Having Money May Be Good for Happiness
If you think money is important for living a good life, is this good or bad for your well-being?
In our research, nearly 4,000 Americans reported what was most important for living a good life. They did this by checking five (out of 17) choices, for example:
- Feeling good—"enjoyment of life's pleasures" and "relaxation, peacefulness, contentment"
- Feeling connected to others—"positive relationships with family" and "positive relationships with friends"
- Good health—"physical fitness and strength" and "the absence of illness"
- Focus on oneself—"loving and caring for myself" and "autonomy, being self-reliant"
- Having money—"enough money to meet basic needs" and "extra money/disposable income"
By having to select only five items, people had to weigh what they think is most important, not simply what they think is helpful for living a good life.
People also reported on their annual household income and answered questions about different aspects of their well-being, such as how frequently they experienced positive or negative emotions, how satisfied they were with their lives, and whether they felt purposeful.
We were especially interested in people who selected the money items. If people think having enough or extra money is important for a good life, is their well-being better or worse? And how does this fit into past research that typically suggests having more money is connected to better well-being?
The Money Items
More people selected having enough money as important for a good life than having extra money. So, people agreed that meeting basic needs was more essential for a good life than having disposable income. Extremely few people selected both categories as important, meaning people typically made the choice between enough or extra money as important.
The money items were tied in opposite ways to their household income: people who said having enough money to meet basic needs made $17,000 less than those who did not think it was important, while people who said having extra money was important made nearly $9,000 more than those who did not think it was important.
In other words, people who think having enough money is important for a good life typically have less money, while people who think having extra money is important for a good life typically have more money.
Money is important—it puts food on the table and keeps the lights on. However, with more money comes more opportunities: disposable income means travel, adventures, hobbies, and, overall, making life less stressful, more enjoyable, and easier. But, what do people's perceptions of money and their actual amount of money earned mean for well-being?
Having higher household income was associated with better well-being across all well-being aspects. Yet, believing money is important for a good life was associated with poorer well-being across all well-being aspects. These negative effects were more dramatic in those who said extra money was important for a good life relative to enough money. People who believed money was important for a good life had worse well-being, especially when they had lower incomes, while people who did not believe money was important for a good life had better well-being, especially when they had higher incomes.
Does Money Buy Happiness?
When considering whether money buys happiness, our research highlights that, yes, having more money is connected to feeling more positive emotions, feeling more satisfied with one's life, feeling more purposeful, and a slew of other aspects of better well-being. However, people's perception of money has implications for their well-being, too: thinking money is important for a good life can negate some of the positive influence that having it may impart.
So, as you think about what may make you happy, recognize the role that money plays: it gives you more opportunities to do what you need and want to do. However, money is better used as a tool in the pursuit of happiness than as a destination for happiness itself.
For Further Reading
Killingsworth, M. A. (2021). Experienced well-being rises with income, even above $75,000 per year. Proceedings of the National Academy of Sciences, 118(4), e2016976118. https://doi.org/10.1073/pnas.2016976118
Pfund, G. N., Willroth, E. C., Mroczek, D. K., & Hill, P. L. (2023). Valuing versus having: The contrary roles of valuing and having money and prestige on well-being. Social Psychological and Personality Science, 19485506231166048. https://doi.org/10.1177/19485506231166048
Gabrielle N. Pfund is a postdoctoral researcher in the Department of Medical Social Sciences at Northwestern University. Her work focuses on the connection between sense of purpose, well-being, and health across the adult lifespan, with specific focuses on the within-person processes of sense of purpose in the short- and long-term, and the implications of purpose for cognitive aging.