Happiness, Money, and Giving It Away

Would you be happier if you were richer? Many people believe that they would be. But research conducted over many years suggests that greater wealth implies greater happiness only at quite low levels of income. People in the United States, for example, are, on average, richer than New Zealanders, but they are not happier. More dramatically, people in Austria, France, Japan, and Germany appear to be no happier than people in much poorer countries, like Brazil, Colombia, and the Philippines.

Comparisons between countries with different cultures are difficult, but the same effect appears within countries, except at very low income levels, such as below $12,000 annually for the US. Beyond that point, an increase in income doesn’t make a lot of difference to people’s happiness. Americans are richer than they were in the 1950’s, but they are not happier. Americans in the middle-income range today – that is, a family income of $50,000-$90,000 – have a level of happiness that is almost identical to well-off Americans, with a family income of more than $90,000.

Most surveys of happiness simply ask people how satisfied they are with their lives. We cannot place great confidence in such studies, because this kind of overall “life satisfaction” judgment may not reflect how much people really enjoy the way they spend their time.

My Princeton University colleague Daniel Kahneman and several co-researchers tried to measure people’s subjective well-being by asking them about their mood at frequent intervals during a day. In an article published in Science on June 30, they report that their data confirm that there is little correlation between income and happiness. On the contrary, Kahneman and his colleagues found that people with higher incomes spent more time in activities that are associated with negative feelings, such as tension and stress. Instead of having more time for leisure, they spent more time at and commuting to work. They were more often in moods that they described as hostile, angry, anxious, and tense.