Does Earning More Money Lead To Greater Well-Being?

Have you heard the phrase, "money doesn't buy you happiness"? I have. About a million times, and whilst there is absolutely some truth to this, a new study is putting holes in this once widely held belief.

Before you read any further, just ask yourself, what is it that you believe about this statement?

What we are talking about it well being, and it can be studied in two ways; experienced well-being: people’s feelings during the moments of life or evaluative well-being: people’s evaluation of their lives where they are reflective about the past. 

The University of Pennsylvania study conducted in 2020, showed that "...over one million real-time reports of experienced well-being from a large US sample show evidence that experienced wellbeing rises linearly with log income, with an equally steep slope above $80,000 as below it. This suggests that higher incomes may still have potential to improve people’s day-to-day well-being, rather than having already reached a plateau for many people in wealthy countries." Fascinating, right?

Most studies have used evaluative well-being as their measure, but this new study used experienced well-being as their measure and the results are surprising many. They used data collected from Track Your Happiness, a scientific research project that investigates what makes your life worth living.  

Previous studies had a theory that once your basic needs are met, a higher income doesn't impact happiness or well-being, but this new study shows that larger incomes ARE associated with greater experienced and evaluative happiness.  

The study looked at people on incomes below $80,000 and above $80,000. It's fascinating research because it shows that for people  on an income under $80,000, spending money reduced negative feelings. And for people who earn more than $80,000, spending money increased their enjoyment. 

They were also asked this question: "To what extent do you feel in control over your life?" This accounted for 74% of the association between income and experienced well-being. 

Have you heard of the theory of relative deprivation? It says that satisfaction is NOT based on objective reality, but our circumstances relative to the experiences of those around us. It shows that the higher the level of affluence in the group studied, the higher the level of relative deprivation.  

Finally, did you know that the more people VALUE happiness, the lower their overall well-being is? My mind boggled when I first read this, but it makes sense if we are suppressing our feelings. When we try to feel happy, and we push aside or avoid difficult thought and feelings, things that need our attention, this often backfires and creates more unhappiness. 

So, does having this new information change the way you think about money and happiness? It got me questioning my beliefs and where I have picked them up from and so much more. What about you?

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