Money Does Buy You Happiness. Maybe.

By Amos Zeeberg (Discover Web Editor) | September 28, 2006 6:00 pm

People have been probably been wondering if money brings happiness ever since Croesus, a king in what is today Turkey, had a mixture of silver and gold pounded into bean-shaped ingots 4,000 years ago. Only over the past few years has the subject become a scientific hot topic. And the results, as far as I can tell, are… (drum roll)… somewhat muddled. One argument that has gained considerable prominence recently is that more money does make you significantly happier if you’re living in poverty, barely squeaking by, but additional income past that has negligible happiness benefits.

Not so, says a new study (pdf) that tracked ten thousand British people over the course of several years and focused especially on 116 who won big lottery payouts (over 1,000 pounds; mean of 4,300 pounds) during that time. One strength of the study is that it followed the winners themselves for two years after they won and also included data on the same people from the two years before the wheel of Fortuna rolled their way; the researchers may have avoided confounding factors that needle at other studies, such as those that compare people at different income levels (happiness might affect income), those that look at people who are given raises (change in status along with change in income), etc.

The study finds that big pay-offs increase people’s happiness by an average of 1.4 points on a 36-point scale, as measured by a standard questionnaire. By comparison, the most dramatic effect on someone’s happiness is being widowed, which on average produces a 5-point drop. Whether being widowed is 3.5 times more intense than winning the lottery — and therefore worth negative 15,000 pounds — is a question only an economist would address. (And the bonus is in no way enough to justify Terrell Owens’ heartless publicist saying he had “25 million reasons why he should be alive,” referring to his contract.)

Lest we think this ends the debate, there are some mysterioso findings in there, too:

• Lottery wins yield these happiness benefits only 2 years after the windfall.
• In the same year that people win, their happiness actually decreases by .6 points. The dreaded grabby-brother-in-law effect?
• High-income people got twice as many happy points from winning as did low-income people! Maybe that’s why they work high-income jobs.
• Big winners gained .7 happy points the year before they won. One wonders if this is a statistical fluke, but does that raise a red flag?

As a big believer in behavioral economics, I wonder if the effects have more to do with human idiosyncracies than the actual amount of money that is objectively gained. Is it possible that the happiness gains are due not to having more money but to the feeling of being someone who won money — someone that God and/or luck is smiling upon?

(Thanks to AB for the tip.)

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CATEGORIZED UNDER: What’s Inside Your Brain?
  • Nick1254367

    Interesting thoughts! I believe it’s not possible to make a general statement on whether money makes people more or less happy. Money comes with a whole set of new elements that may have good or bad impact on our happiness, and depending on how susceptible we are to every one of them, the conclusion will go one way or the other (i.e. different from person to person). I recently made an effort to provide a more comprehensive picture of what these ad- and disadvantages are. I invite you to have a look at Money and Happiness and tell me what you think!
    Thank you, Nick


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