[audreyh1]

I think as our net worth increased our sense of financial security expanded to include being able to help close family members in need. In other words our “number” for happiness grew as we could not be happy if we weren’t able to help family members weather a crisis. If our other family members were very well off this “expansion of need” probably would not have happened.

Beyond that, these days I’m willing to pay up far more for convenience, little hassle, greater comfort, etc. than I was say 20 years ago. The older I get the more jealous I am of my time and effort.

 

[RobertTN]

If you really dig into the study and results you will see at the end, there are very few people in the highest income category, only 1.2%. So, you could have a problem with results if you happened to have an abnormal amount of 'unhappy' in the highest income (as defined by the study's questions) people respond to the study because of the small size at this income level (it is only about 340 people at this income level so just a few people could skew results for this category). Also, they are going off of income, not assets/net worth. I could have $30 million of Muni bonds, what is my income, $0. Finally, on income, it implies that they are focusing on working people, in fact the average age is in the 30s.

The other big issue is their binary questioning. Meaning, if a higher income person is really, really, really happy their response for analysis in the study would be the same as a person who is 'just' happy and that 'just' happy person makes half of what the high income really, really, really happy person makes.

As you can tell, I think these types of studies are silly. What are they trying to accomplish? A way to make someone struggling to get by because they live in a HCOL area making $80,000 a year that they should feel happy because others in their same income category are? They do not even take geography into consideration.

I remember when I was building my business and struggling, I was happy (working hard, using my brain, building something, etc.). I am blessed to be sitting on some money and I am happy now for other reasons (spending time with wife and kids, travel anywhere on a moment's notice, etc.).

Finally, anyone who says money does not help is, I do not believe, being honest. It takes a major stressor off the table and more importantly, it buys time, and time is one of the few limitations in life.

 

[Jerry1]

I will never have enough money to knowingly waste food.

Or, most anything. I hate wasting stuff. At its core, it’s just not right. Unfortunately, that’s one of the things that keeps me from clearing out my “junk”. It’s very hard for me to just discard something that has value.

 

[dmpi]

I've been on both sides of being poor and rich. There's a world of difference. A lot of it is just mental. When you're poor you HAVE to shop around for the best deals to stretch your money in order to survive. When you're rich you shop price because frankly it's more fun and it gives you something challenging to do. When you're poor you envy all the people around you who seem to have everything. When you're rich you realize that material stuff is really no big deal and you can be truly happy for other people's success. Same goes for power. When you have no power you're hurting, but when you finally get some you don't know what the big deal was.

 

[athena53]

I had gotten "organic" celery because Aldi didn't have the regular stuff that time, so it was a bit more expensive. And, it didn't have some of the extremities that most people would cut off of celery, anyway, although my house mate still cut some of it off. In the overall scheme of things, I'd imagine that parts he was going to throw away amounted to less than 10 cents, but I just could not stand seeing that food go to waste.

I save all the odds and ends of vegetables in a plastic bag in the freezer and make vegetable broth out of them! I learned that from my late DH, who grew up poor.

I agree that just having enough money to remove stressors from your life increases happiness. A couple of years ago my car died while I was visiting DS and DDIL 3 hours away. It needed the transmission replaced- not worth the value of the car. I chose a new car from the local dealer site, negotiated a price, had money transferred to my checking account and picked it up the next day. OK, it was only a Honda Civic, but still...the scenario could have been totally different if I'd owned a beater with a loan balance on it and had to run around looking for an affordable used car and the financing to buy it.

At this point I may have reached a plateau- more money would not make me any happier.

 

[ER Eddie]

Money buys freedom. It's what you do with the freedom that matters. It's not the money itself.

I wouldn't make too much of any one particular study. If you look at the bulk of the findings -- and there have been a ton of studies in this area -- the overall pattern is pretty clear. One study here or there doesn't matter a whole lot.

Remember, too, these studies are all correlational -- meaning they do NOT (cannot) establish a casual link. The title is misleading, because it implies a causal relationship (money "makes" you happier). No, it does not. There is an association between the two -- and there are also plenty of uncontrolled confounds. You see this same thing in nutritional "science" all the time.

The only way you could establish that money "makes" you happier is by randomly assigning people to different income brackets, tracking them over decades, controlling their behavior in in other relevant areas (e.g., relationships, health). Good luck getting that design past the IRB.

 

[karen1972]

I didn't dive into this one, but I've seen the Berkley study that was $70k years ago and I thought I saw it was updated in 2022 to be $105k

That one made sense to me as there is the law of diminishing returns. if you have 1 candy bar you are happy, if you get a second candy bar you may be happier, but by the time you get 3.4.5.6 candy bars you are not going to want to eat that many candy bars and thus they dont' make you happier... ie which is the same with buying anything.

Being broke, stressing about how to make rent, fix the car, more money gives you a TON more happiness, having a home, a decent reliable car, able to afford stuff for the kids, again big gains to happiness... but once you have the house, car, etc, you get to the point of just buying "nicer" and "more" stuff is when the happiness factor usually starts to slow down for most people.

We live on about $75k, I'd like to have about $100k, that extra $25k would make a difference in happiness a I'd be driving a new car, not a 12yo car. We'd go on longer vacations and more often. However, I'm happier on $75k early retired and not working but budgeting than I would be still working but having more income...because while I could be happier with more stuff, I'm still pretty happy right now.

 

[MRG]

When we got married and I worked in a sawmill, it was tough. Hunger was something I knew and didn't like. Looking around my hometown, I didn't see opportunities. A few years later, I got a chance to move to KC, and I saw opportunities. It took a few years to make them start to pay off, and I got fat. Twenty-nine years in programming does that. I worked with a guy who was my teacher only we didn't recognize each other, we'd both put on 75+ pounds since I was in his classroom..

 

[old medic]

Yep, same here. Although, sometimes I'll admit I probably take it too far. For instance.........

We keep a couple containers, one in the fridge for leftover trimmings from any vegetables, and another in the freezer bones and meat trimmings. Yesterday I dug everything out and used the insta-pot to make broth to can today. most of any leftover get used, or froze for the future.