Can Money Buy Happiness?

the best thing

By Amy Hackworth. Image by Caravan Shoppe.

We’ve heard repeatedly since we were young that money doesn’t buy happiness, but it can be tempting to test the theory out on our own, just to be sure. If you’re driving an old car, it’s hard to imagine you wouldn’t be a little happier with better gas mileage and air conditioning that actually works. And what if you could buy that perfect sofa that’s several hundred dollars out of your price range? Isn’t it possible that would make you just a bit happier?

Research by professors Elizabeth Dunn and Michael Norton suggests that, for the most part, the old adage is true. A new car, or even a new house, doesn’t affect our happiness for long. Although we might experience initial excitement or enthusiasm for those kinds of purchases, we’re wrong when we predict they’ll make us happier.

Dunn and Norton cite a German study that followed people who moved into a new home because they didn’t like something about their old home. The German researchers found that five years later residents were more satisfied with their housing, but they were absolutely no more satisfied with their lives.

But there is a way to spend money that does impact our happiness, and that’s to spend it on other people. In Dunn and Norton’s studies, they give money to participants and ask them to spend it on themselves or on others. Invariably, the people who spend the money on others report being happier than those who spend the money on themselves. Interestingly, the amount can be as a little as $5 and still have a measurable impact on happiness at the end of the day.

Do you ever feel tempted to hinge happiness on something you’d like to buy for yourself? Or does this research simply confirm what you’ve known all along? Are you likely to change your spending habits after reading about this research? And what’s the best purchase you’ve made for someone else?

P.S. Warren Buffett’s thoughts on giving away 99% of his wealth make for an interesting read.

28 thoughts on “Can Money Buy Happiness?”

  1. WOW, fantastic post! Okay, so if that is true, HOW do we teach this to children? Will they feel the happiness if they give that five dollars to someone else, or will they feel they have been cheated? I do LOVE helping other people – even if I never see the results, I think it is so great to share. This article is really significant for me right now because I’m trying to decide about a purchase and sometimes I do ask myself that question, “WIll this really increase my happiness?” And, of course, I know it won’t. So, why can’t I just not give up on buying the item?!?!??! Thanks for this post, Amy. How do you do it every week? Such provocative issues that make us dig deep inside. Love it.

    1. It is like therapy! Weekly digging is good I agree:) Like you, I am a giver – would much rather spoil others than receive and do so on a regular (big and small) basis!

  2. No. But it can put a smile on our faces if only for a while. It always feels good to donate to a cause or help someone out. But it also feels great to buy that pair of boots or shoes…sigh.

  3. I have pondered the money-happiness correlation very often so I’ll keep comments about my understanding of it short. I can imagine that the happiness level when attaining monetary gain and the items that come with it could be short lived but it is tempting indeed to hope for! The grass is always greener…I guess my best explanation would be that money will enhance what is already there (in your life) and that IS a good thing. It cannot fix, complete nor create the happiness factor for anyone. DO I dream about having millions more (or even millions lol)? Of course, but I must say I feel I’d use this to not buy a super mansion or blow it all right away (although that could be someone else’s happiness and I respect that:) – I would move my family into a farmhouse I’ve lusted after for a long time basically because we are land-loving people and the acres would be a wonderful place to exist each day and get us away from the small city that is heavily filled with violence these days. I would help my son start his business (even though I know he’ll attain this one day) and I’d love to be able to breathe from the stress of monthly bills. These things would truly improve our lives, therefore make me happier I do believe. So, in that way, money could make someone happy I suppose…Most importantly, my day to day relationships would continue to be the source of my happiness as they are today! I am lucky for that I know. I cherish my time with family young and old, and these bonds fuel me and make me rich! ♥

  4. These are all lovely points — but this study overlooks the many documented ways money DOES by happiness. Ask any mother who cannot afford adequate food or healthcare for their children. The angst that accompanies such strife makes the flip side of the life lottery appear to be pure bliss.

    And oh! The irony of this post appearing on this site, which becomes more and more realistic each day. It’s kind of sad, really.

    As is the fact that I know my post will be deleted, to continue to keep up appearances, shiny happy consumer appearances that is.

    1. Hmmm…. As I am currently in the dire straits you talk about, i take issue with the idea that money buys happiness. My family cannot currently afford health insurance and are struggling to put food on our table. But I don’t believe that having easy access to either of those things will bring me any greater happiness. Peace? Yes! Less stress? Definitely. But I don’t buy into the idea that the flip side is bliss. Happiness is less about money than it is about our own ability to find joy in the little things of life. And I’m very grateful to Amy for this lovely post that reminds me that I can be blissfully happy despite my current situation.

    2. Hi Karen. I want to address the idea that your comment would be deleted. There’s simply no basis to assume that.

      Among the thousands and thousands of comments I’ve received this year, I can tell you, I’ve only deleted 5, and all 5 were comments that attacked home tour guests. Would you allow readers to attack your guests on your website? Or in your home? Of course not.

