money makes me happy essay

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Does More Money Really Make Us More Happy?

  • Elizabeth Dunn
  • Chris Courtney

money makes me happy essay

A big paycheck won’t necessarily bring you joy

Although some studies show that wealthier people tend to be happier, prioritizing money over time can actually have the opposite effect.

  • But even having just a little bit of extra cash in your savings account ($500), can increase your life satisfaction. So how can you keep more cash on hand?
  • Ask yourself: What do I buy that isn’t essential for my survival? Is the expense genuinely contributing to my happiness? If the answer to the second question is no, try taking a break from those expenses.
  • Other research shows there are specific ways to spend your money to promote happiness, such as spending on experiences, buying time, and investing in others.
  • Spending choices that promote happiness are also dependent on individual personalities, and future research may provide more individualized advice to help you get the most happiness from your money.

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Where your work meets your life. See more from Ascend here .

How often have you willingly sacrificed your free time to make more money? You’re not alone. But new research suggests that prioritizing money over time may actually undermine our happiness.

  • ED Elizabeth Dunn is a professor of psychology at the University of British Columbia and Chief Science Officer of Happy Money, a financial technology company with a mission to help borrowers become savers. She is also co-author of “ Happy Money: The Science of Happier Spending ” with Dr. Michael Norton. Her TED2019 talk on money and happiness was selected as one of the top 10 talks of the year by TED.
  • CC Chris Courtney is the VP of Science at Happy Money. He utilizes his background in cognitive neuroscience, human-computer interaction, and machine learning to drive personalization and engagement in products designed to empower people to take control of their financial lives. His team is focused on creating innovative ways to provide more inclusionary financial services, while building tools to promote financial and psychological well-being and success.

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Jade Wu Ph.D.

Can Money Really Buy Happiness?

Money and happiness are related—but not in the way you think..

Updated November 10, 2023 | Reviewed by Chloe Williams

  • More money is linked to increased happiness, some research shows.
  • People who won the lottery have greater life satisfaction, even years later.
  • Wealth is not associated with happiness globally; non-material things are more likely to predict wellbeing.
  • Money, in and of itself, cannot buy happiness, but it can provide a means to the things we value in life.

Money is a big part of our lives, our identities, and perhaps our well-being. Sometimes, it can feel like your happiness hinges on how much cash is in your bank account. Have you ever thought to yourself, “If only I could increase my salary by 12 percent, I’d feel better”? How about, “I wish I had an inheritance. How easier life would be!” I don’t blame you — I’ve had the same thoughts many times.

But what does psychological research say about the age-old question: Can money really buy happiness? Let’s take a brutally honest exploration of how money and happiness are (and aren’t) related. (Spoiler alert: I’ve got bad news, good news, and lots of caveats.)

Higher earners are generally happier

Over 10 years ago, a study based on Gallup Poll data on 1,000 people made a big headline in the news. It found that people with higher incomes report being happier... but only up to an annual income of $75,000 (equivalent to about $90,000 today). After this point, a high emotional well-being wasn’t directly correlated to more money. This seemed to show that once a persons’ basic (and some “advanced”) needs are comfortably met, more money isn’t necessary for well-being.

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But a new 2021 study of over one million participants found that there’s no such thing as an inflection point where more money doesn’t equal more happiness, at least not up to an annual salary of $500,000. In this study, participants’ well-being was measured in more detail. Instead of being asked to remember how well they felt in the past week, month, or year, they were asked how they felt right now in the moment. And based on this real-time assessment, very high earners were feeling great.

Similarly, a Swedish study on lottery winners found that even after years, people who won the lottery had greater life satisfaction, mental health, and were more prepared to face misfortune like divorce , illness, and being alone than regular folks who didn’t win the lottery. It’s almost as if having a pile of money made those things less difficult to cope with for the winners.

Evaluative vs. experienced well-being

At this point, it's important to suss out what researchers actually mean by "happiness." There are two major types of well-being psychologists measure: evaluative and experienced. Evaluative well-being refers to your answer to, “How do you think your life is going?” It’s what you think about your life. Experienced well-being, however, is your answer to, “What emotions are you feeling from day to day, and in what proportions?” It is your actual experience of positive and negative emotions.

In both of these studies — the one that found the happiness curve to flatten after $75,000 and the one that didn't — the researchers were focusing on experienced well-being. That means there's a disagreement in the research about whether day-to-day experiences of positive emotions really increase with higher and higher incomes, without limit. Which study is more accurate? Well, the 2021 study surveyed many more people, so it has the advantage of being more representative. However, there is a big caveat...

Material wealth is not associated with happiness everywhere in the world

If you’re not a very high earner, you may be feeling a bit irritated right now. How unfair that the rest of us can’t even comfort ourselves with the idea that millionaires must be sad in their giant mansions!

But not so fast.

Yes, in the large million-person study, experienced well-being (aka, happiness) did continually increase with higher income. But this study only included people in the United States. It wouldn't be a stretch to say that our culture is quite materialistic, more so than other countries, and income level plays a huge role in our lifestyle.

Another study of Mayan people in a poor, rural region of Yucatan, Mexico, did not find the level of wealth to be related to happiness, which the participants had high levels of overall. Separately, a Gallup World Poll study of people from many countries and cultures also found that, although higher income was associated with higher life evaluation, it was non-material things that predicted experienced well-being (e.g., learning, autonomy, respect, social support).

Earned wealth generates more happiness than inherited wealth

More good news: For those of us with really big dreams of “making it” and striking it rich through talent and hard work, know that the actual process of reaching your dream will not only bring you cash but also happiness. A study of ultra-rich millionaires (net worth of at least $8,000,000) found that those who earned their wealth through work and effort got more of a happiness boost from their money than those who inherited it. So keep dreaming big and reaching for your entrepreneurial goals … as long as you’re not sacrificing your actual well-being in the pursuit.

money makes me happy essay

There are different types of happiness, and wealth is better for some than others

We’ve been talking about “happiness” as if it’s one big thing. But happiness actually has many different components and flavors. Think about all the positive emotions you’ve felt — can we break them down into more specifics? How about:

  • Contentment
  • Gratefulness

...and that's just a short list.

It turns out that wealth may be associated with some of these categories of “happiness,” specifically self-focused positive emotions such as pride and contentment, whereas less wealthy people have more other-focused positive emotions like love and compassion.

In fact, in the Swedish lottery winners study, people’s feelings about their social well-being (with friends, family, neighbors, and society) were no different between lottery winners and regular people.

Money is a means to the things we value, not happiness itself

One major difference between lottery winners and non-winners, it turns out, is that lottery winners have more spare time. This is the thing that really makes me envious , and I would hypothesize that this is the main reason why lottery winners are more satisfied with their life.

Consider this simply: If we had the financial security to spend time on things we enjoy and value, instead of feeling pressured to generate income all the time, why wouldn’t we be happier?

This is good news. It’s a reminder that money, in and of itself, cannot literally buy happiness. It can buy time and peace of mind. It can buy security and aesthetic experiences, and the ability to be generous to your family and friends. It makes room for other things that are important in life.

In fact, the researchers in that lottery winner study used statistical approaches to benchmark how much happiness winning $100,000 brings in the short-term (less than one year) and long-term (more than five years) compared to other major life events. For better or worse, getting married and having a baby each give a bigger short-term happiness boost than winning money, but in the long run, all three of these events have the same impact.

What does this mean? We make of our wealth and our life what we will. This is especially true for the vast majority of the world made up of people struggling to meet basic needs and to rise out of insecurity. We’ve learned that being rich can boost your life satisfaction and make it easier to have positive emotions, so it’s certainly worth your effort to set goals, work hard, and move towards financial health.

But getting rich is not the only way to be happy. You can still earn health, compassion, community, love, pride, connectedness, and so much more, even if you don’t have a lot of zeros in your bank account. After all, the original definition of “wealth” referred to a person’s holistic wellness in life, which means we all have the potential to be wealthy... in body, mind, and soul.

Kahneman, D., & Deaton, A.. High income improves evaluation of life but not emotional well-being. . Proceedings of the national academy of sciences. 2010.

Killingsworth, M. A. . Experienced well-being rises with income, even above $75,000 per year .. Proceedings of the National Academy of Sciences. 2021.

Lindqvist, E., Östling, R., & Cesarini, D. . Long-run effects of lottery wealth on psychological well-being. . The Review of Economic Studies. 2020.

Guardiola, J., González‐Gómez, F., García‐Rubio, M. A., & Lendechy‐Grajales, Á.. Does higher income equal higher levels of happiness in every society? The case of the Mayan people. . International Journal of Social Welfare. 2013.

Diener, E., Ng, W., Harter, J., & Arora, R. . Wealth and happiness across the world: material prosperity predicts life evaluation, whereas psychosocial prosperity predicts positive feeling. . Journal of personality and social psychology. 2010.

Donnelly, G. E., Zheng, T., Haisley, E., & Norton, M. I.. The amount and source of millionaires’ wealth (moderately) predict their happiness . . Personality and Social Psychology Bulletin. 2018.

Piff, P. K., & Moskowitz, J. P. . Wealth, poverty, and happiness: Social class is differentially associated with positive emotions.. Emotion. 2018.

Jade Wu Ph.D.

Jade Wu, Ph.D., is a clinical health psychologist and host of the Savvy Psychologist podcast. She specializes in helping those with sleep problems and anxiety disorders.

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More Proof That Money Can Buy Happiness (or a Life with Less Stress)

When we wonder whether money can buy happiness, we may consider the luxuries it provides, like expensive dinners and lavish vacations. But cash is key in another important way: It helps people avoid many of the day-to-day hassles that cause stress, new research shows.

Money can provide calm and control, allowing us to buy our way out of unforeseen bumps in the road, whether it’s a small nuisance, like dodging a rainstorm by ordering up an Uber, or a bigger worry, like handling an unexpected hospital bill, says Harvard Business School professor Jon Jachimowicz.

“If we only focus on the happiness that money can bring, I think we are missing something,” says Jachimowicz, an assistant professor of business administration in the Organizational Behavior Unit at HBS. “We also need to think about all of the worries that it can free us from.”

The idea that money can reduce stress in everyday life and make people happier impacts not only the poor, but also more affluent Americans living at the edge of their means in a bumpy economy. Indeed, in 2019, one in every four Americans faced financial scarcity, according to the Board of Governors of the Federal Reserve System. The findings are particularly important now, as inflation eats into the ability of many Americans to afford basic necessities like food and gas, and COVID-19 continues to disrupt the job market.

Buying less stress

The inspiration for researching how money alleviates hardships came from advice that Jachimowicz’s father gave him. After years of living as a struggling graduate student, Jachimowicz received his appointment at HBS and the financial stability that came with it.

“My father said to me, ‘You are going to have to learn how to spend money to fix problems.’” The idea stuck with Jachimowicz, causing him to think differently about even the everyday misfortunes that we all face.

To test the relationship between cash and life satisfaction, Jachimowicz and his colleagues from the University of Southern California, Groningen University, and Columbia Business School conducted a series of experiments, which are outlined in a forthcoming paper in the journal Social Psychological and Personality Science , The Sharp Spikes of Poverty: Financial Scarcity Is Related to Higher Levels of Distress Intensity in Daily Life .

Higher income amounts to lower stress

In one study, 522 participants kept a diary for 30 days, tracking daily events and their emotional responses to them. Participants’ incomes in the previous year ranged from less than $10,000 to $150,000 or more. They found:

  • Money reduces intense stress: There was no significant difference in how often the participants experienced distressing events—no matter their income, they recorded a similar number of daily frustrations. But those with higher incomes experienced less negative intensity from those events.
  • More money brings greater control : Those with higher incomes felt they had more control over negative events and that control reduced their stress. People with ample incomes felt more agency to deal with whatever hassles may arise.
  • Higher incomes lead to higher life satisfaction: People with higher incomes were generally more satisfied with their lives.

“It’s not that rich people don’t have problems,” Jachimowicz says, “but having money allows you to fix problems and resolve them more quickly.”

Why cash matters

In another study, researchers presented about 400 participants with daily dilemmas, like finding time to cook meals, getting around in an area with poor public transportation, or working from home among children in tight spaces. They then asked how participants would solve the problem, either using cash to resolve it, or asking friends and family for assistance. The results showed:

  • People lean on family and friends regardless of income: Jachimowicz and his colleagues found that there was no difference in how often people suggested turning to friends and family for help—for example, by asking a friend for a ride or asking a family member to help with childcare or dinner.
  • Cash is the answer for people with money: The higher a person’s income, however, the more likely they were to suggest money as a solution to a hassle, for example, by calling an Uber or ordering takeout.

While such results might be expected, Jachimowicz says, people may not consider the extent to which the daily hassles we all face create more stress for cash-strapped individuals—or the way a lack of cash may tax social relationships if people are always asking family and friends for help, rather than using their own money to solve a problem.

“The question is, when problems come your way, to what extent do you feel like you can deal with them, that you can walk through life and know everything is going to be OK,” Jachimowicz says.

Breaking the ‘shame spiral’

In another recent paper , Jachimowicz and colleagues found that people experiencing financial difficulties experience shame, which leads them to avoid dealing with their problems and often makes them worse. Such “shame spirals” stem from a perception that people are to blame for their own lack of money, rather than external environmental and societal factors, the research team says.

“We have normalized this idea that when you are poor, it’s your fault and so you should be ashamed of it,” Jachimowicz says. “At the same time, we’ve structured society in a way that makes it really hard on people who are poor.”

For example, Jachimowicz says, public transportation is often inaccessible and expensive, which affects people who can’t afford cars, and tardy policies at work often penalize people on the lowest end of the pay scale. Changing those deeply-engrained structures—and the way many of us think about financial difficulties—is crucial.

After all, society as a whole may feel the ripple effects of the financial hardships some people face, since financial strain is linked with lower job performance, problems with long-term decision-making, and difficulty with meaningful relationships, the research says. Ultimately, Jachimowicz hopes his work can prompt thinking about systemic change.

“People who are poor should feel like they have some control over their lives, too. Why is that a luxury we only afford to rich people?” Jachimowicz says. “We have to structure organizations and institutions to empower everyone.”

[Image: iStockphoto/mihtiander]

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Does Money Make You Happy? The Latest Research Might Surprise You

Evidence that money does, in fact, buy happiness continues to surface.

Money Can Make You Happier

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The old adage “money doesn’t buy happiness” in recent decades evolved to an understanding that individuals’ happiness increases with income.

Our collective understanding of the relationship between money and happiness has shifted over the past two decades as researchers increasingly uncover close ties between individuals’ earnings and their day-to-day happiness.

Studies on Well-Being and Money Contradict

The adage “money doesn’t buy happiness” has evolved in recent decades due to research that shows otherwise.

The idea that an individual’s emotional well-being increases up to a certain income threshold became prevalent due to a wildly popular 2010 Princeton study. In the study, Daniel Kahneman and Angus Deaton reviewed more than 450,000 responses to a daily well-being survey of 1,000 U.S. residents and found that emotional well-being increased with rising income until the $75,000 mark.

In 2021, however, a report from the Wharton School at the University of Pennsylvania revealed there is no such plateau, shifting the public's perception yet again. The research, led by Wharton School Senior Fellow Matthew Killingsworth, collected 1.7 million emotional snapshots throughout several days of more than 33,000 participants and found that all measured forms of well-being continued to rise with income, regardless of the dollar amount.

“There is no critical level of income that really changes that relationship,” Killingsworth wrote. And though happiness is correlated with other life factors, like education and marital status, he said his findings indicate the relationship between income and happiness is stronger.

A 2023 Report Settles the Debate

Due to the two contradicting reports resulting from similar research, Killingsworth and Kahneman teamed up with facilitator Barbara Mallers to reanalyze the experience sampling data together. The resulting 2023 research report , Income and Emotional Well-being: A Conflict Resolved, reveals a flattening pattern does exist but only for the least happy 20% of the population.

In other words, relatively happy people make up the majority (80%) and tend to experience increasing happiness as their income increases – without limits.

There is an unhappy minority, however, that experiences only a significant increase in happiness with rising income up to a certain amount – $100,000, adjusted for inflation. After the $100,000 mark, their happiness plateaus. Respondents who were in the upper 15th percentile of the happiness distribution interestingly showed the opposite effect – their happiness increased more sharply after the $100,000 mark.

Why Does Money Lead to Greater Happiness?

Another study released in January of 2022 and led by Jon M. Jachimowicz, an assistant professor at Harvard Business School, explored the many ways money can be used as a problem-solving tool that results in more overall happiness.

In the study, 522 participants with incomes ranging from less than $10,000 to more than $150,000 tracked daily events and emotional responses for 30 days in a diary. The results showed that although there was no significant difference in the frequency of stressful events experienced by participants across income levels, money reduced the intensity of the emotional response to those events.

