The Gray Divorce Podcast: Episode 49 Does Money Buy Happiness?

Andrew Hatherley |

Andrew discusses the subject of money and happiness and looks at recent research that suggests a far higher correlation between the two than previously considered. 

Research on the Subject 

In a 2010 study, Daniel Kahneman and Angus Deaton of Princeton found that happiness did increase with income but only to a certain point. They found no progress in happiness beyond the $75,000 level. 

A recently released study in 2024 by Matt Killingsworth of the Wharton School of the University of Pennsylvania found a much higher correlation between money and happiness at higher income levels. Killingsworth found that happiness rises consistently up to $8 million in income, with people earning at these levels showing much higher levels of life satisfaction. 

The Limits of Money in Achieving Happiness 

  • Having more money is associated with happiness, seeking more money can hurt our happiness. 
  • Comparing your financial situation to others often leads to feelings of inadequacy or envy, even if you're doing really well. 
  • As income increases, expectations and desires rise at the same time, leading to a situation where no lasting increase in happiness is achieved. 

The Role of Non-Material Factors in Happiness 

  • Relationships and social connections are two of the most significant predictors of happiness. 
  • Having a sense of meaning and purpose in life is another critical factor in achieving happiness. 
  • While money might be able to provide you with good healthcare resources, it cannot guarantee good health. Physical and mental health are key determinants of happiness. 

Money as a Tool for Happiness 

  • Spending on experiences, such as travel or dining out, tends to bring more happiness than spending on material goods. 
  • Studies have shown that people who spend money on others experience greater happiness than those who only spend money on themselves. 
  • When you are secure in your financial situation you are less likely to experience stress and anxiety, leading to greater overall well-being.