This thought has crossed the minds of many: “If only I could hit the lottery, then all my problems would be solved.” But the relationship between money and happiness isn’t as straightforward as you might think — at least according to those who study the issue closely.
What the Data Shows
Money is not a panacea for guaranteeing happiness. Researchers surveyed more than 3000 Swedish lottery winners five to 22 years after winning a prize of at least $100,000. Ultimately, they found that the winners’ happiness actually didn’t change much after hitting the jackpot. They weren’t significantly happier — or unhappier.
Another study of 1.7 million people across 164 countries, however, pointed to an income “sweet spot” — an earnings range between $60,000 and $75,000 that correlates with improved levels of happiness. Other data points to $75,000 being an optimal income level for happiness.
The Why Behind the Data
Why doesn’t more money translate to greater degrees of happiness? One theory is that we’re all susceptible to a phenomenon called hedonic adaptation, otherwise known as the hedonic treadmill. This refers to our tendency to return to a happiness setpoint following both positive and negative events over time. In other words, we eventually adapt to our current circumstances — for better or worse.
Yet others suggest that the extent to which money means greater levels of happiness depends a great deal on how a person spends it. For example, money put toward purchasing experiences may be more beneficial for happiness than funds used to acquire possessions. Additionally, using money to foster meaningful connections with others or for altruistic purposes may also be a more effective way to promote happiness.
A Complex Issue
We can debate the extent to which money can “buy” happiness. But for those who struggle to meet basic needs, having sufficient funds to stay safe, sheltered and fed can provide a necessary sense of security. It’s also important to note that the study investigating the “ideal income” finds that the levels vary considerably depending by location. The cost-of-living ranges tremendously across the U.S., so the relationship between money and happiness can change significantly according to situation and context.
Financial wellness can be a significant part of overall wellness, but it takes its place among other areas of tremendous importance, including physical and mental health, personal relationships and sense of purpose. At the end of the day, the most meaningful question for each person may not be whether money can buy happiness in general — but rather how to maximize one’s own personal happiness using all available tools and resources, money included.