And on the whole, researchers determined that people with higher incomes report greater levels of life satisfaction.

“It’s not that rich people don’t have problems,” Jachimowicz told Harvard Business School’s Working Knowledge publication, “but having money allows you to fix problems and resolve them more quickly.” He explains that income increases a sense of control which can mitigate the intensity of distress and lead to greater life satisfaction.

“Money provides people with a sense of autonomy and freedom to live the life they want to live,” Killingsworth says.

"It’s not necessarily because they’re buying fancier cars and having nicer meals, though they may be, but a lot of what money is doing is allowing them to carry out their intentions and desires as agents in the world as opposed to being overly constrained by resources,” he adds.

Cultivating Happiness Despite Rising Costs

Today, as inflation continues to eat away at Americans’ buying power, the cost of happiness may be rising as well. Most salaries in the U.S. have not kept pace with inflation, but the principles revealed in the latest research on happiness and money can help individuals make the most of what they do have.

“It’s very easy to get the wrong message from that work,” says Elizabeth Dunn, a psychology professor at the University of British Columbia and chief science officer at Happy Money. “Money does matter for happiness, that’s never been in doubt. But it’s not the case that more money automatically yields happiness."

Instead, she says consumers should more closely evaluate how they’re spending their money.

“When inflation climbs, it’s like you have fewer dollars in your wallet, so you have to make more careful choices in terms of what to buy,” Dunn says.

Beyond how you spend your money, it can help to get to the root of the matter – happiness has been linked to having an increased agency over one's life.

“Some people might say, 'What Matt’s study is showing is that I should make as much money as possible.’ I would say probably more money is better, but it’s one of many factors that matter,” Dunn says.

“Even if my real dollars are declining, especially in times of inflation, one way to think about it is you can maintain a sense of control over your life in ways that aren’t as dependent on money,” she adds.

Overspending and How to Stop

Jessica Walrack Oct. 26, 2023

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Tags: money , personal finance , employment , psychology , mental health , inflation , personal budgets , economy

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Does Money Make You Happy?

One of the big questions when it comes to happiness, particularly in a work context, is whether money can make you happier. If you keep chasing the next job with a larger salary, will you be happier? Does paying your team more make them happier?

money makes me happy essay

Matt Phelan

23 November 2022

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These are the kinds of questions that as individuals and organisations we have to answer. As ever, at The Happiness Index, we believe in going back to science. There have been lots of studies which look at the impact of money on happiness, so it’s easy to find some answers to our questions. 

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Does Money Make You Happier?

The short answer is: Yes.

Of course, as ever there’s a bit more to it than that. So let’s dive further into the thorny questions around money and happiness .

Will Earning a Great Salary Make me Happier?

Of course, your salary has a big impact on your quality of life. It’s going to impact everything from the kinds of food you eat, to where you live and the car you drive. However, these improvements will only make you happier to a point.

Wellbeing expert Gethin Nadin tells us that “Money contributes to happiness when it helps us make basic needs but the research tells us that above a certain level more money doesn’t actually yield more happiness.” The research that he refers to here is a 2010 study out of Princeton. The data suggests that happiness increased with salary until participants earned $75,000 per annum. Beyond this point, the correlation between salary and happiness decreased.

Money contributes to happiness when it helps us make basic needs but the research tells us that above a certain level more money doesn’t actually yield more happiness. - Gethin Nadin, Bestselling HR Author & Top Global Employee Experience Influencer 2019 & 2020

Not only did earning more money make participants happier, but it also protected them from things which might make them unhappier. For example, participants going through a divorce who earned less became unhappier than those earning more.

It’s interesting to note, however, that the amount of money people think they need to earn to be happy is very different from what the Princeton study shows. Sonja Lyubomirsky, an important happiness researcher at the University of California, completed a study into just this. She found that people making $30,000 thought they’d need to increase their annual salary to $50,000 to be happy. But, those earning $100,000 per year estimated a yearly salary of $250,000 would make them happy. In short, people always think they need a little more money to be happy.

Will Being a Multimillionaire Make Me Happier?

The studies discussed above only look at income which sits within the bounds of average earners. Many people want to exceed this and earn millions, living a lavish footballer lifestyle. Can you blame them? But will this make them happier? Let’s look at other studies to examine these questions in more detail.

A 2017 study looked at the happiness of multimillionaires to see if they were happy. This study looked at 4,000 millionaires in the US and calculated satisfaction with lifestyle scores for these individuals. The study found that here, as with us mere mortals, there is a link between money and happiness. Indeed the research by Grant Donnelly et al, shows that there isn’t much difference between the happiness of multimillionaires until we get to those worth over $10 million. That said, even within this, these super-rich decamillionaires aren’t significantly happier than regular millionaires. Donnelly describes the difference as “modest”.

So it seems even multimillionaires aren’t significantly happier than those working with regular amounts of money. But what if we look at how these people came to be rich?

Will Inheriting a Fortune Make Me Happier?

By now, we’ve probably all received an email from someone claiming to be a Nigerian prince, telling us that we’ve inherited a fortune. Before hitting the spam button, it’s often tempting to imagine what you would do with your newfound wealth. Unfortunately, it seems that those who inherit fortunes aren’t actually that much happier at all.

The same 2017 study that we looked at before also found that those who inherited their fortune were less happy than those who had earned their millionaire status. So perhaps we should be grateful that our long lost Nigerian uncle’s money is unlikely to reach our bank accounts after all.

Will Winning The Lottery Make Me Happier?

In the absence of rich uncles, long lost or otherwise, the other get-rich-quick dream is winning the lottery. Luckily for us, there have been loads of studies into lottery winners, including a bunch about whether they’re happy or not. So will winning the lottery make us as happy as we think it will?

A 2007 study showed that those winning $200,000 experienced greater stress in the year that they won, but after two years were more likely to be happier than those who hadn’t won any money at all. In a 2018 literature review, Donnelly found that moderately sized winnings may increase happiness. Unfortunately, the impact isn’t very big, certainly not as big as we might think. Those winning the larger prizes showed no increase in happiness.

As with the millionaire’s example, it’s not just about how much money you have, but also how you come by it.

Will Spending Money Make Me Happier?

Once you have your money, does how you spend it affect how happy you are? The short answer here is also, yes. But as ever it’s a bit more complicated than that. It really depends on what you’re spending your money on.

A 2014 study by Thomas Gilovich showed that spending money on experiences is the best way to spend money to bring happiness. Another way to spend money to bring you happiness is to spend money on other people – Elizabeth Dunn has completed studies into what she calls “prosocial spending” and has shown that spending as little as $5 on others can bring more happiness than spending the same amount on yourself.

My favourite way to spend money to bring happiness is to spend money on time. For example, paying others to do jobs we don’t enjoy around the house, spending money on equipment that makes jobs easier or quicker, like a dishwasher, or even working less because we can afford to can all bring us happiness. Particularly when this money is reinvested into things which bring us joy like hobbies, spending time with loved ones, or films or music.

Compared to the ways of spending money already outlined above, buying things actually is the least efficient way of investing money into our happiness. However, there are ways to ensure that our material purchases are bringing us happiness. We can buy several smaller treats, spend time considering exactly what we want to buy, and also continue to think about the benefit that the item brings us in our day to day life even after we purchase it.

Will Paying My Team More Make Them Happier?

Of course, as you’ve seen above, there’s no simple answer to this question. There’s no real proof that raising salaries automatically makes people happier. However, paying people well is obviously the right thing to do.

Morally it makes sense to pay your staff what they’re worth, it also ensures they feel valued – which will definitely impact their performance. It also makes perfect business sense too. A 2020 study showed that worrying about money caused more stress than concerns about relationships or work itself. The study calculated that, on average, an employee loses about 1.5 days of work a year due to money-related stress. Across your whole team, this is going to add up. From a business perspective, it makes perfect sense to try to mitigate the financial stress your team is under and help them achieve financial wellbeing. This will impact employee engagement and happiness .

On average employees lose 1.5 days a year to money-related stress. This is having an impact on your bottom line. Gethin Nadin, Bestselling HR Author & Top Global Employee Experience Influencer 2019 & 20

Gethin Nadin argues that employers are in a unique position to have a direct impact on the financial and therefore mental wellbeing of their staff. This is something that organisations should take seriously. At the end of the day, absenteeism is having a direct impact on your bottom line.

Paying your team more also makes sense from a neuroscientific standpoint. In particular we see increasing salary as something that can support the key neuroscience themes of safety and acknowledgement. 

As we’ve seen, ensuring that people can pay their bills can reduce stress, this is because it means that your team will feel more safe and secure in their role. It will also encourage them to build a healthier work-life balance as they will feel less worried about the stability of their role, and so more able to find a healthy balance. 

Being paid what they’re worth will also help your team feel that they are being given the recognition they need. Although it’s easy to think of recognition as being something more associated with praise and relationships, in actual fact, actions are also a very important part of getting Acknowledgement right. It’s a tangible way your team knows that you value them every month. 

Will Paying my Team More Increase Engagement? 

Again, there’s no direct correlation between employee engagement and pay. 

However, personal growth is an important neuroscience theme when it comes to engagement, and salary can definitely feed into this. For many people, being given pay rises and working towards promotion is an important indicator of their development and progression within an organisation.

Although it’s far from the only way to determine growth, and it might not be the way that everyone approaches their development, it’s still important to bear in mind when considering how engaged your team is. Creating defined goals, targets and learning plans is obviously where we should start when supporting our team’s personal growth. But for many individuals this might seem meaningless unless it can be backed up by promotions and corresponding raises.

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Happiness Economics: Can Money Buy Happiness?

Happiness economics

It only costs a small amount, a slight risk, with the possibility of a substantial reward.

But will it make you happy? Will it give you long-lasting happiness?

Undoubtedly, there will be a temporary peak in happiness, but will all your troubles finally fade away?

That is what we will investigate today. We explore the economics of happiness and whether money can buy happiness. In this post, we will start by broadly exploring the topic and then look at theories and substantive research findings. We’ll even have a look at previous lottery winners.

For interested readers, we will list interesting books and podcasts for further enjoyment and share a few of our own happiness resources.

Ka-ching: Let’s get rolling!

Before you continue, we thought you might like to download our three Happiness & Subjective Wellbeing Exercises for free . These detailed, science-based exercises will help you or your clients identify sources of authentic happiness and strategies to boost wellbeing.

This Article Contains

What is happiness economics, theory of the economics of happiness, can money buy happiness 5 research findings, 6 fascinating books and podcasts on the topic, resources from, a take-home message.

Happiness economics is a field of economics that recognizes happiness and wellbeing as important outcome measures, alongside measures typically used, such as employment, education, and health care.

Economics emphasizes how specific economic/financial characteristics affect our wellbeing (Easterlin, 2004).

For example, does employment result in better health and longer lifespan, among other metrics? Do people in wealthier countries have access to better education and longer life spans?

In the last few decades, there has been a shift in economics, where researchers have recognized the importance of the subjective rating of happiness as a valuable and desirable outcome that is significantly correlated with other important outcomes, such as health (Steptoe, 2019) and productivity (DiMaria et al., 2020).

Broadly, happiness is a psychological state of being, typically researched and defined using psychological methods. We often measure it using self-report measures rather than objective measures that are less vulnerable to misinterpretation and error.

Including happiness in economics has opened up an entirely new avenue of research to explore the relationship between happiness and money.

Andrew Clark (2018) illustrates the variability in the term happiness economics with the following examples:

  • Happiness can be a predictor variable, influencing our decisions and behaviors.
  • Happiness might be the desired outcome, so understanding how and why some people are happier than others is essential.

However, the connection between our behavior and happiness must be better understood. Even though “being happy” is a desired outcome, people still make decisions that prevent them from becoming happier. For example, why do we choose to work more if our work does not make us happier? Why are we unhappy even if our basic needs are met?

An example of how happiness can influence decision-making

Sometimes, we might choose not to maximize a monetary or financial gain but place importance on other, more subjective outcomes.

To illustrate: If faced with two jobs — one that pays well but will bring no joy and another that pays less but will bring much joy — some people would prefer to maximize their happiness over financial gain.

If this decision were evaluated using a utility framework where the only valued outcomes were practical, then the decision would seem irrational. However, this scenario suggests that psychological outcomes, such as the experience of happiness, are as crucial as other socio-economic outcomes.

Economists recognize that subjective wellbeing , or happiness, is an essential characteristic and sometimes a desirable outcome that can motivate our decision-making.

In the last few decades, economics has shifted to include happiness as a measurable and vital part of general wellbeing (Graham, 2005).

The consequence is that typical economic questions now also look at the impact of employment, finances, and other economic metrics on the subjective rating and experience of happiness at individual and country levels.

Theory of the economy of happiness

Happiness is such a vital outcome in society and economic activity that it must be involved in policy making. The subjective measure of happiness is as important as other typical measures used in economics.

Many factors can contribute to happiness. In this post, we consider the role of money. The relationship between happiness, or subjective wellbeing, and money is assumed to be positive: More money means greater happiness.

However, the relationship between money and happiness is paradoxical: More money does not guarantee happiness (for an excellent review, see Graham, 2005).

Specifically, low levels of income are correlated with unhappiness. However, as our individual wealth increases and our basic needs are met, our needs change and differ in their importance.

Initially, our happiness is affected by absolute levels of income, but at a certain threshold, we place importance on relative levels of income. Knowing how we rank and compare to other people, in terms of wealth and material possession, influences our happiness.

The relationship between wealth and happiness continues to increase, but only to a certain point; at this stage, more wealth does not guarantee more happiness (Easterlin, 1974; Diener et al., 1993).

This may be at odds with our everyday lived experience. Most of us choose to work longer hours or multiple jobs so that we make more money. However, what is the point of doing this if money does not increase our happiness? Why do we seem to think that more money will make us happier?

History of the economics of happiness

The relationship between economics and happiness originated in the early 1970s. Brickman and Campbell (1971, as cited in Brickman et al., 1978) first argued that the typical outcomes of a successful life, such as wealth or income, had no impact on individual wellbeing.

Easterlin (1974) expanded these results and showed that although wealthier people tend to be happier than poor people in the same country, the average happiness levels within a country remained unchanged even as the country’s overall wealth increased.

The inconsistent relationship between happiness and income and its sensitivity to critical income thresholds make this topic so interesting.

There is some evidence that wealthier countries are happier than others, but only when comparing the wealthy with the poor (Easterlin, 1974; Graham, 2005).

As countries become wealthier, citizens report higher happiness, but this relationship is strongest when the starting point is poverty. Above a certain income threshold, happiness no longer increases (Diener et al., 1993).

Interestingly, people tend to agree on the amount of money needed to make them happy; but beyond a certain value, there is little increase in happiness (Haesevoets et al., 2022).

Measurement challenges

Measuring happiness accurately and reliably is challenging. Researchers disagree on what happiness means.

It is not the norm in economics to measure happiness by directly asking a participant how happy they are; instead, happiness is inferred through:

  • Subjective wellbeing (Clark, 2018; Easterlin, 2004)
  • A combination of happiness and life satisfaction (Bruni, 2007)

Furthermore, happiness can refer to an acute psychological state, such as feeling happy after a nice meal, or a lasting state similar to contentment (Nettle, 2005).

Researchers might use different definitions of happiness and ways to measure it, thus leading to contradictory results. For example, happiness might be used synonymously with subjective wellbeing and can refer to several things, including life satisfaction and financial satisfaction (Diener & Oishi, 2000).

It seems contradictory that wealthier nations are not happier overall than poorer nations and that increasing the wealth of poorer nations does not guarantee that their happiness will increase too. What could then be done to increase happiness?

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What is the relationship between income/wealth and happiness? To answer that question, we looked at studies to see where and how money improves happiness, but we’ll also consider the limitations to the positive effect of income.

Money buys access; jobs boost happiness

Overwhelming evidence shows that wealth is correlated with measures of wellbeing.

Wealthier people have access to better healthcare, education, and employment, which in turn results in higher life satisfaction (Helliwell et al., 2012). A certain amount of wealth is needed to meet basic needs, and satisfying these needs improves happiness (Veenhoven & Ehrhardt, 1995).

Increasing happiness through improved quality of life is highest for poor households, but this is explained by the starting point. Access to essential services improves the quality of life, and in turn, this improves measures of wellbeing.

Most people gain wealth through employment; however, it is not just wealth that improves happiness; instead, employment itself has an important association with happiness. Happiness and employment are also significantly correlated with each other (Helliwell et al., 2021).

Lockdown on happiness

The World Happiness Report (Helliwell et al., 2021) reports that unemployment increased during the COVID-19 pandemic, and this was accompanied by a marked decline in happiness and optimism.

The pandemic also changed how we evaluated certain aspects of our lives; for example, the relationship between income and happiness declined. After all, what is the use of money if you can’t spend it? In contrast, the association between happiness and having a partner increased (Helliwell et al., 2021).

