Will having more money make me happier?
— Karl Johnston, Glasgow
Dear Mr Johnston,
I have been asked the secret of happiness before, but your question is rather specific. To answer it we need to turn to economist Andrew Oswald.
He has worked with numerous collaborators to calculate a “happiness equation”, based on analysing thousands of people’s responses to questions about their contentment. His conclusion is that, assuming nothing else changes, more money makes them happier. He backs it up with a piece of work studying what happens to people who unexpectedly win lotteries – they, too, become happier.
This is what economists expect; not because we believe that people value money for its own sake, but because money can buy all kind of things, and if none of them brought you any pleasure you’d have to be an exceptionally incompetent shopper.
So the simple answer to your question is yes, more money will make you happier. But be careful – simply pursuing money will not, if your relationships, health or job security suffer. Oswald shows that these are vastly more important than money. Getting married produces £70,000-a-year’s worth of joy, although given the cost of weddings these days that’s not much of a bargain. Staying healthy and employed are more important still, worth tens of thousands of pounds a month.
Envy plays a sinister role. Oswald shows that happiness increases with higher income, but it falls with higher expectations. The higher the income of your peer group the more depressed you tend to be. This is not good news for you: since you ask smart questions and read the Financial Times, you must expect a lot out of life. Oswald suggests that you are likely to be disappointed.
Published on ft.com