      But I’m more than open to a good discussion and try to make lots of room for all sides and all viewpoints. Here are two examples:

      I rarely erase comments because discussions on Design Mom are typically very civil. You are sincerely welcome to disagree with viewpoints expressed here. Several readers do in this post alone.

    3. I have read other studies, that say in fact money buys happiness until all basic needs are met. Beyond that it does not bring inner happiness. is a great place to read more about this subject.

      1. Carrie – I agree with this completely! I work on staff engagement in my job and it’s the same – more pay only improves staff satisfaction/happiness until they are paid enough to take the issue off the table (they make enough to meet their living expenses and needs). Beyond that, money is not a motivator at work. Instead it’s autonomy, mastery, and purpose that contribute to satisfaction.

      2. Carrie…completely agree with this point. I am reading The Happiness Project right now (as well as Happier at Home as I often read several books at once) and love them both. I am actually reading now the chapter dedicated to this topic and it’s very interesting.

        I agree though that it’s not so much how much money you spend, but that you spend in a thoughtful and intentional way. Also, it’s not so much that people want to BE millionaires, they just want to live and vacation and feel like millionaires. There is a whole chapter on this in the book The 4-hour Work Week that is really interesting.

  5. I love this so much. We’re such little coveters. We can’t help but want want want. (The capitalists know just what they’re doing). But I notice whenever I overspend on myself I have this sticky, gluey, icky feeling which amounts, I suppose, to a low-grade shame. Where any time I really think about what someone else might want and find it for them I feel light and noble. Which I suppose, in its own way, is greedy.

  6. The other day I was laying on my bed looking at the nightstand I bought, on a whim, at a little antique store about two years ago. It was priced too high and I regretted the purchase for a couple of days. But now? I’m so glad I bought it; I love it so much and it does make me happy. Of course, treating others also makes me happy.

    I do think money can buy us “happiness” if it improves our lifestyle – like being able to afford healthcare as one person mentioned, being able to keep up with bills, or going on an amazing trip.

  7. I always find happiness in reading this blog, because it is not purely about consuming and buying but about being creative with what you have. It really cured me in a way to find that on the internet.
    We used to be VERY poor with a little baby at home but my boyfriend is a real giver and believes that this is how the universe works. Whenever we get, we give, to homeless people, street musicians, waiters, friends. And even when we were poor we had more than some of our friends and sometimes would throw dinner parties (just soup and a bottle of wine, really) in the cold Berlin winter time just to gather around and appreciate that we all found our homes here.
    We also like to spend money on buying nice things for ourselves but never the same thing twice. When we were poor, we spoiled ourselves by buying a beautiful couch (paid by installments) and we still have it and love it and it would have to fall apart before we’d buy a new one.
    Money works best when it is floating around, coming and going, getting and giving. And it is true, it aso makes you happy, when you share it.

  8. I love this post, Amy! In my experience, I think I resonate most with Val’s comment above. When I think of our 8 years in New York (which weren’t that long ago!), among all the happy memories, I can also recall lots of stress around money and the lack of it. Goodness, we were in graduate school, and had lots of kids in a really expensive area of the country. It was rough sometimes!

    So perhaps money doesn’t increase happiness, but does decrease stress? Has anyone else experienced that?

    And I fully agree with the part about spending money on others. Even texting $10 to a favorite cause can up my happiness quotient for the day.

    1. I totally agree: it decreases stress. Which sometimes stands between you and happiness. I was very very stressed being pregnant and poor in a new city with very little support system. Still: Very beautiful things happened back then which made me happy. But I don’t miss the money stress. At. All.
      It is a terrible thing when you feel, you can’t control it.
      But being stressed and being unhappy is not the same thing.

    2. Thanks for this Gabrielle- I truly agree with this point. I don’t believe money makes you happy, but stress about money sure can suck happiness. We have intentionally had 4 children, but every (wanted and loved) child has meant a big financial drop (as I take time off work to be with them) and accompanying stress. Our youngest is 3 and slooowwwwly the money stress is lifting. I am so glad we had all 4, and I’m also glad that the lean years (while lovely in many many ways) are passing and a new era will come with a bit more money for easy payment of electricity bills, extra curricular school activities, house stuff and maybe even some nice holidays :0)

  9. I love the quotes about money cant buy happiness? then that person just doesn’t know where to shop! lol
    But on a more serious side we know that if you weren’t happy before you got the money, money doesn’t really improve your happiness after.

    It can be hard to think if only I owned a home, if only I could afford a decent car, If only I could afford extra curricular activities for my kids…. but we can still be happy family without these things (and we are) its hard not to get caught up in thinking that these would make us happier.

    I heard about a study that looked at people of all wages (very rich to very poor) and most people seemed to think they would be happier/could cope financially if they just earnt 20% more. This came out across the board at all incomes. I heard it in a talk about money management and it was suggested that if we are careful with our money we can keep that 20% and not fall into financial debt (which is probably why people thought they would be happier with just 20% more – to afford the things they want/to pay for their debts)

    its hard not to think that way. but I’ve seen even the poorest people can be happy, and we’ve all seen mega rich celebrities/sports stars who aren’t or who are plagued with problems. Sometimes money creates more problems.

