The idea that ‘money can’t buy you happiness’ has prevailed for over a decade. Studies showed that earning above what we needed to cover our basic needs and keep us ‘comfortable’ was futile, and could even make us less happy. But sadly, those days are gone. Social scientists have now removed any rose-tinted spectacles to agree a new motto: the more the merrier.
In 2020, researchers analysed data from the Office for National Statistics and Happy Planet Index to find out how much money the average Briton would need to live a happy life. The answer: £33,864 or more. And it’s the ‘more’ part that’s key. A study published in 2021 by Matthew Killingsworth of the University of Pennsylvania suggests that the more money we have, the happier we are.
This isn’t purely a ‘greed is good’ philosophy: it has more to do with the state of the world and the ‘wellness inequality’ we’re currently experiencing in much of it. Wealthier people tend to be in better health, and better health has an impact on happiness. Rich people who spend their money on buying more free time and investing in experiences rather than ‘stuff’ can also boost their happiness.
Of course, happiness also comes from relationships, job satisfaction and just enjoying life. But money in the bank gives us greater options in many of these categories.
What also impacts our happiness is how much we have compared to others. If we can maintain the same standard of living as those around us, we experience a higher level of wellbeing and so feel happier. If we can’t, we don’t. ‘Relative deprivation’, as it’s known, is regardless of ‘absolute poverty’ – we can live in a wealthy neighbourhood or country, but if we haven’t got a new car and our neighbour has, we’ll be unhappy (according to the science).
The effects of relative deprivation explain why average happiness has been stagnant over time despite sharp rises in income globally. Taxes on ‘status-seeking’ spending as well as higher income tax may lessen the negative impact of relative deprivation on wellbeing (and explain why the high-tax Scandinavian countries often come top of the global happiness polls).
But most Brits still baulk at the idea of higher taxes. So for now, having more money than our neighbours and earning at least £33k a year is the statistical sweet spot for us to be happy, but not, incidentally, our children.
A study in Psychology Today showed that the children of wealthy parents had a higher risk of experiencing depression, anxiety, eating disorders and substance abuse. Researchers also found that, as we get richer, we may become less ethical and less empathetic, since wealth instils a sense of freedom and the wealthier we are, the less we care about other people’s problems and feelings.
By contrast, psychologists at the University of California at Berkeley and San Francisco found that people on lower incomes are better readers of facial expressions and more empathetic.
So if we’re not driving a fancier car than our neighbours or feeling as flush, there may be some solace in this simple fact: we’re probably much nicer people.