Yes, money can buy happiness
Does money buy happiness? We certainly behave as though it does, spending most of our waking hours pursuing it. If only we got that raise, owned that second home, third car or 3G iPad, things would be better, we tell ourselves. We would finally be happy.
Truth be told, people drastically overestimate the impact of changes in income on their well-being. In a survey I conducted with my colleagues Elizabeth Dunn and Lara Aknin at the University of British Columbia, we asked 315 Americans to rank their happiness on a 100-point scale and predict how happy they would be if they made ten different incomes, ranging from $5,000 up to $1,000,000. Those who reported earning $25,000 a year predicted that their happiness would double if they made $55,000. But when we measured the actual happiness of these two groups, the change was only 7%. Beyond that, our data showed that once people reach the median income in the U.S. (about $60,000), the happiness return on additional income is very small.
Hapless lotto winners, take heart. We did discover at least one way to buy happiness with your money: Give it away.
Why might this be the case? We hypothesize that making more money leads people to accumulate more and more material goods, but not to accrue the things that really make people happy--relationships with others. Think of the wealthy person who buys three homes with 15 guest bedrooms--yet finds himself without any friends or family to host. Even shopping, Americans` longtime preferred method of social interaction, now requires no social interaction at all. You can fill your 16-bedroom home with goods without leaving it. All you need is a cable modem and a PC.
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