Wealthier states smile more, but is it real?


If we took a snapshot of happiness and a country’s wealth, we would find that richer countries tend to have happier populations than poorer countries.

For example, based on the 2021 World Happiness Report, the top five happiest countries — which are also wealthy countries — are Finland, Iceland, Denmark, Switzerland, and the Netherlands (Helliwell et al., 2021).

In contrast, the unhappiest countries are those that tend to be emerging markets or have a lower gross domestic product (GDP), e.g., Zimbabwe, Tanzania, and India (Graham, 2005; Helliwell et al., 2021).

At face value, this makes sense: Poorer countries most likely have other factors associated with them, e.g., higher unemployment, more crime, and less political stability. So, based on this cross-sectional data, a country’s wealth and happiness levels appear to be correlated. However, over a more extended period, the relationship between happiness and GDP is nil (Easterlin, 2004).

That is, the subjective wellbeing of a population does not increase as a country becomes richer. Even though the wealth of various countries worldwide has increased over time, the overall happiness levels have not increased similarly or have remained static (Kahneman et al., 2006). This is known as a happiness–income paradox.

Easterlin (2004) posits four explanations for this finding:

  • Societal and individual gains associated with increased wealth are concentrated among the extremely wealthy.
  • Our degree of happiness is informed by how we compare to other people, and this relative comparison does not change as country-wide wealth increases.
  • Happiness is not limited to only wealth and financial status, but is affected by other societal and political factors, such as crime, education, and trust in the government.
  • Long-term satisfaction and contentment differ from short-term, acute happiness.

Kahneman et al. (2006) provide an alternative explanation centered on the method typically used by researchers. Specifically, they argue that the order of the questions asked to measure happiness and how these questions are worded have a focusing effect. Through the question, the participant’s attention to their happiness is sharpened — like a lens in a camera — and their happiness needs to be over- or underestimated.

Kahneman et al. (2006) also point out that job advancements like a raise or a promotion are often accompanied by an increase in salary and work hours. Consequently, high-paying jobs often result in less leisure time available to spend with family or on hobbies and can cause more unhappiness.

Not all that glitters is gold

Extensive research explored whether a sudden financial windfall was associated with a spike in happiness (e.g., Sherman et al., 2020). The findings were mixed. Sometimes, having more money is associated with increased life satisfaction and improved physical and mental health.

This boost in happiness, however, is not guaranteed, nor is it long. Sometimes, individuals even wish it had never happened (Brickman et al., 1978; Sherman et al., 2020).

Consider lottery winners. These people win sizable sums of money — typically more extensive than a salary increase — large enough to impact their lives significantly. Despite this, research has consistently shown that although lottery winners report higher immediate, short-term happiness, they do not experience higher long-term happiness (Sherman et al., 2020).

Here are some reasons for this:

  • Previous everyday activities and experiences become less enjoyable when compared to a unique, unusual experience like winning the lottery.
  • People habituate to their new lifestyle.
  • A sudden increase in wealth can disrupt social relationships among friends and family members.
  • Work and hobbies typically give us small nuggets of joy over a more extended period (Csikszentmihalyi et al., 2005). These activities can lose their meaning over a longer period, resulting in more unhappiness (Sherman et al., 2020; Brickman et al., 1978).

Sherman et al. (2020) further argue that lottery winners who decide to quit their job after winning, but do not fill this newly available time with some type of meaningful hobby or interest, are also more likely to become unhappy.

Passive activities do not provide the same happiness as work or hobbies. Instead, if lottery winners continue to take part in activities that give them meaning and require active engagement, then they can avoid further unhappiness.

Happiness: Is it temperature or climate?

Like most psychological research, part of the challenge is clearly defining the topic of investigation — a task made more daunting when the topic falls within two very different fields.

Nettle (2005) describes happiness as a three-tiered concept, ranging from short-lived but intense on one end of the spectrum to more abstract and deep on the other.

The first tier refers to transitory feelings of joy, like when one opens up a birthday present.

The second tier describes judgments about feelings, such as feeling satisfied with your job. The third tier is more complex and refers to life satisfaction.

Across research, different definitions are used: Participants are asked about feelings of (immediate) joy, overall life satisfaction, moments of happiness or satisfaction, and mental wellbeing . The concepts are similar but not identical, thus influencing the results.

Most books on happiness economics are textbooks. Although no doubt very interesting, they’re not the easy-reading books we prefer to recommend.

Instead, below you will find a range of books written by economists that explore happiness. These should provide a good springboard on the overall topic of happiness and what influences it, in case any of our readers want to pick up a more in-depth textbook afterward.

If you have a happiness book you would recommend, please let us know in the comments section.

1. Happiness: Lessons from a New Science – Richard Layard


Richard Layard, a lead economist based in London, explores in his book if and how money can affect happiness.

Layard does an excellent job of introducing topics from various fields and framing them appropriately for the reader.

The book is aimed at readers from varying academic and professional backgrounds, so no experience is needed to enjoy it.

Find the book on Amazon .

2. Happiness by Design: Change What You Do, Not How You Think – Paul Dolan

Happiness by Design

This book has a more practical spin. The author explains how we can use existing research and theories to make small changes to increase our happiness.

Paul Dolan’s primary thesis is that practical things will have a bigger effect than abstract methods, and we should change our behavior rather than our thinking.

The book is a quick read (airport-perfect!), and Daniel Kahneman penned the foreword.

3. The Psychology of Money: Timeless Lessons on Wealth, Greed and Happiness – Morgan Housel

The Psychology of Money

This book is not necessarily about happiness economics, but it is close enough to the overall theme that it is worth mentioning.

Since most people are concerned with making more money, this book helps teach the reader why we make the decisions we do and how we make better decisions about our money.

This book is a worthwhile addition to any bookcase if you are interested in the relationship between finances and psychology in general.

4. Happiness: The Science Behind Your Smile – Daniel Nettle


If you are interested in happiness overall, then we recommend Happiness: The Science Behind Your Smile by Daniel Nettle, a professor of behavioral science at Newcastle University.

In this book, he takes a scientific approach to explaining happiness, starting with an in-depth exploration of the definition of happiness and some of its challenges.

The research that he presents comes from various fields, including social sciences, medicine, neurobiology, and economics.

Because of its small size, this book is perfect for a weekend away or to read on a plane.

5 & 6. Prefer to listen rather than read?

One of our favorite podcasts is Intelligence2, where leading experts in a particular field gather to debate a particular topic.

Money Can't Buy Happiness

This show’s host, Dr. Laurie Santos, argues that we can increase our happiness by not hoarding our money for ourselves but by giving it to others instead. If you are interested in this episode , or any of the other episodes in the Happiness Lab podcast series, then head on over to their page.

There are several resources available at for our readers to use in their professional and personal development.

In this section, you’ll find a few that should supplement any work on happiness and economics. Since the undercurrent of the topic is whether happiness can be improved through wealth, a few resources look at happiness overall.

Valued Living Masterclass

Although knowledge is power, knowing that money does not guarantee happiness does not mean that clients will suddenly feel fulfilled and satisfied with their lives.

For this reason, we recommend the Valued Living Masterclass , for professionals to help their clients find meaning in their lives. Rather than keeping up with the Joneses or chasing a high-paying job, professionals can help their clients connect with their inner meaning (i.e., their why ) as a way to find meaning and gain happiness.

Three free exercises

If you want to try it out before committing, look at the Meaning & Valued Living exercise pack , which includes three exercises for free.

Recommended reading

Read our post on Success Versus Happiness for further information on balancing happiness with success, in any domain . This topic is poignant for readers who conflate happiness and success, and will guide readers to better understand their relationship and how the two terms influence each other.

For readers who wonder about altruism , you would find it interesting that rather than hoarding, you can increase your happiness through volunteering and donating. In this post, the author, Dr. Jeremy Sutton, does a fabulous job of approaching altruism from various fields and provides excellent resources for further reading and real-life application.

Our last recommendation is for readers who want to know more about measuring subjective wellbeing and happiness . The post lists various tests and apps that can measure happiness and the overall history of how happiness was measured and defined. This is a good starting point for researchers or clinicians who want to explore happiness economics professionally.

17 Happines Exercises

If you’re looking for more science-based ways to help others develop strategies to boost their wellbeing, this collection contains 17 validated happiness and wellbeing exercises . Use them to help others pursue authentic happiness and work toward a  life filled with purpose and meaning

money makes me happy essay

17 Exercises To Increase Happiness and Wellbeing

Add these 17 Happiness & Subjective Well-Being Exercises [PDF] to your toolkit and help others experience greater purpose, meaning, and positive emotions.

Created by Experts. 100% Science-based.

As you’ve seen in our article, the evidence overwhelmingly clarifies that money does not guarantee more happiness … well, long-term happiness.

Our happiness is relative since we compare ourselves to other people, and over time, as we become accustomed to our wealth, we lose all the happiness gains we made.

Money can ease financial and social difficulties; consequently, it can drastically improve people’s living conditions, life expectancy, and education.

Improvements in these outcomes have a knock-on effect on the overall experience of one’s life and the opportunities for one’s family and children. Nevertheless, better opportunities do not guarantee happiness.

Our intention with this post was to illustrate some complexities surrounding the relationship between money and happiness.

Knowing that money does not guarantee happiness, we recommend less expensive methods to improve one’s happiness:

  • Spend time with friends.
  • Cultivate hobbies and interests.
  • Stay active and eat healthy.
  • Try to live a meaningful life.
  • Give some love (go smooch your partner or tickle your dog’s belly).

Diamonds might be a girl’s best friend, but money is a fair weather one, at best.

We hope you enjoyed reading this article. Don’t forget to download our three Happiness Exercises for free .

  • Brickman, P., Coates, D., & Janoff-Bulman, R. (1978). Lottery winners and accident victims: Is happiness relative? Journal of Personality and Social Psychology , 36 (8), 917.
  • Bruni, L. (2007). Handbook on the economics of happiness . Edward Elgar.
  • Clark, A. E. (2018). Four decades of the economics of happiness: Where next? Review of Income and Wealth , 64 (2), 245–269.
  • Csikszentmihalyi, M., Abuhamdeh, S., & Nakamura, J. (2005). Flow. In A. J. Elliot & C. S. Dweck (Eds.), Handbook of competence and motivation (pp. 598–608). Guilford Publications.
  • Diener, E., Sandvik, E., Seidlitz, L., & Diener, M. (1993). The relationship between income and subjective well-being: Relative or absolute? Social Indicators Research , 28 , 195–223.
  • Diener, E., & Oishi, S. (2000). Money and happiness: Income and subjective well-being across nations. Culture and Subjective Well-Being , 185 , 218.
  • DiMaria, C. H., Peroni, C., & Sarracino, F. (2020). Happiness matters: Productivity gains from subjective well-being. Journal of Happiness Studies , 21 (1), 139–160.
  • Easterlin, R. A. (1974). Does economic growth improve the human lot? Some empirical evidence. In P. A. David & M. W. Reder (Eds.), Nations and households in economic growth: Essays in honor of Moses Abramovitz (pp. 89–125). Academic Press.
  • Easterlin, R. A. (2004). The economics of happiness. Daedalus , 133 (2), 26–33.
  • Graham, C. (2005). The economics of happiness. World Economics , 6 (3), 41–55.
  • Haesevoets, T., Dierckx, K., & Van Hiel, A. (2022). Do people believe that you can have too much money? The relationship between hypothetical lottery wins and expected happiness. Judgment and Decision Making , 17 (6), 1229–1254.
  • Helliwell, J., Layard, R., & Sachs, J. (Eds.) (2012). World happiness report . The Earth Institute, Columbia University.
  • Helliwell, J. F., Layard, R., Sachs, J. D., & Neve, J. E. D. (2021). World happiness report 2021 .
  • Kahneman, D., Krueger, A. B., Schkade, D., Schwarz, N., & Stone, A. A. (2006). Would you be happier if you were richer? A focusing illusion. Science , 312 (5782), 1908–1910.
  • Nettle, D. (2005). Happiness: The science behind your smile . Oxford University Press.
  • Sherman, A., Shavit, T., & Barokas, G. (2020). A dynamic model on happiness and exogenous wealth shock: The case of lottery winners. Journal of Happiness Studies , 21 , 117–137.
  • Steptoe, A. (2019). Happiness and health. Annual Review of Public Health , 40 , 339–359.
  • Veenhoven, R., & Ehrhardt, J. (1995). The cross-national pattern of happiness: Test of predictions implied in three theories of happiness. Social Indicators Research , 34 , 33–68.

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Research: Can Money Buy Happiness?

In his quarterly column, Francis J. Flynn looks at research that examines how to spend your way to a more satisfying life.

September 25, 2013

A boy holding a toy train

A boy looks at a toy train he received during an annual gift-giving event on Christmas Eve 2011. | Reuters/Jose Luis Gonzalez

What inspires people to act selflessly, help others, and make personal sacrifices? Each quarter, this column features one piece of scholarly research that provides insight on what motivates people to engage in what psychologists call “prosocial behavior” — things like making charitable contributions, buying gifts, volunteering one‘s time, and so forth. In short, it looks at the work of some of our finest researchers on what spurs people to do something on behalf of someone else.

In this column I explore the idea that many of the ways we spend money are prosocial acts — and prosocial expenditures may, in fact, make us happier than personal expenditures. Authors Elizabeth Dunn and Michael Norton discuss evidence for this in their new book, Happy Money: The Science of Smarter Spending . These behavioral scientists show that you can get more out of your money by following several principles — like spending money on others rather than yourself. Moreover, they demonstrate that these principles can be used not only by individuals, but also by companies seeking to create happier employees and more satisfying products.

According to Dunn and Norton, recent research on happiness suggests that the most satisfying way of using money is to invest in others. This can take a seemingly limitless variety of forms, from donating to a charity that helps strangers in a faraway country to buying lunch for a friend.

Witness Bill Gates and Warren Buffet, two of the wealthiest people in the world. On a March day in 2010, they sat in a diner in Carter Lake, Iowa, and hatched a scheme. They would ask America‘s billionaires to pledge the majority of their wealth to charity. Buffet decided to donate 99 percent of his, saying, “I couldn‘t be happier with that decision.”

And what about the rest of us? Dunn and Norton show how we all might learn from that example, regardless of the size of our bank accounts. Research demonstrating that people derive more satisfaction spending money on others than they do spending it on themselves spans poor and rich countries alike, as well as income levels. The authors show how this phenomenon extends over an extraordinary range of circumstances, from a Canadian college student purchasing a scarf for her mother to a Ugandan woman buying lifesaving malaria medication for a friend. Indeed, the benefits of giving emerge among children before the age of two.

Investing in others can make individuals feel healthier and wealthier, even if it means making yourself a little poorer to reap these benefits. One study shows that giving as little as $1 away can cause you to feel more flush.

Quote Investing in others can make you feel healthier and wealthier, even if it means making yourself a little poorer.

Dunn and Norton further discuss how businesses such as PepsiCo and Google and nonprofits such as are harnessing these benefits by encouraging donors, customers, and employees to invest in others. When Pepsi punted advertising at the 2010 Superbowl and diverted funds to supporting grants that would allow people to “refresh” their communities, for example, more public votes were cast for projects than had been cast in the 2008 election. Pepsi got buzz, and the company‘s in-house competition also offering a seed grant boosted employee morale.

Could this altruistic happiness principle be applied to one of our most disputed spheres — paying taxes? As it turns out, countries with more equal distributions of income also tend to be happier. And people in countries with more progressive taxation (such as Sweden and Japan) are more content than those in countries where taxes are less progressive (such as Italy and Singapore). One study indicated that people would be happier about paying taxes if they had more choice as to where their money went. Dunn and Norton thus suggest that if taxes were made to feel more like charitable contributions, people might be less resentful having to pay them.

The researchers persuasively suggest that the proclivity to derive joy from investing in others may well be just a fundamental component of human nature. Thus the typical ratio we all tend to fall into of spending on self versus others — ten to one — may need a shift. Giving generously to charities, friends, and coworkers — and even your country — may well be a productive means of increasing well-being and improving our lives.

Research selected by Francis Flynn, Paul E. Holden Professor of Organizational Behavior at Stanford Graduate School of Business.

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money makes me happy essay

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clock This article was published more than  1 year ago

Can money buy happiness? Scientists say it can.

money makes me happy essay

It’s a question that philosophers, economists and social scientists have grappled with for decades: Can money buy happiness?

For most people in the United States, the answer is, seemingly, yes.

Two prominent researchers, Daniel Kahneman and Matthew Killingsworth, came to this conclusion in a joint study published this month in the Proceedings of the National Academy of Sciences, overturning the dominant thinking that people are generally happier as they earn more, with their joy leveling out when their income hits $75,000.

