money is not important for happiness essay

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Does More Money Really Make Us More Happy?

• Elizabeth Dunn
• Chris Courtney

A big paycheck won’t necessarily bring you joy

Although some studies show that wealthier people tend to be happier, prioritizing money over time can actually have the opposite effect.

• But even having just a little bit of extra cash in your savings account ($500), can increase your life satisfaction. So how can you keep more cash on hand?
• Ask yourself: What do I buy that isn’t essential for my survival? Is the expense genuinely contributing to my happiness? If the answer to the second question is no, try taking a break from those expenses.
• Other research shows there are specific ways to spend your money to promote happiness, such as spending on experiences, buying time, and investing in others.
• Spending choices that promote happiness are also dependent on individual personalities, and future research may provide more individualized advice to help you get the most happiness from your money.

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How often have you willingly sacrificed your free time to make more money? You’re not alone. But new research suggests that prioritizing money over time may actually undermine our happiness.

• ED Elizabeth Dunn is a professor of psychology at the University of British Columbia and Chief Science Officer of Happy Money, a financial technology company with a mission to help borrowers become savers. She is also co-author of “ Happy Money: The Science of Happier Spending ” with Dr. Michael Norton. Her TED2019 talk on money and happiness was selected as one of the top 10 talks of the year by TED.
• CC Chris Courtney is the VP of Science at Happy Money. He utilizes his background in cognitive neuroscience, human-computer interaction, and machine learning to drive personalization and engagement in products designed to empower people to take control of their financial lives. His team is focused on creating innovative ways to provide more inclusionary financial services, while building tools to promote financial and psychological well-being and success.

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However you spend it, money isn’t the key to happiness

Research Fellow at Stirling Management School, University of Stirling

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Christopher Boyce receives funding from the Economic and Social Research Council.

University of Stirling provides funding as a member of The Conversation UK.

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How important, if at all, is having more money for our happiness and well-being? Unsurprisingly this question stimulates a lot of opinion and debate. But are people accurate in their predictions about the benefits of having money?

A new study published in the Journal of Positive Psychology highlights that people are often mistaken in how spending our money might benefit our lives. People are prone to forecasting errors – that is, they mistakenly predict future events to be better or worse than they actually turn out to be.

In this latest study the researchers show that people predict that buying material possessions will be a better use of money than spending instead on life experiences. But once the purchases are had, the experience is what’s perceived to have been a better use of money, resulting in higher well-being. More or less, this confirms findings from other studies . And so it seems that a focus on having as opposed to being may limit human potential.

But what does this new study tell us about the importance of money for both happiness and well-being more generally? On the whole money matters much less than people think and has led some to conclude simply that money doesn’t make us happy because we aren’t spending it right .

My own research has also illustrated that we probably don’t spend our money on the things most beneficial for well-being. For example, we have shown that spending on psychological therapy would be an extremely cost-effective way of raising well-being . But, the message from our research is not that we should just spend our money better and that people underestimate the effect of purchasing certain things, as the authors claim in the latest study. Instead, our work highlights just how relatively unimportant money is at raising individual well-being compared to other more important things.

More to life than money

How to spend our money is not the only choice we have – we also have choices as to how we should live our lives and whether in fact we should spend so much time and energy pursuing money in the first place. Thus when we are trying to understand the importance of money for well-being it is one thing to compare types of spending, but really we should be comparing how important money is in relation to other things.

The reality is that how much someone earns contributes very little to their sense of well-being compared with other things such as social relationships, physical and mental health or how a person relates to the world around them. Focusing directly on these factors would probably do much more for our well-being rather than how we chose to spend our money.

We have demonstrated that personality change, for example, contributes substantially more to changes in well-being than income factors . People who, for example, become more open to new experiences or emotionally more stable, are much more likely to experience larger well-being changes than any change to their income.

Being materialistic is well-known to be detrimental to an individual’s well-being. Those that pursue wealth and possessions consistently report lower well-being than those that don’t.

So a better question to address than how we should spend our money is: “Why does more money seem to bring us very little well-being even though we often predict otherwise?”

Money and social standing

One reason is that people don’t care about how much money they have per se, but care more about the social position that their income gives them . But increases in an individual’s income won’t necessarily equate to a growth in social standing. And, while people may think that an income increase will bring greater well-being, this may not factor in that everyone else may experience an income increase at the same time.

It’s also been shown that income losses have a much greater impact on well-being than equivalent income gains . This suggests that any benefit that accrues from an income rise, whether at the individual or national level, may be completely wiped out by much smaller income losses. The importance of income is therefore not in obtaining it, but avoiding losing it. Only once it’s obtained does income become essential to maintain your current level of well-being and this may partly explain why it is believed to be so important for well-being.

The question as to whether more money brings greater happiness comes up time and time again and will no doubt continue to do so. Indeed it is an important question and how we spend our money is of course important – if we have money then of course it makes sense to use it wisely. But it would be a mistake to let the pursuit of money for the sake of happiness distract us away from the things in life that simply matter more.

