September 8, 2010

Can Money Buy You Happiness?

Have you ever been told money can't buy happiness? Well according to two researchers, money can buy happiness. At least to a point!

People's emotional well-being -- happiness -- increases as their income increases up to about $75,000, the researchers report in Tuesday's edition of Proceedings of the National Academy of Sciences.

Angus Deaton, an economist at the Center for Health and Wellbeing at Princeton University, told the Associated Press (AP) that for people who make less than that "stuff is so in your face it's hard to be happy. It interferes with your enjoyment."

Surveys of 450,000 Americans conducted in 2008 and 2009 were reviewed by Deaton and his colleague Daniel Kahneman. The surveys were conducted for the Gallup-Healthways Well-Being Index and included questions on people's everyday happiness and their overall satisfaction with life.

Their happiness increased as their income did, but the effect leveled off at about 75,000 dollars, said Deaton. On the other hand, their overall sense of success continued to rise as their earnings increased even further.

Making more than $75,000 is not going to make people happier or change their daily mood, "but it is going to make them feel they have a better life," Deaton said in interview with the AP.

Someone who goes from a $100,000-a-year job to a $200,000 one realizes an improved sense of success. But that doesn't necessarily mean they are going to be happier, said Deaton.

Kahneman, a Nobel Prize winning psychologist, and Deaton carried out the study to learn more about economic growth and policy. Some have questioned the value of growth to individuals, and Deaton said they were far from resolving the question.

He added, however, "Working on this paper has brought me a lot of emotional well-being. As an economist I tend to think money is good for you, and am pleased to find some evidence for that."

Overall, as with other studies of well-being, "we found that most people were quite happy and satisfied with their lives," the researchers said.

Comparing their results of happiness with those of other countries, Deaton and Kahneman said the United States ranked ninth after the Scandinavian countries, Canada, the Netherlands, Switzerland and New Zealand.

The research was supported by the Gallup Organization and the National Institute on Aging.


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