This threshold was initially posited by Kahneman, a Nobel Prize-winning economist and psychologist, in a 2010 study that concluded that “emotional well-being [also] rises with log income, but there is no further progress beyond an annual income of $75,000.”

But in 2021, Killingsworth, a happiness researcher and senior fellow at the University of Pennsylvania’s Wharton School, found that happiness does not plateau after $75,000, and that “experienced well-being” can continue to rise with income well beyond $200,000.

Kahneman and Killingsworth said their latest study was an “adversarial collaboration” where they pitted their theories against each other with the help of an arbiter. The latest research adjusted for inflation, they said.

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In their study, Kahneman and Killingsworth surveyed 33,391 adults aged between 18 and 65 who live in the United States, are employed and report a household income of least $10,000 a year. The authors said they lacked substantial data for those earning over $500,000.

To measure their happiness, participants were asked to report on their feelings at random intervals in the day via a smartphone app developed by Killingsworth called Track Your Happiness . Killingsworth said in an email that the data came from “repeatedly pinging people at randomly-timed moments during daily life, and asking about their happiness at that moment in real-time.” Specifically, they were asked “How do you feel right now?” on a scale ranging from “very bad” to “very good,” he said.

The study reached two big conclusions: First, that “happiness continues to rise with income even in the high range of incomes” for the majority of people, showing that for many of us, on average having more money can make us increasingly happier.

But the study also found that there was an “unhappy minority,” about 20 percent of participants, “whose unhappiness diminishes with rising income up to a threshold, then shows no further progress.”

These people tend to experience negative “miseries” that typically cannot be alleviated by earning more money; the report cites examples such as heartbreak, bereavement or clinical depression. For them, their “suffering” may diminish as their income rises to about $100,000 but “very little beyond that,” the study said.

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“In the simplest terms, this suggests that for most people larger incomes are associated with greater happiness,” Killingsworth said in a statement about the study.


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“The exception is people who are financially well-off but unhappy. For instance, if you’re rich and miserable, more money won’t help. For everyone else, more money was associated with higher happiness to somewhat varying degrees.”

The study acknowledges that happiness or emotional well-being is a changing daily scale for many people and that “happy people are not all equally happy” but argues that there are “degrees of happiness” and often a “ceiling” for happiness.

The study also found that money can affect happiness differently, depending on income. Among lower earners, “unhappy people gain more from increased income than happier people do,” it said. “In other words, the bottom of the happiness distribution rises much faster than the top in that range of incomes.”

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In his statement, Killingsowrth made clear that money isn’t everything — “just one of the many determinants of happiness.” He added: “Money is not the secret to happiness, but it can probably help a bit.”

The study also made its way to social media Wednesday, with one Twitter user joking : “Anyone who says money doesn’t buy happiness just doesn’t know where to go for shopping.”

Another teased : “Money won’t make you happy, but it’s nicer to cry in a Ferrari.”

money makes me happy essay

Greater Good Science Center • Magazine • In Action • In Education

How Money Changes the Way You Think and Feel

The term “affluenza”—a portmanteau of affluence and influenza, defined as a “painful, contagious, socially transmitted condition of overload, debt, anxiety, and waste, resulting from the dogged pursuit of more”—is often dismissed as a silly buzzword created to express our cultural disdain for consumerism. Though often used in jest, the term may contain more truth than many of us would like to think.

Whether affluenza is real or imagined, money really does change everything, as the song goes—and those of high social class do tend to see themselves much differently than others. Wealth (and the pursuit of it) has been linked with immoral behavior—and not just in movies like The Wolf of Wall Street .

Psychologists who study the impact of wealth and inequality on human behavior have found that money can powerfully influence our thoughts and actions in ways that we’re often not aware of, no matter our economic circumstances. Although wealth is certainly subjective, most of the current research measures wealth on scales of income, job status, or socioeconomic circumstances, like educational attainment and intergenerational wealth.

money makes me happy essay

Here are seven things you should know about the psychology of money and wealth.

More money, less empathy?

Several studies have shown that wealth may be at odds with empathy and compassion . Research published in the journal Psychological Science found that people of lower economic status were better at reading others’ facial expressions —an important marker of empathy—than wealthier people.

“A lot of what we see is a baseline orientation for the lower class to be more empathetic and the upper class to be less [so],” study co-author Michael Kraus told Time . “Lower-class environments are much different from upper-class environments. Lower-class individuals have to respond chronically to a number of vulnerabilities and social threats. You really need to depend on others so they will tell you if a social threat or opportunity is coming, and that makes you more perceptive of emotions.”

While a lack of resources fosters greater emotional intelligence, having more resources can cause bad behavior in its own right. UC Berkeley research found that even fake money could make people behave with less regard for others. Researchers observed that when two students played Monopoly, one having been given a great deal more Monopoly money than the other, the wealthier player expressed initial discomfort, but then went on to act aggressively, taking up more space and moving his pieces more loudly, and even taunting the player with less money.

Wealth can cloud moral judgment

It is no surprise in this post-2008 world to learn that wealth may cause a sense of moral entitlement. A UC Berkeley study found that in San Francisco—where the law requires that cars stop at crosswalks for pedestrians to pass—drivers of luxury cars were four times less likely than those in less expensive vehicles to stop and allow pedestrians the right of way. They were also more likely to cut off other drivers.

Another study suggested that merely thinking about money could lead to unethical behavior. Researchers from Harvard and the University of Utah found that study participants were more likely to lie or behave immorally after being exposed to money-related words.

“Even if we are well-intentioned, even if we think we know right from wrong, there may be factors influencing our decisions and behaviors that we’re not aware of,” University of Utah associate management professor Kristin Smith-Crowe, one of the study’s co-authors, told MarketWatch .

Wealth has been linked with addiction

While money itself doesn’t cause addiction or substance abuse, wealth has been linked with a higher susceptibility to addiction problems. A number of studies have found that affluent children are more vulnerable to substance abuse issues , potentially because of high pressure to achieve and isolation from parents. Studies also found that kids who come from wealthy parents aren’t necessarily exempt from adjustment problems—in fact, research found that on several measures of maladjustment, high school students of high socioeconomic status received higher scores than inner-city students. Researchers found that these children may be more likely to internalize problems, which has been linked with substance abuse.

But it’s not just adolescents: Even in adulthood, the rich outdrink the poor by more than 27 percent.

Money itself can become addictive

The pursuit of wealth itself can also become a compulsive behavior. As psychologist Dr. Tian Dayton explained, a compulsive need to acquire money is often considered part of a class of behaviors known as process addictions, or “behavioral addictions,” which are distinct from substance abuse.

These days, the idea of process addictions is widely accepted. Process addictions are addictions that involve a compulsive and/or an out-of-control relationship with certain behaviors such as gambling, sex, eating, and, yes, even money.…There is a change in brain chemistry with a process addiction that’s similar to the mood-altering effects of alcohol or drugs. With process addictions, engaging in a certain activity—say viewing pornography, compulsive eating, or an obsessive relationship with money—can kickstart the release of brain/body chemicals, like dopamine, that actually produce a “high” that’s similar to the chemical high of a drug. The person who is addicted to some form of behavior has learned, albeit unconsciously, to manipulate his own brain chemistry.

While a process addiction is not a chemical addiction, it does involve compulsive behavior —in this case, an addiction to the good feeling that comes from receiving money or possessions—which can ultimately lead to negative consequences and harm the individual’s well-being. Addiction to spending money—sometimes known as shopaholism —is another, more common type of money-associated process addiction.

Wealthy children may be more troubled

Children growing up in wealthy families may seem to have it all, but having it all may come at a high cost. Wealthier children tend to be more distressed than lower-income kids, and are at high risk for anxiety, depression, substance abuse, eating disorders, cheating, and stealing. Research has also found high instances of binge-drinking and marijuana use among the children of high-income, two-parent, white families.

“In upwardly mobile communities, children are often pressed to excel at multiple academic and extracurricular pursuits to maximize their long-term academic prospects—a phenomenon that may well engender high stress,” writes psychologist Suniya Luthar in “The Culture Of Affluence.” “At an emotional level, similarly, isolation may often derive from the erosion of family time together because of the demands of affluent parents’ career obligations and the children’s many after-school activities.”

We tend to perceive the wealthy as “evil”

On the other side of the spectrum, lower-income individuals are likely to judge and stereotype those who are wealthier than themselves, often judging the wealthy as being “cold.” (Of course, it is also true that the poor struggle with their own set of societal stereotypes.)

Rich people tend to be a source of envy and distrust, so much so that we may even take pleasure in their struggles, according to Scientific American . University of Pennsylvania research demonstrated that most people tend to link perceived profits with perceived social harm. When participants were asked to assess various companies and industries (some real, some hypothetical), both liberals and conservatives ranked institutions perceived to have higher profits with greater evil and wrongdoing across the board, independent of the company or industry’s actions in reality.

Money can’t buy happiness (or love)

We tend to seek money and power in our pursuit of success (and who doesn’t want to be successful, after all?), but it may be getting in the way of the things that really matter: happiness and love.

More on Inequality

Read Jason Marsh's award-winning story on how inequality hurts everyone's happiness .

Discover how inequality can make the wealthy less cooperative .

Find out why affluent people are more likely to break rules .

Explore whether the rich are really less generous .

There is no direct correlation between income and happiness. After a certain level of income that can take care of basic needs and relieve strain ( some say $50,000 a year , some say $75,000 ), wealth makes hardly any difference to overall well-being and happiness and, if anything, only harms well-being: Extremely affluent people actually suffer from higher rates of depression . Some data has suggested money itself doesn’t lead to dissatisfaction—instead, it’s the ceaseless striving for wealth and material possessions that may lead to unhappiness. Materialistic values have even been linked with lower relationship satisfaction .

But here’s something to be happy about: More Americans are beginning to look beyond money and status when it comes to defining success in life. According to a 2013 LifeTwist study , only around one-quarter of Americans still believe that wealth determines success.

This article originally appeared in the Huffington Post and Fulfillment Daily .

About the Author

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Money Makes You Happy: Philosophical Reasoning Essay

The connection between money and happiness is an eternal issue which has raised enormous discussions and debates. Through the years people have tried to find out and to prove if money buys or not happiness. This issue became one of the most important issues in a world where the money was gaining more and more power day by day. The term of materialism became very popular among people and gaining money turned into an essential challenge. People become seeking money desperately. All the occurrences through years lead us to think that money really brings happiness. This is only what can we see from the first view because the reality may be really different. The question about money and happiness is not so easy to be answered and there has never been a unique universal answer about it.

It is possible to give the right to the ones who think that money can buy happiness. It is proved that people want to take revenues from their activities as more possible. The economists explain that this thought leads only to a logical conclusion. This conclusion is that the more money you have, the happier you must be. This conclusion is not accepted by psychologists who think that wealth brings the happiness only in the moment when it helps the people to pass the poverty but it can do much after that phase. Another argument about this statement is that the growth through the years, especially after the World War II, of the gross domestic products in many states has not always provided happiness to its citizens. Surveys conduced in United States, Japan and Western Europe show clearly that the people who live in these states are not happy although they are supposed to have more money that they had before the war.

The best things in life are a good health, a loving family and peace of mind. Many people may have a large house with all the commodities, but they may lack love and harmony within it. Many others may be poor but may have harmony in their homes which makes them see the life more beautiful than it is.

Another think very interested to be asked is that why money does not bring happiness. People’s happiness is directly connected with their health, their success in marriage and of course with the well-being of their children. The happiness consists in elements like that. It does not come from nothing. If we have money but we do not have all that, it is very likely for us to be unhappy.

Thinking about earning money people forgets doing other activities from which they acquire pleasure. They are likely to spend more time working and as a result they do not pay attention to other things very important in life. They forget thinking about love and affection. A greater income is the only think that concerns them. People who think like use to spend a lot of time in passive leisure such as TV or simply relax meanwhile they forget active leisure such as exercise. If one’s life becomes only work, relax and TV it is logical that this person is unlikely to be happy.

On my opinion the happiness does not have a certain formula. It depends only on what is important to you. I would be very happy to have emotional and social wealth. For me it is important to be healthy, to have a loving family, to have “real” friends and a successful career. All that does not necessary come from money.

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IvyPanda. (2021, November 22). Money Makes You Happy: Philosophical Reasoning.

"Money Makes You Happy: Philosophical Reasoning." IvyPanda , 22 Nov. 2021,

IvyPanda . (2021) 'Money Makes You Happy: Philosophical Reasoning'. 22 November.

IvyPanda . 2021. "Money Makes You Happy: Philosophical Reasoning." November 22, 2021.

1. IvyPanda . "Money Makes You Happy: Philosophical Reasoning." November 22, 2021.


IvyPanda . "Money Makes You Happy: Philosophical Reasoning." November 22, 2021.

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Money Does Not Always Buy Happiness, but Are Richer People Less Happy in Their Daily Lives? It Depends on How You Analyze Income

Laura kudrna.

1 Institute of Applied Health Research, University of Birmingham, Birmingham, United Kingdom

Kostadin Kushlev

2 Department of Psychology, Georgetown University, Washington, DC, United States

Associated Data

Publicly available datasets were analyzed in this study. These data can be found at: (The ATUS extract builder was used to create the ATUS dataset, see Hofferth et al., 2017 ). GSOEP data were requested from , see Richter and Schupp, 2015 .

Do people who have more money feel happier during their daily activities? Some prior research has found no relationship between income and daily happiness when treating income as a continuous variable in OLS regressions, although results differ between studies. We re-analyzed existing data from the United States and Germany, treating household income as a categorical variable and using lowess and spline regressions to explore nonlinearities. Our analyses reveal that these methodological decisions change the results and conclusions about the relationship between income and happiness. In American and German diary data from 2010 to 2015, results for the continuous treatment of income showed a null relationship with happiness, whereas the categorization of income showed that some of those with higher incomes reported feeling less happy than some of those with lower incomes. Lowess and spline regressions suggested null results overall, and there was no evidence of a relationship between income and happiness in Experience Sampling Methodology (ESM) data. Not all analytic approaches generate the same results, which may contribute to explaining discrepant results in existing studies about the correlates of happiness. Future research should be explicit about their approaches to measuring and analyzing income when studying its relationship with subjective well-being, ideally testing different approaches, and making conclusions based on the pattern of results across approaches.


Does having more money make someone feel happier? The answer to this longstanding question has implications for how individuals live their lives and societies are structured. It is often assumed that more income brings more happiness (with happiness broadly defined herein as hedonic feelings, while recognizing closely related constructs, including satisfaction and eudaimonia; Tiberius, 2006 ; Angner, 2010 ; Dolan and Kudrna, 2016 ; Sunstein, 2021 ). In many aspects of policy, upward income mobility is encouraged, and poverty can result in exclusion, stigmatization, and discrimination by institutions and members of the public. More income provides people with opportunities and, sometimes, capabilities to consume more and thus satisfy more of their preferences, meet their desires and obtain more of what they want and need ( Harsanyi, 1997 ; Sen, 1999 ; Nussbaum, 2008 ). These are all reasons to assume that higher income will bring greater happiness—or, at least, that low income will bring low happiness.

Some research challenges the assumption that earning more should lead to greater happiness. First, because people expect that more money should make them happier, people may feel less happy when their high expectations are not met ( Graham and Pettinato, 2002 ; Nickerson et al., 2003 ) and they may adapt more quickly to more income than they expect ( Aknin et al., 2009 ; Di Tella et al., 2010 ). Second, since the 1980s in many developed countries, the well-educated have had less leisure time than those who are not ( Aguiar and Hurst, 2007 ) and people living in high-earning and well-educated households report feeling more time stress and dissatisfaction with their leisure time ( Hamermesh and Lee, 2007 ; Nikolaev, 2018 ). The quantity of leisure time is not linearly related to happiness, with both too much and too little having a negative association ( Sharif et al., 2021 ). Evidence also shows that people with higher incomes spend more time alone ( Bianchi and Vohs, 2016 ). The lower quality and quantity of leisure and social time of people with higher incomes may, in turn, negatively impact their happiness, especially given there are strong links between social capital or “relational goods” and well-being ( Helliwell and Putnam, 2004 ; Becchetti et al., 2008 ).

At the same time, some—but not all—evidence suggests that working class individuals tend to be more generous and empathetic than more affluent individuals ( Kraus et al., 2010 ; Piff et al., 2010 ; Balakrishnan et al., 2017 ; Macchia and Whillans, 2022 ), and such kindness toward others has been associated with higher well-being ( Dunn et al., 2008 ; Aknin et al., 2012 ). Relatedly, psychological research suggests that people with lower socioeconomic status have a more interdependent sense of self ( Snibbe and Markus, 2005 ; Stephens et al., 2007 ). It is, therefore, possible that people high in income have lower well-being because they experience less of the internal “warm glow” ( Andreoni, 1990 ) benefit that comes along with valuing social relationships and group membership. In theory, therefore, there are reasons to suppose that high income has both benefits and costs for well-being, and empirical evidence can inform the debate about when and whether these different perspectives are supported.