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Home — Essay Samples — Philosophy — Philosophy of Life — Money Doesn’t Always Buy Happiness

Money Doesn't Always Buy Happiness

• Categories: Money and Class in America Philosophy of Life Social Justice

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Published: Mar 16, 2024

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The relationship between money and happiness, the limits of wealth, alternative paths to happiness.

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Can Money Really Buy Happiness?

Money and happiness are related—but not in the way you think..

Updated November 10, 2023 | Reviewed by Chloe Williams

• More money is linked to increased happiness, some research shows.
• People who won the lottery have greater life satisfaction, even years later.
• Wealth is not associated with happiness globally; non-material things are more likely to predict wellbeing.
• Money, in and of itself, cannot buy happiness, but it can provide a means to the things we value in life.

Money is a big part of our lives, our identities, and perhaps our well-being. Sometimes, it can feel like your happiness hinges on how much cash is in your bank account. Have you ever thought to yourself, “If only I could increase my salary by 12 percent, I’d feel better”? How about, “I wish I had an inheritance. How easier life would be!” I don’t blame you — I’ve had the same thoughts many times.

But what does psychological research say about the age-old question: Can money really buy happiness? Let’s take a brutally honest exploration of how money and happiness are (and aren’t) related. (Spoiler alert: I’ve got bad news, good news, and lots of caveats.)

Higher earners are generally happier

Over 10 years ago, a study based on Gallup Poll data on 1,000 people made a big headline in the news. It found that people with higher incomes report being happier... but only up to an annual income of $75,000 (equivalent to about $90,000 today). After this point, a high emotional well-being wasn’t directly correlated to more money. This seemed to show that once a persons’ basic (and some “advanced”) needs are comfortably met, more money isn’t necessary for well-being.

But a new 2021 study of over one million participants found that there’s no such thing as an inflection point where more money doesn’t equal more happiness, at least not up to an annual salary of $500,000. In this study, participants’ well-being was measured in more detail. Instead of being asked to remember how well they felt in the past week, month, or year, they were asked how they felt right now in the moment. And based on this real-time assessment, very high earners were feeling great.

Similarly, a Swedish study on lottery winners found that even after years, people who won the lottery had greater life satisfaction, mental health, and were more prepared to face misfortune like divorce , illness, and being alone than regular folks who didn’t win the lottery. It’s almost as if having a pile of money made those things less difficult to cope with for the winners.

Evaluative vs. experienced well-being

At this point, it's important to suss out what researchers actually mean by "happiness." There are two major types of well-being psychologists measure: evaluative and experienced. Evaluative well-being refers to your answer to, “How do you think your life is going?” It’s what you think about your life. Experienced well-being, however, is your answer to, “What emotions are you feeling from day to day, and in what proportions?” It is your actual experience of positive and negative emotions.

In both of these studies — the one that found the happiness curve to flatten after $75,000 and the one that didn't — the researchers were focusing on experienced well-being. That means there's a disagreement in the research about whether day-to-day experiences of positive emotions really increase with higher and higher incomes, without limit. Which study is more accurate? Well, the 2021 study surveyed many more people, so it has the advantage of being more representative. However, there is a big caveat...

Material wealth is not associated with happiness everywhere in the world

If you’re not a very high earner, you may be feeling a bit irritated right now. How unfair that the rest of us can’t even comfort ourselves with the idea that millionaires must be sad in their giant mansions!

But not so fast.

Yes, in the large million-person study, experienced well-being (aka, happiness) did continually increase with higher income. But this study only included people in the United States. It wouldn't be a stretch to say that our culture is quite materialistic, more so than other countries, and income level plays a huge role in our lifestyle.

Another study of Mayan people in a poor, rural region of Yucatan, Mexico, did not find the level of wealth to be related to happiness, which the participants had high levels of overall. Separately, a Gallup World Poll study of people from many countries and cultures also found that, although higher income was associated with higher life evaluation, it was non-material things that predicted experienced well-being (e.g., learning, autonomy, respect, social support).

Earned wealth generates more happiness than inherited wealth

More good news: For those of us with really big dreams of “making it” and striking it rich through talent and hard work, know that the actual process of reaching your dream will not only bring you cash but also happiness. A study of ultra-rich millionaires (net worth of at least $8,000,000) found that those who earned their wealth through work and effort got more of a happiness boost from their money than those who inherited it. So keep dreaming big and reaching for your entrepreneurial goals … as long as you’re not sacrificing your actual well-being in the pursuit.

There are different types of happiness, and wealth is better for some than others

We’ve been talking about “happiness” as if it’s one big thing. But happiness actually has many different components and flavors. Think about all the positive emotions you’ve felt — can we break them down into more specifics? How about:

• Contentment
• Gratefulness

...and that's just a short list.