  10. My Father has always said, “Money won’t make you happy but lack of money can make you miserable.” He meant what many have echoed here – if you don’t have money for the needs of life (not the wants) then not having money can make for very unhappy, stressful circumstances. Having money allows you the freedom not to worry about taking your child to the doctor or having your car fixed. For me, it’s not happiness money buys – it’s the peace I have knowing that our basic needs can be met.

  11. The first thing that came to mind when I read this post is the saying “Wherever you go, there you are.” Nothing is ever perfect (we moved to the country and have peace and trees, but oh the driving!), so I suppose it’s how we handle the imperfections that matters. I’m still working on that!

    I have this quote on my board: “As we grow older and realize more clearly the limitations of human happiness, we come to see that the only real and abiding pleasure in life is to give pleasure to other people.” P. G. Wodehouse

  12. I agree, and I agree about needing the basic things in life. I heard a great quote that I think summed it up perfectly. It was something like, ‘Money is like oxygen: If you have it, you don’t think much about it. If you don’t have it, it quickly becomes your #1 priority.’

  13. There actually is a ton of research on this question, but it’s all fraught with methodological issues that have yet to be resolved. For example, those people who chose to buy things for others ended up reporting that they were more happy- but what way does the causal arrow go? One could easily argue that people who are more happy to begin with are more likely to buy things for other people. Ideally you would want to randomly group people into two groups- have one buy things for others and one forced to buy something for themselves- that would give you a better idea of the impact of purchasing for others on happiness outcomes.

    Moreover, there is a TON of research that suggests that higher incomes are indeed tied to more happiness (let’s not kid ourselves here and end up glamorizing the poverty line as the “simple” life). I pasted a recent abstract by Kahenman and Deaton from work that can be found at at the National Academy of Sciences below- in sum they find increasing happiness up until 75K. All in all this makes sense to me, income matters, up to a point where you start to get diminished or flattened returns.

    In any case, while I like this post, I am skeptical of the claims made by Dunn and Norton. Let’s be careful not to draw broader conclusions from fairly narrow work.

    High income improves evaluation of life but not emotional well-being
    Daniel Kahneman and Angus Deaton
    Recent research has begun to distinguish two aspects of subjective well-being. Emotional well-being refers to the emotional quality of an individual’s everyday experience—the frequency and intensity of experiences of joy, stress, sadness, anger, and affection that make one’s life pleasant or unpleasant. Life evaluation refers to the thoughts that people have about their life when they think about it. We raise the question of whether money buys happiness, separately for these two aspects of well-being. We report an analysis of more than 450,000 responses to the Gallup-Healthways Well-Being Index, a daily survey of 1,000 US residents conducted by the Gallup Organization. We find that emotional well-being (measured by questions about emotional experiences yesterday) and life evaluation (measured by Cantril’s Self-Anchoring Scale) have different correlates. Income and education are more closely related to life evaluation, but health, care giving, loneliness, and smoking are relatively stronger predictors of daily emotions. When plotted against log income, life evaluation rises steadily. Emotional well-being also rises with log income, but there is no further progress beyond an annual income of ~$75,000. Low income exacerbates the emotional pain associated with such misfortunes as divorce, ill health, and being alone. We conclude that high income buys life satisfaction but not happiness, and that low income is associated both with low life evaluation and low emotional well-being.

  14. hiya, I wanted to add to this great discussion with a personal note. I never imagined that when I grew up and had a family I would not have a house or a car (like everyone else). But here I am at 35 yrs. old, renting a small cottage and walking, riding bikes or taking public transit everywhere and being immensely satisfied. Our life is simple and we are happy with these decisions. We are lucky to live in Berkeley so that its possible for us.

  15. Money provides choice. Without it, options are often limited. But people with ample money still have to choose happiness, whatever that means for them.

  16. Pingback: Money CAN Buy Happiness…If You Give It Away |

  17. What a beautiful thought!

    You can’t tell me that having enough money to pay your bills wouldn’t make you happier, because I know it does. My brother who makes a lot of money has two autistic children and when I complain about not having enough money he says everybody has their own trials and not to wish for somebody else’s. But seriously, the constant worry, the stomachaches every night wondering how you’re going to pay your bills…I wouldn’t wish that on anyone. When we finally moved out of UT and my husband was able to make a salary above poverty level (with a masters degree!) it DID make us happier. We don’t make enough to give away, but having enough to cover the bills is absolutely better than not.

  18. As a Happiness Coach, I can attest to the fact that money does not buy happiness. Studies have shown that if you live in the US and have an average household income of $50k, your level of happiness will no longer increase for sustained periods of time based on more money. This is because we all have a baseline in our brains. In other words, if you are making $75k a year, your lifestyle adjusts to that budgetary amount. When you get a raise for $100k a year, you momentarily will be elated at your new financial status, but quickly your baseline will reset to your new lifestyle, leaving you once again longing for more.

    That said, money can help pay for experiences – like travel, or enable us to be more charitable – both things that have shown to increase your level of satisfaction and authentic happiness. =)

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