Empirical Evidence on Income and Happiness

The standard finding in existing literature is that higher income predicts greater happiness, but with a declining marginal utility ( Dolan et al., 2008 ; Layard et al., 2008 ): that is, higher income is most closely associated with happiness among those with the least income and is least closely associated with happiness for those with the most income. Recently, this finding has been qualified by studies showing that the relationship between income and happiness depends on how happiness is conceptualized and measured: as an overall evaluation of one’s life or as daily emotional states ( Kahneman and Deaton, 2010 ; Killingsworth, 2021 ). In this vein, authors Kushlev et al. (2015) found no relationship between income and daily happiness in the American Time Use Survey (ATUS), which has recently been found for other happiness measures, too ( Casinillo et al., 2020 , 2021 ) The finding from Kushlev et al. (2015) was replicated in the German Socioeconomic Panel Survey (GSEOP) by Hudson et al. (2016) , and in another analysis of the ATUS by Stone et al. (2018) .

Some research has focused specifically on the effect of high income on happiness. Kahneman and Deaton (2010) conducted regression analyses using a Gallup sample of United States residents, finding that annual income beyond ~$75K was not associated with any higher daily emotional well-being. Income beyond ~$75K, however, predicted better life evaluations. Using a self-selecting sample of experiential data in the United States, Killingsworth (2021) conducted piecewise regressions and found no evidence of satiation or turning points. Jebb et al. (2018) fit regression spline models to global Gallup data, showing that the satiation point in daily experiences found by Kahneman and Deaton (2010) was also apparent in other countries. Unlike Kahneman and Deaton (2010) , however, Jebb et al. (2018) also found evidence of satiation in people’s life evaluations, and even some evidence for “turning points”—whereby richer people evaluated their lives as worse than some of those with lower incomes. A satiation point in life evaluations was also found in European countries at around €28K annually ( Muresan et al., 2020 ).

This pattern of findings could partly depend on the choice of analytic strategy. In analyses of the same dataset as Jebb et al. (2018) but using lowess regression, researchers found no evidence of satiation or turning points in the relationship between income and people’s life evaluations ( Sacks et al., 2012 ; Stevenson and Wolfers, 2012 ). These conflicting results suggest that the effect of analytic strategy on results deserves a closer examination.

The Research Gap

While there has been much research on income and happiness, including according to how happiness is defined and measured, we are not away of any studies that have compared the relationship between income and happiness according to how income is defined and measured. We propose that the relationship between income and happiness may depend not only on how happiness is measured, but also on how income is measured and analyzed. To improve our knowledge of the relationship between income and happiness, this paper, we focus on nonlinearities in the relationship between income and happiness and re-analyze the ATUS data used by Kushlev et al. (2015) and Stone et al. (2018) , as well as the GSOEP data used by Hudson et al. (2016) . Specifically, while Kushlev et al. (2015) analyzed income as a continuous variable in the ATUS, we treat income the way it was measured: as a categorical variable. We compare these results to GSOEP data where we re-code the original continuous measure of income into categorical quantiles. To further explore nonlinearities in the relationship between income and happiness, we also conduct local linear “lowess” and spline regression analyses.

We chose to re-analyze these data to address the question of differences in the relationship between income and happiness according to the measurement and analysis of income because the ATUS and GSOEP provide nationally representative data on people’s feelings as experienced during specific “episodes” of the day after asking them to reconstruct what they did during the entire day. Thus, compared to data from Gallup, which measures affect “yesterday,” measurements in the ATUS are more grounded in specific experiences, and therefore, less subject to recall bias ( Kahneman et al., 2004 ). And unlike Gallup, which uses more crude, dichotomous (“yes-no”) response scales, ATUS measures happiness along a standard seven-point Likert-type scale. In the GSOEP, we were also able to analyze data from the Experience Sampling Methodology (ESM), which asks people how they are feeling during specific episodes during the day and, as such, is even more grounded in specific experiences.

Measuring and Analyzing Income

The original ATUS income variable—family income—contains 16 uneven categories (see Table 1 ). For example, Category 11 has a range of ~$10K, whereas Category 14 has a range of ~$25K. The increasingly larger categories are designed to reflect declining marginal utility as an innate quality of income. Based on this, Kushlev et al. (2015) analyzed income as a continuous variable using the original uneven categories. Continuous scales, however, assume equal intervals between scale points—a strong assumption to make for the relatively arbitrary rate of change in the category ranges. Is increasing one’s income from $20,000 to $25,000 really equidistant to increasing it from $35,000 to $40,000 ( Table 1 )? And can we really assume, for example, that adding $5,000 of additional income to $35,000 is the same as adding $10,000 of additional income to $40,000? Recognizing this issue, income researchers have adopted alternative strategies. For example, Stone et al. (2018) took the midpoints of each category of income, and then log-transformed it. Thus, they transformed the categorical measure of income into a continuous measure. This approach produced results for happiness consistent with the findings of Kushlev et al. (2015) .

The original categories of income in the ATUS family income measure with number of individuals in each income category in the ATUS 2010, 2012, and 2013 well-being modules.

Complete cases only for all variables analyzed.

Both the increasing ranges of the income scale itself and its log-transformations reflect an assumed declining marginal utility of income: They treat a given amount of income increase at the higher end of the income distribution as having less utility than the same amount at the lower end of the distribution. But by subsuming income’s declining utility in its very measurement (or transformation thereof), it becomes difficult to interpret a null relationship with happiness. In other words, we might not be seeing a declining marginal utility of income reflected on happiness because the income variable itself reflects its declining utility.

Even when the income variable itself does not reflect its declining utility, a null relationship between income and daily experiences of happiness has been observed. Hudson et al. (2016) used GSOEP, which contains a measure of income that is continuous in its original form. Whether analyzing this income measure in its raw original form or in transformed log and quadratic forms, a null relationship with happiness was observed. This approach, however, does not consider whether there might be nonlinear/log/quadratic turning or satiation points at higher levels of income—an issue also applicable to previous analyses of ATUS ( Kushlev et al., 2015 ; Stone et al., 2018 ). This is important because there are theoretically both benefits and costs to achieving higher levels of income that could occur at various levels of income; however, this possibility has not yet been fully explored in ATUS or GSOEP data.

In sum, past research using ATUS has treated categorically measured income as a continuous variable, either assuming equidistance between scale points or attempting to create equidistance through statistical transformations. By doing so, however, researchers may have statistically accounted for the very utility of income for happiness that they are trying to test. In both ATUS and GSOEP, the question of whether there might be satiation and/or turning points at higher levels of income has not been fully considered. The present research explores whether treating income as a categorical variable in both ATUS and GSOEP would replicate past findings or reveal novel insights, focusing on possible nonlinearities in the relationship between income and happiness.

Materials and Methods

We used data from ATUS well-being modules in 2010, 2012, and 2013. To facilitate future replications of this research, the ATUS extract builder was used to create the dataset ( Hofferth et al., 2017 ). 1 The ATUS is a repeated cross-sectional survey and is nationally representative of United States household residents aged 15 years and older. Its sampling frame is the Current Population Survey (CPS), which was conducted 2–5 months prior to the ATUS. Some items in the ATUS come from the CPS, including the household income item that we analyze.

Data from the GSOEP come from the Innovation Sample (IS), which is a subsample of the larger main GSOEP ( Richter and Schupp, 2015 ). The main GSOEP and the IS are designed to be nationally representative. The IS contains information on household residents aged 17 years of age and older. We used two modules from these data: the 2012–2015 DRM module, which is a longitudinal survey, and the 2014–2015 ESM module.

Outcome Measures

In ATUS, participants were called on the phone and asked how they spent their time yesterday: what activities they were doing, for how long, who they spent time with and where they were located. This information was used to create their time use diary. A random selection of three activities were taken from these diaries and participants were asked how they felt during them. The feelings items were tired, sad, stressed, pain, and happy. Participants were also asked how meaningful what they were doing felt.

In GSOEP, participants were interviewed face to face for the DRM questions and through smartphones for the ESM questions. In the DRM, as in the ATUS, they were asked how they spent their time yesterday and, for a random selection of three activities, they were asked further details about how they felt. In the ESM, participants were randomly notified on mobile phones at seven random points during the day for around 1 week. As in the DRM, they were asked how they were spending their time at the point of notification, as well as how they felt. Participants in both ESM and DRM samples were asked about whether they were feeling happy, as well as other emotions such as sadness, stress, and boredom.

The focus of this research is on the happiness items from both the ATUS and GSOEP to highlight differences according to the treatment of the independent measure of income rather than differences according to the dependent outcome of emotional well-being.

Data were analyzed in STATA 15 and jamovi. The Supplementary Material S1 file contains the STATA command file for the main commands written to analyze the data. In both ATUS and GSOEP, OLS regressions were conducted with happiness as the outcome measure and income as the explanatory measure. Following Kushlev et al. (2015) and Hudson et al. (2016) , the average happiness across all activities each day was taken to create an individual-level measure. Because the GSOEP DRM sample contained multiple observations across years, the SEs were clustered at the individual level for models using this dataset.

The treatment of income differed according to the dataset because income was collected differently in each dataset. In the ATUS, income was first analyzed in continuous, log, and quadratic forms in OLS regressions, as in other research ( Kushlev et al., 2015 ; Hudson et al., 2016 ). Next, it was analyzed as a categorical variable with 16 categories, preserving the identical format that it was originally collected in from the CPS questionnaire.

In GSOEP, the income variable in the dataset is provided in continuous form because participants reported their monthly income as an integer. To compare to the ATUS results, 16 quantiles of income were created and analyzed in GSOEP DRMs (see Table 2 - note that there were insufficient observations to conduct these analyses with GSOEP ESMs). This income variable was also analyzed in continuous, log, and quadratic forms.

The range and number of person-year observations of the GSOEP Income 4 variable divided into 16 quantiles.

Omnibus F -tests and effect sizes ( n 2 ) are also reported to compare the categorical, continuous, log, and quadratic approaches.

We conducted lowess and spline regressions to further investigate possible nonlinearities in the relationship between income and happiness. For the lowess regressions, the smoothing parameter was set at of 0.08. For the regression splines, we fitted knots at four quartiles and five quantiles of income. We also used the results of OLS regressions treating income as a categorical variable, as well as the results of the lowess regression treating income as continuous, to fit knots at pre-specified values of income (where these analyses suggested there could be turning and/or satiation points).

Complete case analyses were conducted with 33,976 individuals in ATUS, 6,766 individuals in German DRMs, and 249 individuals in German ESMs. There was item-missing data in some samples (ATUS, 1.7% missing; GSOEP DRMs, 8.2% missing; GSOEP ESMs data, and 6.0% missing). We make analytical and not population inferences and therefore do not use survey weights ( Pfeffermann, 1996 ).

Results are presented without and with controls for demographic and diary characteristics. Following Kushlev et al. (2015) , Hudson et al. (2016) , and Stone et al. (2018) , these controls were age, gender, marital status, ethnic background, 2 health, 3 employment status, children, 4 and whether the day was a weekend. We also control for the year of the survey in ATUS DRM data to address the issue that our results are not due to new data but rather how we treat the income variable.

The list of variables we use in analyses are in Table 3 .

List of variables used in analyses in ATUS and GSOEP.

In both ATUS and GSOEP, daily happiness was analyzed using a 0–6 scale (in GSOEP scale points 1–7 were recoded to 0–6 to match ATUS). The ATUS mean happiness was 4.38 (SD = 1.33). The GSOEP DRM mean happiness was 2.91 (SD = 1.46), and the GSOEP ESM mean happiness was 2.65 (SD = 1.03).

The magnitude of our results can be considered in the context of effect sizes from other research on demographic characteristics and daily happiness ( Kahneman et al., 2004 ; Stone et al., 2010 ; Luhmann et al., 2012 ; Hudson et al., 2019 ). For example, the effect size for the relationship between age and daily experiences of happiness was 0.16 in Stone et al. (2010) . Our effect sizes range from 0.06 to 0.37. Throughout, we focus on coefficients, their 95% CIs, and visualizations of these coefficients and CIs, rather than on their statistical significance ( Lakens, 2021 ). The purpose of this is to highlight how analytic treatments of income affect the magnitude and precision of the relationship between income and happiness.

When treating the 16-category family income variable as continuous in OLS regressions, there was no substantive relationship between income and happiness as in other prior research ( Kushlev et al., 2015 ; Hudson et al., 2016 ; Stone et al., 2018 ). Out of the linear, squared, and log coefficients without and with controls, the largest and most precise coefficients were with controls; for linear income it was ( b  = −0.006, 95% CI = −0.01, −0.002), squared income ( b  = −0.0001, 95% CI = 0.0003, 0.00006), and log income ( b  = −0.03, 95% CI = −0.05, 0.001). The omnibus F -test (without controls) for linear income was F  = 0.28, n 2  = 0.000008 (95% CI = 0.00, 0.0002), for income squared was F  = 1.60, n 2  = 0.00005 (95% CI = 0.00, 0.0003), and for log income was F  = 0.23, n 2  = 0.000006 (95% CI = 0.00,0.0002).

The categorization of income focused attention on those with incomes of $35–40K, who appeared substantively happier than some of those with higher incomes (and lower incomes; see Figure 1 ). For example, with controls, those with incomes of $35–40K appeared happier relative to those with incomes of $150K+ ( b  = 0.16, 95% CI: 0.08, 0.24) and $100–150K ( b  = 0.14, 95% CI: 0.07, 0.221). The omnibus test for categorical income was F  = 1.61, n 2  = 0.007 (95% CI = 0.00, 0.0009).

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Predicted values of average individual happiness in the American Time Use Survey (ATUS) at the 16 values of the family income variable without and with controls. Covariates at means. 95% CI.

Results from regression splines and a lowess regression suggested null results overall (see Figure 2 ). Further details of the analyses are in Supplementary Material S2 .

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Line graph of predicted values from lowess regressions explaining variance in happiness from income treated as a continuous variable in ATUS.

When treating the continuous household income variable as continuous (in €10,000s) in OLS regressions, there was no substantive relationship between income and happiness as in other prior research ( Kushlev et al., 2015 ; Hudson et al., 2016 ; Stone et al., 2018 ). The association with the largest magnitude and most precision was for log income with controls ( b  = −0.08, 95% CI = −0.18, 0.01). 5

As in ATUS, treating the variable as categorical suggested some relationships between income and happiness. These results drew attention to those third quantile (~€14–18K), who seemed happier than those both higher and lower in income (see Figure 3 ). For example, with controls, they were happier than those in quantiles 13 (€42.6–48K, b  = 0.46, 95% CI = 0.25, 0.67), seven (~€24–27K, b  = 0.34, 95% CI = 0.13, 0.56), and one (€2.40–11,520K, b  = 0.28, 95% CI = 0.05, 0.51). The omnibus test for categorical income was F  = 4.00, n 2  = 0.009 (95% CI = 0.003, 0.01), whereas the omnibus test for linear income was F  = 0.09, n 2  = 0.00001 (95% CI = 0.00, 0.0007). The omnibus for log income was F  = 1.42, n 2  = 0.0002 (95% CI = 0.00, 0.0001) and for income squared it was F  = 0.96, n 2  = 0.0001 (95% CI = 0.00, 0.001).

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Object name is fpsyg-13-883137-g003.jpg

Predicted values of average person-year happiness from GSOEP DRMs at 16 quantiles of income (Income 4) without and with controls. Covariates at means. 95% CI.

The lowess and spline regressions suggested null results overall, as the coefficients were small in magnitude (see Figure 4 ). Further details of the analyses are in Supplementary Material S3 .

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Line graph of predicted values from lowess regressions explaining variance in happiness from income treated as a continuous variable in GSOEP DRMs at 16 quantiles of income.

There was no evidence to suggest any substantive association between income and happiness in ESM data for linear income, income squared, log income, in the lowess regressions, or regression splines. A visualization of the lowess results are in Figure 5 and further details of the analyses are in Supplementary Material S4 .

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Results of local linear “lowess” regression from GSOEP Experience Sampling Methodology (ESM) data with happiness as the outcome and continuous annual income as the explanatory variable.

The omnibus F -test for linear income was F  = 0.53, n 2  = 0.002 (95%CI = −0.00, 0.03), and for log income it was F  = 0.12, n 2  = 0.0005, 95%CI = 0.00, 0.02. For income squared it was F  = 0.63, n 2  = 0.003, 95%CI = 0.00 0.03.

Is income creating a signal in these data on daily experiences of happiness, or is it all simply noise? The present results suggest that whether income can be concluded as being associated with daily experiences of happiness may depend on how income is analyzed. When income in ATUS is analyzed in its original, categorical form, there is some evidence that some people with higher incomes feel somewhat less happy than some of those with lower incomes. When the continuous income variable in GSOEP is split into categories, a similar pattern is observed. This is not inconsistent with the findings of Kushlev et al. (2015) , Hudson et al. (2016) , and Stone et al. (2018) , who found no relationship between income and daily feelings of happiness in the same data when income was analyzed as a continuous variable. It simply illustrates that a relationship between income and happiness could be interpreted when treating income categorically rather than continuously.

There are at least three possible interpretations to our overall results. One interpretation tends toward conservative. We conducted multiple comparisons of many transformations of income, which might inspire some to question whether we should have accounted for this in some way by adjusting for multiple comparisons. Although we found some evidence of differences in happiness according to income, such an adjustment might lead to an overall null conclusion when characterizing the relationship between income on happiness. A second interpretation is more generous. Within this perspective, one might emphasize the fact that because our income measures were correlated, no correction for multiple comparisons was required. It could then be argued that because we found some evidence for the relationship between income on happiness, there is good evidence that the overall effect is not null. A more moderate perspective, and the one adopted in this paper, is that because the overall pattern of our results showed mixed null and nonnull results, we can make an overall conclusion of some differences in happiness according to income. We also noticed that equivalizing income in the German data strengthened the relationship of income and happiness, further supporting the conclusion of some differences—and that the analytic treatment of income matters.

Based on the moderate perspective, we conclude that there is very little evidence of any relationship between income and daily experiences of happiness—and any relationship that does exist would suggest higher income could be associated with less happiness. The results do not support the results of Sacks et al. (2012) or Killingsworth (2021) , where a greater income was associated with greater happiness, and there were no satiation or turning points (see also Stevenson and Wolfers, 2012 ). These results are more aligned with Kahneman and Deaton (2010) , who found a satiation point in the relationship between income daily experiences of happiness, researchers finding no association between income and happiness ( Kushlev et al., 2015 ; Jebb et al., 2018 ; Casinillo et al., 2020 , 2021 ), who found that higher income can be associated with worse evaluations of life. We suggest the analytic strategy for income could contribute to explaining discrepant results in existing literature, and researchers should be clear about the approaches they have tested, although we acknowledge that sampling differences could play a role, too.

Overall, the results were broadly consistent between countries because there was no substantive relationship between income and happiness when income was treated continuously but there appeared to be relationships when treating income categorically. Despite a similar overall pattern in the income results, there were other difference between countries. German residents rated their happiness as lower than United States residents (a difference of ~1.5 scale points out of seven). This could be because of different interpretations of the word “happiness” in Germany and the United States. The word for happiness in German used in the survey— glück —can mean something more akin to lucky or optimistic—which is different from the meaning of word “happy” in the United States. Despite this linguistic difference, those with higher incomes were still less happy than some of those with lower incomes in both samples.


One limitation to our results is the representativeness of the income distribution. Household surveys like those that we used do not tend to capture the “tails” of the income distribution very well: People in institutions and without addresses are excluded from these sample populations, which omits populations such as those living in nursing homes and prisons, as well as the homeless. Moreover, people do not always self-report their income accurately due to issues such as social desirability bias ( Angel et al., 2019 ). Existing studies that have focused on those with very low incomes do tend to find that low income is associated with low happiness ( Diener and Biswas-Diener, 2002 ; Clark et al., 2016 ; Adesanya et al., 2017 ). In ATUS, the highest household income value available was $150K, whereas in GSOEP it was €360K. Thus, it is not always clear whether the very affluent, such as millionaires, are represented in these samples ( Smeets et al., 2020 ). Overall, our results cannot be taken as representative of people who are very poor or rich and should not be interpreted as such.

Another limitation is that the present results cannot be interpreted casually because there has been no manipulation of income in these data nor exploration of mechanisms and there was no longitudinal data in ATUS. As discussed by Kushlev et al. (2015) , there are issues such as reverse causality. Here, however, some of our results potentially suggest an alternative reverse causality pathway, whereby less happy people may select into earning more income. Because the counterfactual is not apparent—we do not know how happy people with high incomes would be without their higher income—it could also be that those with high incomes would be even less happy than they currently are if they had not attained their current level of income. In other words, people with high incomes may have started out as less happy in the first place and be even less happy if they did not have high incomes.

A further limitation is the time period of the data, especially that they were collected prior to the COVID-19 pandemic. This could be an issue because it is possible that the relationship between income and daily experiences of happiness has changed, such as due to the exacerbation of health inequalities and restrictions on freedom of movement due to nationwide lockdowns. Our study does not provide any information on the longer-term and health and well-being consequences of both COVID-19 itself and the policy response to COVID-19 ( Aknin et al., 2022 ). As one example, access to green space, which has health and well-being benefits, is lower among those with low income, and this mechanism between income and happiness may have become more salient during COVID-19 ( Geary et al., 2021 ). Overall, it is important to consider the regional, political, and socioeconomic contexts in which income is attained to understand its relationship with well-being, including levels of income in reference groups such as neighbors, friends, and colleagues ( Luttmer, 2005 ; De Neve and Sachs, 2020 ). It would be important to replicate the results in this research with more recent data to address the limitation that the data we used are not recent, considering our broader point that the measurement and analysis of income should be considered as carefully as the measurement and analysis of happiness.

Future Directions

This research points to several directions for future research. One direction relates to data and measures: Nonlinearities in the relationship between income and happiness could be examined using time use data from other countries, considered between countries and/or within countries over time ( Deaton et al., 2008 ; De Neve et al., 2018 ), and investigated for measures of emotional states other than happiness ( Piff and Moskowitz, 2018 ). In general, our results suggest that researchers should pay attention to how income is measured and analyzed when considering how it is related to happiness, which complements findings from other research that the way happiness is measured and analyzed is important ( Kahneman and Deaton, 2010 ; Jebb et al., 2018 ).

Future research could also explore mechanisms that may explain our findings. In addition to those mentioned in the Introduction—expectations ( Graham and Pettinato, 2002 ; Nickerson et al., 2003 ), time use ( Aguiar and Hurst, 2007 ; Hamermesh and Lee, 2007 ; Bianchi and Vohs, 2016 ; Nikolaev, 2018 ; Sharif et al., 2021 ); generosity ( Dunn et al., 2008 ; Kraus et al., 2010 ; Piff et al., 2010 ; Aknin et al., 2012 ; Balakrishnan et al., 2017 ; Macchia and Whillans, 2022 ), and sense of self ( Snibbe and Markus, 2005 ; Stephens et al., 2007 )—another is the identity-related effect of transitioning between socioeconomic groups. Though one might expect upward mobility to be associated with greater happiness, research suggests that some working class people do not wish to become upwardly mobile because it could lead to a loss of identity and change in community ( Akerlof, 1997 ; Friedman, 2014 ). Indeed, upward intergenerational mobility is associated with worse life evaluations in the United Kingdom—though not in Switzerland ( Hadjar and Samuel, 2015 ), although recent findings show substantial negative effects of downward mobility, too ( Dolan and Lordan, 2021 ). Over time, therefore, the degree of mobility in a population could influence the relationship between income and happiness in both positive and negative directions.

Additionally, social comparisons could drive the effects of higher income on happiness. Higher income might not benefit happiness if one’s reference group—that is, the people to whom we compare or have knowledge of in some form ( Hyman, 1942 ; Shibutani, 1955 ; Runciman, 1966 )—changes with higher socioeconomic status. As income increases, people might compare themselves to others who are also doing similarly or better to them, and then not feel or think that they are doing any better by comparison—or even feel worse ( Cheung and Lucas, 2016 ). This is one of the explanations for the well-known “Easterlin Paradox” ( Easterlin, 1974 ), which suggests that as national income rises people do not become happier because they compare their achievements to others. The paradox is debated ( Sacks et al., 2012 ). Additionally, some research shows that it is possible to view others’ greater success as one’s own future opportunity and for upward social comparisons to then positively impact upon well-being ( Senik, 2004 ; Davis and Wu, 2014 ; Ifcher et al., 2018 ). As with the role of mobility in the relationship between income and happiness, it is unclear whether the role of social comparisons would create a positive or negative impact over time and future research could explore this.

Final Remarks

Overall, our results provide some evidence that individual attainment in terms of income may not equate to the attainment of individual happiness—and could even be associated with less daily happiness, depending upon how income is measured and analyzed. These results suggest that how income is associated with happiness depends on how income is measured and analyzed. They provide some support to the idea that financial achievement can have both costs and benefits, potentially informing normative discussions about the optimal distribution of income in society.

Data Availability Statement

Ethics statement.

Ethical review and approval was not required for the study on human participants in accordance with the local legislation and institutional requirements. Written informed consent from the participants’ legal guardian/next of kin was not required to participate in this study in accordance with the national legislation and the institutional requirements.

Author Contributions

LK and KK contributed to conception and design of the study. LK organized the data, performed the statistical analysis in STATA, and wrote the first draft of the manuscript. KK performed additional statistical analysis in jamovi and wrote sections of the manuscript. All authors contributed to the article and approved the submitted version.

LK was supported by a London School of Economics PhD scholarship during early work and later by the National Institute for Health Research (NIHR) Applied Research Collaboration (ARC) West Midlands. The views expressed are those of the author(s) and not necessarily those of the NIHR or the Department of Health and Social Care.

Conflict of Interest

The authors declare that the research was conducted in the absence of any commercial or financial relationships that could be construed as a potential conflict of interest.

Publisher’s Note

All claims expressed in this article are solely those of the authors and do not necessarily represent those of their affiliated organizations, or those of the publisher, the editors and the reviewers. Any product that may be evaluated in this article, or claim that may be made by its manufacturer, is not guaranteed or endorsed by the publisher.


LK thanks Professor Paul Dolan and Dr Georgios Kavetsos for their support early on in conducting this research, as well as Professor Richard Lilford for insights about multiple comparisons.


2 In the ATUS this was Hispanic and Black, in GSOEP this was German origin.

3 In the ATUS this was whether the respondent had any physical or cognitive difficulty (yes/no), in GSOEP this was self-rated general health (bad, poor, satisfactory, good, and very good).

4 In the ATUS this was presence of children <18 years in the household, in GSOEP this was number of children.

5 This association was stronger and more precise when equivalizing income (dividing by the square root of household size), b  = −0.16, 95%CI = −0.06, −0.27, underscoring the importance of transparency in the treatment of income.

Supplementary Material

The Supplementary Material for this article can be found online at:

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The essential role of money in achieving happiness.

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In conclusion, while money cannot buy happiness outright, it plays a pivotal role in creating conditions conducive to happiness. Recognizing this can help us approach money with a healthier mindset, seeing it not as an end in itself, but as a tool for achieving a happier and more fulfilling life.

500 Words Essay on Money Is Important for Happiness

Money, a medium of exchange, is a crucial element of life. It is an undeniable fact that it plays a significant role in shaping up the happiness and well-being of individuals. The concept of money and happiness has been debated for centuries, with various perspectives on its importance. This essay will explore the multifaceted relationship between money and happiness, shedding light on why money is significant for happiness.

The Necessity of Money for Basic Needs

To begin with, money is necessary for meeting basic human needs, which include food, shelter, and clothing. Without money, it would be challenging to fulfill these needs, leading to a life of hardship and, consequently, unhappiness. Maslow’s hierarchy of needs supports this perspective, placing physiological needs at the base of the pyramid, which are essential for survival and can only be met through financial means.

Money as a Means to Improve Quality of Life

Beyond basic necessities, money also allows individuals to improve their quality of life. It provides access to better healthcare, education, and opportunities for self-improvement and growth. These elements contribute significantly to one’s overall happiness. Moreover, money can be used to acquire experiences that bring joy, such as travel, hobbies, or spending time with loved ones.

Financial Security and Mental Peace

Financial security, facilitated by money, is another crucial factor contributing to happiness. The absence of financial stress can lead to better mental health and overall well-being. Money can provide a safety net for unexpected situations, giving individuals peace of mind and the freedom to pursue their passions without the constant worry of financial instability.

The Limitations of Money in Achieving Happiness

While the importance of money for happiness is evident, it is essential to recognize its limitations. Research suggests that beyond a certain income level, additional money does not significantly increase happiness. This is known as the ‘Easterlin Paradox.’ Furthermore, an excessive focus on money can lead to materialism, which can negatively impact relationships and personal satisfaction.

In conclusion, money plays a crucial role in facilitating happiness by meeting basic needs, improving quality of life, and providing financial security. However, it is not the only determinant of happiness, and its pursuit should be balanced with other aspects of life, such as relationships, passions, and personal growth. Therefore, while money is important for happiness, it is not the sole ingredient and should be viewed as a tool to achieve happiness rather than the end goal.

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money makes me happy essay

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Sample essay: does money bring happiness?

by Manjusha Nambiar · Published April 7, 2014 · Updated April 23, 2024

IELTS essay prompt

Some people believe that money brings happiness; others are of the opinion that having too much money is a problem. Discuss both views and give your own opinion.

Sample response

Almost all of us are motivated by money. The only reason that most of us spend 8 to 10 hours at the workplace is to earn money. Money probably doesn’t bring happiness, but not having enough money to take care of our basic needs will seriously limit our happiness. No one wants to live in poverty and no one will lend to the poor.

Money helps us lead a comfortable life. It helps us provide the best possible education for our children. It ensures that our near and dear ones have access to medical attention whenever they need it. Having more money than you need is unlikely to increase your levels of happiness, but not having enough will definitely destroy your peace of mind.

There is a limit to the amount of money that we can spend on ourselves. Still, the richest among us have amassed wealth they or their progeny will never use in their lifetime. Still, they aren’t satisfied. They want more. That is the lure of money. It never makes people content. Those who don’t have it want to have it. Those who have it want to have even more of it. Unfortunately, in our pursuit of riches, we often forget to live. We forget to appreciate the little joys that make our lives worth living.

Having a lot of money is definitely a problem. It even threatens our safety and security and makes us the target of thieves. Look at the richest people. They can’t move around freely like you or I. They are always surrounded by their personal security guards and often live their entire lives in constant fear of getting attacked.

To conclude, money is unlikely to make us happy, but we must still earn enough. However, in our pursuit of riches, we must not lose our souls. True happiness comes from spiritual awakening. Money has hardly anything to do with it.

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money makes me happy essay

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money makes me happy essay

Home — Essay Samples — Economics — Money — Money Makes Life Easier But It Doesn’t Make You Happy


Money Makes Life Easier But It Doesn't Make You Happy

  • Categories: Money Values

About this sample


Words: 852 |

Published: Jan 28, 2021

Words: 852 | Pages: 2 | 5 min read

Works Cited

  • Diener, E., Lucas, R. E., & Oishi, S. (2002). Subjective well-being: The science of happiness and life satisfaction. Handbook of positive psychology, 2, 63-73.
  • Lyubomirsky, S., King, L., & Diener, E. (2005). The benefits of frequent positive affect: Does happiness lead to success? Psychological Bulletin, 131(6), 803-855.
  • Vohs, K. D., Mead, N. L., & Goode, M. R. (2006). The psychological consequences of money. Science, 314(5802), 1154-1156.
  • Dunn, E. W., Gilbert, D. T., & Wilson, T. D. (2011). If money doesn't make you happy, then you probably aren't spending it right. Journal of Consumer Psychology , 21(2), 115-125.
  • Aknin, L. B., Norton, M. I., & Dunn, E. W. (2009). From wealth to well-being? Money matters, but less than people think. The Journal of Positive Psychology, 4(6), 523-527.
  • Kahneman, D., & Deaton, A. (2010). High income improves evaluation of life but not emotional well-being. Proceedings of the National Academy of Sciences, 107(38), 16489-16493.
  • Easterlin, R. A. (2003). Explaining happiness. Proceedings of the National Academy of Sciences, 100(19), 11176-11183.
  • Clark, A. E., Frijters, P., & Shields, M. A. (2008). Relative income, happiness, and utility: An explanation for the Easterlin paradox and other puzzles. Journal of Economic Literature, 46(1), 95-144.
  • Kasser, T. (2002). The high price of materialism. MIT Press.
  • Layard, R. (2005). Happiness: Lessons from a new science. Penguin UK.

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The Possible Collapse of the U.S. Home Insurance System

A times investigation found climate change may now be a concern for every homeowner in the country..

This transcript was created using speech recognition software. While it has been reviewed by human transcribers, it may contain errors. Please review the episode audio before quoting from this transcript and email [email protected] with any questions.

From “The New York Times,” I’m Sabrina Tavernise. And this is “The Daily.”


Today, my colleague, Christopher Flavelle, on a “Times” investigation into one of the least known and most consequential effects of climate change — insurance — and why it may now be a concern for every homeowner in the country.

It’s Wednesday, May 15.

So, Chris, you and I talked a while ago about how climate change was really wreaking havoc in the insurance market in Florida. You’ve just done an investigation that takes a look into the insurance markets more broadly and more deeply. Tell us about it.

Yeah, so I cover climate change, in particular the way climate shocks affect different parts of American life. And insurance has become a really big part of that coverage. And Florida is a great example. As hurricanes have gotten worse and more frequent, insurers are paying out more and more money to rebuild people’s homes. And that’s driving up insurance costs and ultimately driving up the cost of owning a home in Florida.

So we’re already seeing that climate impact on the housing market in Florida. My colleagues and I started to think, well, could it be that that kind of disruption is also happening in other states, not just in the obvious coastal states but maybe even through the middle of the US? So we set out to find out just how much it is happening, how much that Florida turmoil has, in fact, become really a contagion that is spreading across the country.

So how did you go about reporting this? I mean, where did you start?

All we knew at the start of this was that there was reason to think this might be a problem. If you just look at how the federal government tracks disasters around the country, there’s been a big increase almost every year in the number and severity of all kinds of disasters around the country. So we thought, OK, it’s worth trying to find out, what does that mean for insurers?

The problem is getting data on the insurance industry is actually really hard. There’s no federal regulation. There’s no government agency you can go to that holds this data. If you talk to the insurers directly, they tend to be a little reluctant to share information about what they’re going through. So we weren’t sure where to go until, finally, we realized the best people to ask are the people whose job it is to gauge the financial health of insurance companies.

Those are rating agencies. In particular, there’s one rating company called AM Best, whose whole purpose is to tell investors how healthy an insurance company is.

Whoa. So this is way down in the nuts and bolts of the US insurance industry.

Right. This is a part of the broader economy that most people would never experience. But we asked them to do something special for us. We said, hey, can you help us find the one number that would tell us reporters just how healthy or unhealthy this insurance market is state by state over time? And it turns out, there is just such a number. It’s called a combined ratio.

OK, plain English?

Plain English, it is the ratio of revenue to costs, how much money these guys take in for homeowner’s insurance and how much they pay out in costs and losses. You want your revenue to be higher than your costs. If not, you’re in trouble.

So what did you find out?

Well, we got that number for every state, going back more than a decade. And what it showed us was our suspicions were right. This market turmoil that we were seeing in Florida and California has indeed been spreading across the country. And in fact, it turns out that in 18 states, last year, the homeowner’s insurance market lost money. And that’s a big jump from 5 or 10 years ago and spells real trouble for insurance and for homeowners and for almost every part of the economy.

So the contagion was real.

Right. This is our first window showing us just how far that contagion had spread. And one of the really striking things about this data was it showed the contagion had spread to places that I wouldn’t have thought of as especially prone to climate shocks — for example, a lot of the Midwest, a lot of the Southeast. In fact, if you think of a map of the country, there was no state between Pennsylvania and the Dakotas that didn’t lose money on homeowner’s insurance last year.

So just huge parts of the middle of the US have become unprofitable for homeowner’s insurance. This market is starting to buckle under the cost of climate change.

And this is all happening really fast. When we did the Florida episode two years ago, it was a completely new phenomenon and really only in Florida. And now it’s everywhere.

Yeah. And that’s exactly what’s so striking here. The rate at which this is becoming, again, a contagion and spreading across the country is just demolishing the expectations of anyone I’ve spoken to. No one thought that this problem would affect so much of the US so quickly.

So in these states, these new places that the contagion has spread to, what exactly is happening that’s causing the insurance companies to fold up shop?

Yeah. Something really particular is happening in a lot of these states. And it’s worth noting how it’s surprised everyone. And what that is, is formally unimportant weather events, like hailstorms or windstorms, those didn’t used to be the kind of thing that would scare insurance companies. Obviously, a big problem if it destroys your home or damages your home. But for insurers, it wasn’t going to wipe them out financially.

Right. It wasn’t just a complete and utter wipeout that the company would then have to pony up a lot of money for.

Exactly. And insurers call them secondary perils, sort of a belittling term, something other than a big deal, like a hurricane.

These minor league weather events.

Right. But those are becoming so frequent and so much more intense that they can cause existential threats for insurance companies. And insurers are now fleeing states not because of hurricanes but because those former things that were small are now big. Hailstorms, wildfires in some places, previous annoyances are becoming real threats to insurers.

Chris, what’s the big picture on what insurers are actually facing? What’s happening out there numbers-wise?

This is a huge threat. In terms of the number of states where this industry is losing money, it’s more than doubled from 10 years ago to basically a third of the country. The amount they’re losing is enormous. In some states, insurers are paying out $1.25 or even $1.50 for every dollar they bring in, in revenue, which is totally unsustainable.

And the result is insurers are making changes. They are pulling back from these markets. They’re hiking premiums. And often, they’re just dropping customers. And that’s where this becomes real, not just for people who surf balance sheets and trade in the stock market. This is becoming real for homeowners around the country, who all of a sudden increasingly can’t get insurance.

So, Chris, what’s the actual implication? I mean, what happens when people in a state can’t get insurance for their homes?

Getting insurance for a home is crucial if you want to sell or buy a home. Most people can’t buy a home without a mortgage. And banks won’t issue a mortgage without home insurance. So if you’ve got a home that insurance company doesn’t want to cover, you got a real problem. You need to find insurance, or that home becomes very close to unsellable.

And as you get fewer buyers, the price goes down. So this doesn’t just hurt people who are paying for these insurance premiums. It hurts people who want to sell their homes. It even could hurt, at some point, whole local economies. If home values fall, governments take in less tax revenue. That means less money for schools and police. It also means people who get hit by disasters and have to rebuild their homes all of a sudden can’t, because their insurance isn’t available anymore. It’s hard to overstate just how big a deal this is.

And is that actually happening, Chris? I mean, are housing markets being dragged down because of this problem with the insurance markets right now?

Anecdotally, we’ve got reports that in places like Florida and Louisiana and maybe in parts of California, the difficulty of getting insurance, the crazy high cost of insurance is starting to depress demand because not everyone can afford to pay these really high costs, even if they have insurance. But what we wanted to focus on with this story was also, OK, we know where this goes eventually. But where is it beginning? What are the places that are just starting to feel these shocks from the insurance market?

And so I called around and asked insurance agents, who are the front lines of this. They’re the ones who are struggling to find insurance for homeowners. And I said, hey, is there one place that I should go if I want to understand what it looks like to homeowners when all of a sudden insurance becomes really expensive or you can’t even find it? And those insurance agents told me, if you want to see what this looks like in real life, go to a little town called Marshalltown in the middle of Iowa.

We’ll be right back.

So, Chris, you went to Marshalltown, Iowa. What did you find?

Even before I got to Marshalltown, I had some idea I was in the right spot. When I landed in Des Moines and went to rent a car, the nice woman at the desk who rented me a car, she said, what are you doing here? I said, I’m here to write a story about people in Iowa who can’t get insurance because of storms. She said, oh, yeah, I know all about that. That’s a big problem here.

Even the rental car lady.

Even the rental car lady knew something was going on. And so I got into my rental car and drove about an hour northeast of Des Moines, through some rolling hills, to this lovely little town of Marshalltown. Marshalltown is a really cute, little Midwestern town with old homes and a beautiful courthouse in the town square. And when I drove through, I couldn’t help noticing all the roofs looked new.

What does that tell you?

Turns out Marshalltown, despite being a pastoral image of Midwestern easy living, was hit by two really bad disasters in recent years — first, a devastating tornado in 2018 and then, in 2020, what’s called a derecho, a straight-line wind event that’s also just enormously damaging. And the result was lots of homes in this small town got severely damaged in a short period of time. And so when you drive down, you see all these new roofs that give you the sense that something’s going on.

So climate had come to Marshalltown?

Exactly. A place that had previously seemed maybe safe from climate change, if there is such a thing, all of a sudden was not. So I found an insurance agent in Marshalltown —

We talked to other agents but haven’t talked to many homeowners.

— named Bobby Shomo. And he invited me to his office early one morning and said, come meet some people. And so I parked on a quiet street outside of his office, across the street from the courthouse, which also had a new roof, and went into his conference room and met a procession of clients who all had versions of the same horror story.

It was more — well more of double.

A huge reduction in coverage with a huge price increase.

Some people had faced big premium hikes.

I’m just a little, small business owner. So every little bit I do feel.

They had so much trouble with their insurance company.

I was with IMT Insurance forever. And then when I moved in 2020, Bobby said they won’t insure a pool.

Some people had gotten dropped.

Where we used to see carriers canceling someone for frequency of three or four or five claims, it’s one or two now.

Some people couldn’t get the coverage they needed. But it was versions of the same tale, which is all of a sudden, having homeowner’s insurance in Marshalltown was really difficult. But I wanted to see if it was bigger than just Marshalltown. So the next day, I got back in my car and drove east to Cedar Rapids, where I met another person having a version of the same problem, a guy named Dave Langston.

Tell me about Dave.

Dave lives in a handsome, modest, little townhouse on a quiet cul-de-sac on a hill at the edge of Cedar Rapids. He’s the president of his homeowners association. There’s 17 homes on this little street. And this is just as far as you could get from a danger zone. It looks as safe as could be. But in January, they got a letter from the company that insures him and his neighbors, saying his policy was being canceled, even though it wasn’t as though they’d just been hit by some giant storm.

So then what was the reason they gave?

They didn’t give a reason. And I think people might not realize, insurers don’t have to give a reason. Insurance policies are year to year. And if your insurance company decides that you’re too much of a risk or your neighborhood is too much of a risk or your state is too much of a risk, they can just leave. They can send you a letter saying, forget it. We’re canceling your insurance. There’s almost no protection people have.

And in this case, the reason was that this insurance company was losing too much money in Iowa and didn’t want to keep on writing homeowner’s insurance in the state. That was the situation that Dave shared with tens of thousands of people across the state that were all getting similar letters.

What made Dave’s situation a little more challenging was that he couldn’t get new insurance. He tried for months through agent after agent after agent. And every company told him the same thing. We won’t cover you. Even though these homes are perfectly safe in a safe part of the state, nobody would say yes. And it took them until basically two days before their insurance policy was going to run out until they finally found new coverage that was far more expensive and far more bare-bones than what they’d had.

But at least it was something.

It was something. But the problem was it wasn’t that good. Under this new policy, if Dave’s street got hit by another big windstorm, the damage from that storm and fixing that damage would wipe out all the savings set aside by these homeowners. The deductible would be crushingly high — $120,000 — to replace those roofs if the worst happened because the insurance money just wouldn’t cover anywhere close to the cost of rebuilding.

He said to me, we didn’t do anything wrong. This is just what insurance looks like today. And today, it’s us in Cedar Rapids. Everyone, though, is going to face a situation like this eventually. And Dave is right. I talked to insurance agents around the country. And they confirmed for me that this kind of a shift towards a new type of insurance, insurance that’s more expensive and doesn’t cover as much and makes it harder to rebuild after a big disaster, it’s becoming more and more common around the country.

So, Chris, if Dave and the people you spoke to in Iowa were really evidence that your hunch was right, that the problem is spreading and rapidly, what are the possible fixes here?

The fix that people seem most hopeful about is this idea that, what if you could reduce the risk and cause there to be less damage in the first place? So what some states are doing is they’re trying to encourage homeowners to spend more money on hardening their home or adding a new roof or, if it’s a wildfire zone, cut back the vegetation, things that can reduce your risk of having really serious losses. And to help pay for that, they’re telling insurers, you’ve got to offer a discount to people who do that.

And everyone who works in this field says, in theory, that’s the right approach. The problem is, number one, hardening a home costs a fantastic amount of money. So doing this at scale is hugely expensive. Number two, it takes a long time to actually get enough homes hardened in this way that you can make a real dent for insurance companies. We’re talking about years or probably decades before that has a real effect, if it ever works.

OK. So that sounds not particularly realistic, given the urgency and the timeline we’re on here. So what else are people looking at?

Option number two is the government gets involved. And instead of most Americans buying home insurance from a private company, they start buying it from government programs that are designed to make sure that people, even in risky places, can still buy insurance. That would be just a gargantuan undertaking. The idea of the government providing homeowner’s insurance because private companies can’t or won’t would lead to one of the biggest government programs that exists, if we could even do it.

So huge change, like the federal government actually trying to write these markets by itself by providing homeowner’s insurance. But is that really feasible?

Well, in some areas, we’re actually already doing it. The government already provides flood insurance because for decades, most private insurers have not wanted to cover flood. It’s too risky. It’s too expensive. But that change, with governments taking over that role, creates a new problem of its own because the government providing flood insurance that you otherwise couldn’t get means people have been building and building in flood-prone areas because they know they can get that guaranteed flood insurance.

Interesting. So that’s a huge new downside. The government would be incentivizing people to move to places that they shouldn’t be.

That’s right. But there’s even one more problem with that approach of using the government to try to solve this problem, which is these costs keep growing. The number of billion-dollar disasters the US experiences every year keeps going up. And at some point, even if the government pays the cost through some sort of subsidized insurance, what happens when that cost is so great that we can no longer afford to pay it? That’s the really hard question that no official can answer.

So that’s pretty doomsday, Chris. Are we looking at the end of insurance?

I think it’s fair to say that we’re looking at the end of insurance as we know it, the end of insurance that means most Americans can rest assured that if they get hit by a disaster, their insurance company will provide enough money they can rebuild. That idea might be going away. And what it shows is maybe the threat of climate change isn’t quite what we thought.

Maybe instead of climate change wrecking communities in the form of a big storm or a wildfire or a flood, maybe even before those things happen, climate change can wreck communities by something as seemingly mundane and even boring as insurance. Maybe the harbinger of doom is not a giant storm but an anodyne letter from your insurance company, saying, we’re sorry to inform you we can no longer cover your home.

Maybe the future of climate change is best seen not by poring over weather data from NOAA but by poring over spreadsheets from rating firms, showing the profitability from insurance companies, and how bit by bit, that money that they’re losing around the country tells its own story. And the story is these shocks are actually already here.

Chris, as always, terrifying to talk to you.

Always a pleasure, Sabrina.

Here’s what else you should know today. On Tuesday, the United Nations has reclassified the number of women and children killed in Gaza, saying that it does not have enough identifying information to know exactly how many of the total dead are women and children. The UN now estimates that about 5,000 women and about 8,000 children have been killed, figures that are about half of what it was previously citing. The UN says the numbers dropped because it is using a more conservative estimate while waiting for information on about 10,000 other dead Gazans who have not yet been identified.

And Mike Johnson, the Speaker of the House, gave a press conference outside the court in Lower Manhattan, where Michael Cohen, the former fixer for Donald Trump, was testifying for a second day, answering questions from Trump’s lawyers. Trump is bound by a gag order. So Johnson joined other stand-ins for the former president to discredit the proceedings. Johnson, one of the most important Republicans in the country, attacked Cohen but also the trial itself, calling it a sham and political theater.

Today’s episode was produced by Nina Feldman, Shannon Lin, and Jessica Cheung. It was edited by MJ Davis Lin, with help from Michael Benoist, contains original music by Dan Powell, Marion Lozano, and Rowan Niemisto, and was engineered by Alyssa Moxley. Our theme music is by Jim Brunberg and Ben Landsverk of Wonderly.

That’s it for “The Daily.” I’m Sabrina Tavernise. See you tomorrow.

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Hosted by Sabrina Tavernise

Featuring Christopher Flavelle

Produced by Nina Feldman ,  Shannon M. Lin and Jessica Cheung

Edited by MJ Davis Lin

With Michael Benoist

Original music by Dan Powell ,  Marion Lozano and Rowan Niemisto

Engineered by Alyssa Moxley

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Across the United States, more frequent extreme weather is starting to cause the home insurance market to buckle, even for those who have paid their premiums dutifully year after year.

Christopher Flavelle, a climate reporter, discusses a Times investigation into one of the most consequential effects of the changes.

On today’s episode

money makes me happy essay

Christopher Flavelle , a climate change reporter for The New York Times.

A man in glasses, dressed in black, leans against the porch in his home on a bright day.

Background reading

As American insurers bleed cash from climate shocks , homeowners lose.

See how the home insurance crunch affects the market in each state .

Here are four takeaways from The Times’s investigation.

There are a lot of ways to listen to The Daily. Here’s how.

We aim to make transcripts available the next workday after an episode’s publication. You can find them at the top of the page.

Christopher Flavelle contributed reporting.

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Christopher Flavelle is a Times reporter who writes about how the United States is trying to adapt to the effects of climate change. More about Christopher Flavelle


Money blog: 'Good news' as major drop in energy bills predicted in July

A significant drop in energy prices has been forecast for July. Read about this and all the latest consumer and personal finance news in the Money blog - and leave a comment or your money problem in the box below.

Friday 17 May 2024 14:30, UK

  • 'Good news' as major drop in household energy bills predicted
  • 'Seismic shift' as number of bank branch closures passes 6,000
  • How much it costs to send your children to private school - as figures reveal major change
  • New Greggs stores to open in these locations
  • Drivers hit by 'unfairly high margins' on fuel

Essential reads

  • Lowest buy-to-let mortgage rates revealed
  • Is more expensive steak better for you?
  • The rise of Michelin starred 'fast food'
  • Basically...  What is PIP - and what could government changes mean?
  • How to make sure your car passes its MOT
  • Cheap Eats:  Michelin-star chef reveals his top steals in London - including an unbeatable sub sandwich
  • Money Problem: My workplace wants to pay us by the minute - what can I do?
  • Best of the Money blog - an archive

Ask a question or make a comment

A hotel part-owned by Gary Neville and other ex-Manchester United legends has been named one of the best places to work in hospitality. 

Each year, The Caterer releases its top 30 best places for employees in the sector, with the top six featuring some familiar names.

The list is compiled via anonymous employee survey - with no input from managers or owners. 

Hotel Football, the only hotel with a rooftop five-a-side pitch, was among the top six venues selected by employees across the UK. 

The hotel's benefits package was particularly well-praised by those who work there - given that it "prioritises the financial wellbeing of employees during the cost of living challenge".

Management at the hotel, which is situated next to Manchester United's Old Trafford stadium, was also praised for enhanced maternity, paternity, parental and adoption leave policies and a strong belief in diversity and inclusion. 

The other five to make up the top six are The Biltmore in Mayfair, Cycas Hospitality (which has 18 locations across the UK), Dalata (which boasts some 1,000 employees), Gleneagles Hotel in Edinburgh and Nobu Hotel in Shoreditch, London. 

The energy price cap is set to fall by about 7% in July, a leading thinktank has said. 

Cornwall Insights said: "For a typical dual fuel household, we predict the July price cap to be £1,574 per annum" - a drop from £1,690.

Looking further ahead, it forecasted the cap to rise again slightly in October, before falling again in January next year. 

Reacting to the news, Uswitch said the predicted drop was "clearly good news". 

"The future still remains uncertain, and with the price cap changing every three months – currently expected to rise in October before falling slightly in January –  it's crucial not to be complacent," Richard Neudegg, director of regulation, said. 

However, "a predicted 7% drop in energy prices in July is clearly good news, with the price cap looking likely to hit its lowest level in over two years", he said. 

He also urged  households who want to lock in rates for price certainty to run a comparison to see what energy tariffs are available to them.

"There are many 12-month fixed tariffs available at rates cheaper than the current price cap, and even some that are 2% below these new predicted July rates," he said. 

Cristiano Ronaldo has topped Forbes' list of highest-paid athletes for the fourth time in his career.

Ronaldo became the world's highest-paid athlete after his move to Saudi Arabian side Al Nassr and Forbes said the 39-year-old's estimated total earnings were around $260m (£205m) - an all-time high for a football player.

His on-field earnings amounted to $200m (£158m) while off-field he earned $60m (£47m) thanks to sponsorship deals where brands make use of his 629 million Instagram followers.

Spanish golfer Jon Rahm took second place following his switch to Saudi-backed LIV Golf.

Rahm earned $218m (£172m) and joins Ronaldo as the only two athletes to earn over $200m.

Third on the list is record eight-time Ballon d'Or winner Lionel Messi, who switched to Major League Soccer team Inter Miami, which helped the Argentine World Cup winner earn $135m (£107m).

The 36-year-old earned $65m (£51m) in on-field earnings but $70m (£55m) off it from deals with major sponsors such as Adidas and Apple.

Los Angeles Lakers forward LeBron James came in fourth at $128m (£101m), while fellow NBA star Giannis Antetokounmpo of the Milwaukee Bucks made fifth with $111m (£88m).

France football captain Kylian Mbappe dropped down to sixth with $110m (£87m).

French striker Karim Benzema, who also moved to Saudi Arabia, is eighth on the list with $106m (£84m), followed by Golden State Warriors guard Stephen Curry with $102m (£80m).

Lamar Jackson is the only NFL player on the list, in 10th place with $101m (£80m), thanks to the signing bonus negotiated into his new Baltimore Ravens contract last year.

The number of new pupils joining private schools has fallen by  2.7% since last year, according to the latest figures.

Data from the Independent Schools Council (ISC) shows families are now paying more than £18,000 a year on average to send their children to private school.

This is an 8% rise in school fees for the 2023-2024 academic year compared with the year before.

But as fees soar, figures show a 2.7% drop in the number of new pupil applications - this is the biggest fall since the ISC started collecting data in 2011.

Every Friday we get an overview of the mortgage market with independent experts from . Today, finance expert Rachel Springall outlines what's been happening within the buy-to-let market…

A handful of lenders moved to tweak the fixed rates they charge on buy-to-let mortgages over the past week. 

Paragon Bank launched some new "portfolio" and "green" fixed mortgages, and Aldermore pulled its limited edition five-year fixed rates, max 65% loan-to-value. 

Buckinghamshire Building Society also launched new deals onto the market, and Claire Askham, head of mortgage sales said: "The decision to increase our BTL lending to 80% represents a positive move for the sector as we continue to see landlords appraising their portfolios through divesting, refinancing and taking advantage of a variety of property-related opportunities as they arise."

Week on week, there has been minor moves to the overall average fixed buy-to-let rates, with the two-year remaining unchanged at 5.62% and the five-year falling by 0.02% to 5.59%.

This week the lowest two-year fix for buy-to-let customers at 75% loan-to-value comes from Metro Bank, priced at 4.19%, which charges a percentage booking fee of 5.00% of the mortgage advance and is available to second-time buyers and remortgage customers borrowing a maximum of £2m. 

There is another option from the same lender which carries an incentive package just for remortgage customers, but it has a lower maximum advance of £1.5m.

If you are looking to borrow more, then Suffolk Building Society has the lowest two-year fix for buy-to-let customers at 80% loan-to-value priced at 4.79% for second-time buyers and remortgage customers. 

The deal charges a percentage completion fee of 3.00% of the mortgage advance as well as a flat £199 booking fee.

Remortgage customers will receive a free valuation and free legal fees incentive.

A five-year fixed buy-to-let mortgage may be more appealing for you to guarantee your monthly repayments for longer. 

If you looking to borrow at 75% loan-to-value, HSBC has a deal for remortgage customers priced at 4.33%, which carries a free valuation and free legal fees incentive package but charges a flat £3,999 product fee.

If you are looking to borrow more, then Furness Building Society has the lowest five-year fixed buy-to-let deal at 80% loan-to-value priced at 5.39% for second-time buyers and remortgage customers. It charges a booking fee of £995 and includes an £250 cashback incentive. 

Remortgage customers will also receive a free valuation. This deal also happens to be a Best Buy for a five-year fixed deal at 80% loan-to-value.

Best Buy alternatives

The lowest buy-to-let rates may carry both a flat product fee and an arrangement fee which is based on a percentage of the mortgage advance, so a Best Buy package may be more suitable if you are looking to save on the upfront cost of any deal. 

You might also want a deal to cover a valuation or legal fees. A Best Buy buy-to-let mortgage could be the most cost-effective choice in this instance, but it's worth seeking advice before entering any arrangement.

This week the top packages on a two-year fixed buy-to-let deal at 75% loan-to-value comes from HSBC, priced at 4.69%, which comes with a free valuation and charges a £3,999 product fee and is available to second-time buyers. 

If you want a loan with a lower upfront fee, then HSBC also has a Best Buy deal priced at 4.94% at 75% loan-to-value, which carries a free valuation and charges a £1,999 product fee and is available to second-time buyers.

If you are looking to borrow more, then Furness Building Society has a Best Buy two-year fixed buy-to-let deal priced at 5.73% at 80% loan-to-value for second-time buyers and remortgage customers. It charges a fee of £995 and includes a £250 cashback incentive. Remortgage customers will also receive a free valuation.

A five-year fixed buy-to-let mortgage may be more appealing for you to guarantee your monthly repayments for longer. If you looking to borrow at 75% loan-to-value, HSBC has a Best Buy deal priced at 4.39%, which carries a free valuation and charges a £3,999 product fee. 

If you want a loan with a lower upfront fee, then HSBC also has a Best Buy deal priced at 4.64% at 75% loan-to-value, which carries a free valuation and charges a £1,999 product fee.

If you are looking to borrow more, then Furness Building Society has a Best Buy five-year fixed buy-to-let deal priced at 5.39% at 80% loan-to-value for second-time buyers and remortgage customers. 

It charges a booking fee of £995 and includes an £250 cashback incentive. Remortgage customers will also receive a free valuation. This deal also happens to be the lowest rate on a five-year fixed deal at 80% loan-to-value.

By James Sillars , business reporter

A lack of strong corporate updates did for the FTSE 100 on Thursday.

A flat end to the day has been followed by a flat end to the week, with the index falling almost 0.1% to 8,433 in early deals on Friday.

Very little around for investors to ponder.

Developments this morning included pharmaceutical firm GSK saying it had raised £1.25bn from selling its entire remaining stake in Haleon.

The consumer healthcare firm was spun out of GSK almost two years ago.

One other announcement of note came from Sainsbury's.

It revealed a five-year strategic partnership with Microsoft that will see generative AI used to boost personalised shopping experiences for consumers, improve search functions and make staff working practices more efficient.

The financial terms were not disclosed. Its shares were 0.4% higher.

Away from the equity markets, it's worth taking a quick look at how oil is finishing the week.

Brent crude is trading above $83 a barrel on evidence of rising demand.

Prices at these levels should not have an impact at the fuel pumps but small recent declines in average costs could be reversed if the upwards oil price trend continues.

Greggs will open eight stores in the next few weeks, as the company continues its expansion plans 

The bakery said it would open a total of 180 new branches before the end of this year. 

We were told earlier this year that the famous sausage roll-seller would open new stores in London, Cambridge and Sale, but Greggs has now revealed where its next eight new branches will be. 

Here are the locations of the eight new sights, revealed by the bakery to The Sun:

  • Saffron Walden, Market Place, England
  • Bangor, Carnarfon Road, Wales
  • Birmingham Prime Park, England
  • Brierley Hill, Merryhill, England
  • Consett Delves Lane Drive Thru, County Durham, England
  • Edinburgh, 60-61 Seafield Road, Scotland
  • Glasgow, Argyle St, Scotland
  • Porth, U3C Geilligron IE, Wales

Drivers are suffering from "unfairly high margins" on fuel sales, Energy Secretary Claire Coutinho has been warned.

In a letter to the cabinet minister, the RAC said the Competition and Markets Authority (CMA) must be given the power to take "meaningful action" against companies charging too much for petrol and diesel.

The average retailer margin - the difference between the amount they pay for fuel and the pump price - has been above 18p per litre for diesel since 7 May and is nearly 12p per litre for petrol, RAC head of policy Simon Williams wrote.

The long-term average for both fuels is 8p.

The RAC believes if retailers charged "fairer" margins, the average price of a litre of petrol and diesel would be around 145p, down from the current prices of 150p per litre for petrol and 157p per litre for diesel.

Mr Williams said the current margins being charged by larger retailers in particular were "extremely unfair on drivers struggling to get by in the cost of living crisis". 

"It's very concerning to see fuel margins at such high levels, particularly as this is happening under the close eye of the CMA and while retailers are voluntarily sharing their forecourt prices with the intention of increasing competition," he said.

The RAC spokesman added that the situation would only be improved in the long-term if the CMA took "meaningful action against retailers whose margins are deemed not to be mirroring significant reductions in the cost of wholesale fuel".

It can be hard to balance the demands of eating well without spending a lot.

In this series, we try to find the healthiest options in the supermarket for the best value - and have enlisted the help of  Sunna Van Kampen , founder of Tonic Health, who went viral on social media for reviewing food in the search of healthier choices.

In this series we don't try to find the outright healthiest option, but help you get better nutritional value for as little money as possible.

This time we're looking at meat. 

"When it comes to which type of meat you buy, there's a common misconception the more expensive the cut the healthier it is," Sunna says.

"But fatty meat stores more nutrients than their lean counterparts - vitamins like A, D, E, and K are fat-soluble and stored in animal fat - so, a fillet steak may contain less nutrients than its fatty cousin," he adds. 

The science

We typically turn towards leaner cuts of meat due to the common belief that saturated fat from animals is something to be avoided. 

"Yet, the latest science suggests that saturated fat and cholesterol may not be as harmful as researchers once thought they were," Sunna says.

He points to a  2020 review  in the National Library of Medicine that looked at several studies on saturated fat and heart disease - and found that the association between the two appeared to be weak.

That being said, a large amount of fat in your diet is in no way advisable - but don't be afraid to introduce fattier cuts. 

Sunna swears by mincemeat - preferring it to steak if choosing the fattier kind. 

Most supermarkets sell somewhere between 5-20% versions - and Sunna urges shoppers to put the higher percentages in their baskets. 

"Mince beef with higher fat content isn’t just about the added fat-soluble vitamins; it's also about what comes with it," he says.

"The added tendons, ligaments and connective tissue in mince beef provides collagen."

Collagen is a protein - full of amino acids that supports the structure of your skin, hair, and nails. 

It also plays a vital role in maintaining the integrity of your joints and connective tissues. 

"By choosing mince beef with 20% fat, you're getting a broader nutritional profile, including those collagen benefits," he says. 

Using prices from major supermarkets, Sunna compares his the money and the health for major beef products... 

  • Fillet steak: Around £35/kg, it's the most expensive cut and doesn't provide as many health upsides as other, cheaper options
  • Ribeye steak : Around £24/kg, with added fat that offers more fat-soluble vitamins.
  • Rump steak: Around £15/kg, it’s one of the most economical ways to steak and that nice rind of fat will give you the added nutrition.
  • Steak mince beef 5% fat: Around £7/ kg, it's premium mince but at over half the price of steak, making a great affordable option, but the lower fat content is only really good for reducing the calories.
  • Mince beef 20% fat: Priced at about £5/kg, it's one of the most affordable options that gives you the most health upside - with all the added fat-soluble vitamins, omega 3s and collagen. 

"Swapping a fillet steak a week to 20% mince could save you £182.52 a year and you'd be increasing your nutrition intake considerably," Sunna says.

"Not only does mince beef save you money, but it also provides a versatile base for countless dishes - burgers, meatballs, bolognese, tacos -the possibilities are endless."

Organics and grass-feds

"Whilst all unprocessed meat is healthy, there are benefits to the quality of your meat," Sunna continues. 

"Typically, a local grass-fed cut of meat has higher omega-3 fatty acids which are beneficial for heart and brain health - up to 6x more  in fact than feed-lot cattle," he adds. 

These can often be far more expensive, however. 

"Choosing between fillet steak and mince beef doesn't have to be a battle of indulgence versus health - both have their unique nutritional benefits, but when it comes to a cost-effective, nutritious option, mince beef with 20% fat takes the win," he says.

The nutritionist's view, from Dr Claire Shortt, lead scientist at  FoodMarble ...

While it's fine to consider cheaper cuts of beef over say filet mignon, it's best to moderate red meat intake given potential links to certain cancers. 

Processed meats are more problematic again, especially from a bowel or stomach cancer perspective. In fact, the World Health Organisation classifies them as a Class I carcinogen (i.e. "known to cause cancer"). 

Read more from this series... 

The number of UK bank branches that have closed forever passes 6,000 today, according to the consumer group Which?

Which? said eight Barclays branches were shutting their doors today, taking the total by the end of the day to 6,005.

This equates to more 60% of the bank branch network since Which? began tracking closures in 2015.

The eight Barclays closures relate to branches in Alperton in Wembley, Andover in Hampshire, Bangor in County Down, Bracknell in Berkshire, Hornchurch in Essex, Inverness in the Highlands in Scotland, Liverpool and Streatham in London.

Barclays has closed 1,216 branches, according to Which?

NatWest Group, which comprises NatWest, Royal Bank of Scotland and Ulster Bank, has closed 1,360 branches and Lloyds Banking Group, made up of Lloyds Bank, Halifax and Bank of Scotland, has shut 1,146 sites, the consumer group said.

Which? said 200 closures by various banks were already scheduled for the rest of 2024.

Currently, 24 more bank branch closures have been scheduled for 2025, although more are expected to be announced later this year and next, it added.

While millions of consumers have made the switch to banking digitally, there remains a significant number of people who are not yet ready or willing to make that jump, underscoring the need for accessible alternatives, Which? said.

Sam Richardson, deputy editor of Which? Money, said the closures showed a "seismic shift" had taken place in terms of our banking habits and the character of the British high street.

"While some may hardly notice the closure of their local branch as they seamlessly switch to online banking, for others reliant on face-to-face services, the impact can be disastrous," he said.

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money makes me happy essay


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