It turns out that wealth may be associated with some of these categories of “happiness,” specifically self-focused positive emotions such as pride and contentment, whereas less wealthy people have more other-focused positive emotions like love and compassion.

In fact, in the Swedish lottery winners study, people’s feelings about their social well-being (with friends, family, neighbors, and society) were no different between lottery winners and regular people.

Money is a means to the things we value, not happiness itself

One major difference between lottery winners and non-winners, it turns out, is that lottery winners have more spare time. This is the thing that really makes me envious , and I would hypothesize that this is the main reason why lottery winners are more satisfied with their life.

Consider this simply: If we had the financial security to spend time on things we enjoy and value, instead of feeling pressured to generate income all the time, why wouldn’t we be happier?

This is good news. It’s a reminder that money, in and of itself, cannot literally buy happiness. It can buy time and peace of mind. It can buy security and aesthetic experiences, and the ability to be generous to your family and friends. It makes room for other things that are important in life.

In fact, the researchers in that lottery winner study used statistical approaches to benchmark how much happiness winning $100,000 brings in the short-term (less than one year) and long-term (more than five years) compared to other major life events. For better or worse, getting married and having a baby each give a bigger short-term happiness boost than winning money, but in the long run, all three of these events have the same impact.

What does this mean? We make of our wealth and our life what we will. This is especially true for the vast majority of the world made up of people struggling to meet basic needs and to rise out of insecurity. We’ve learned that being rich can boost your life satisfaction and make it easier to have positive emotions, so it’s certainly worth your effort to set goals, work hard, and move towards financial health.

But getting rich is not the only way to be happy. You can still earn health, compassion, community, love, pride, connectedness, and so much more, even if you don’t have a lot of zeros in your bank account. After all, the original definition of “wealth” referred to a person’s holistic wellness in life, which means we all have the potential to be wealthy... in body, mind, and soul.

Kahneman, D., & Deaton, A.. High income improves evaluation of life but not emotional well-being. . Proceedings of the national academy of sciences. 2010.

Killingsworth, M. A. . Experienced well-being rises with income, even above $75,000 per year .. Proceedings of the National Academy of Sciences. 2021.

Lindqvist, E., Östling, R., & Cesarini, D. . Long-run effects of lottery wealth on psychological well-being. . The Review of Economic Studies. 2020.

Guardiola, J., González‐Gómez, F., García‐Rubio, M. A., & Lendechy‐Grajales, Á.. Does higher income equal higher levels of happiness in every society? The case of the Mayan people. . International Journal of Social Welfare. 2013.

Diener, E., Ng, W., Harter, J., & Arora, R. . Wealth and happiness across the world: material prosperity predicts life evaluation, whereas psychosocial prosperity predicts positive feeling. . Journal of personality and social psychology. 2010.

Donnelly, G. E., Zheng, T., Haisley, E., & Norton, M. I.. The amount and source of millionaires’ wealth (moderately) predict their happiness . . Personality and Social Psychology Bulletin. 2018.

Piff, P. K., & Moskowitz, J. P. . Wealth, poverty, and happiness: Social class is differentially associated with positive emotions.. Emotion. 2018.

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Does Money Buy Happiness? Here’s What the Research Says

March 28, 2023 • 5 min read.

Reconciling previously contradictory results, researchers from Wharton and Princeton find a steady association between larger incomes and greater happiness for most people but a rise and plateau for an unhappy minority.

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The following article was originally published on Penn Today .

Does money buy happiness? Though it seems like a straightforward question, research had previously returned contradictory findings, leaving uncertainty about its answer.

Foundational work published in 2010 from Princeton University’s  Daniel Kahneman  and Angus Deaton had found that day-to-day happiness rose as annual income increased, but above $75,000 it leveled off and happiness plateaued. In contrast, work published in 2021 from the University of Pennsylvania’s  Matthew Killingsworth  found that happiness rose steadily with income well beyond $75,000, without evidence of a plateau.

To reconcile the differences, Kahneman and Killingsworth paired up in what’s known as an adversarial collaboration, joining forces with Penn Integrates Knowledge  University Professor  Barbara Mellers  as arbiter. In a new  Proceedings of the National Academy of Sciences  paper , the trio shows that, on average, larger incomes are associated with ever-increasing levels of happiness. Zoom in, however, and the relationship becomes more complex, revealing that within that overall trend, an unhappy cohort in each income group shows a sharp rise in happiness up to $100,000 annually and then plateaus.

“In the simplest terms, this suggests that for most people larger incomes are associated with greater happiness,” says Killingsworth, a senior fellow at Wharton and lead paper author. “The exception is people who are financially well-off but unhappy. For instance, if you’re rich and miserable, more money won’t help. For everyone else, more money was associated with higher happiness to somewhat varying degrees.”

Mellers digs into this last notion, noting that emotional well-being and income aren’t connected by a single relationship. “The function differs for people with different levels of emotional well-being,” she says. Specifically, for the least happy group, happiness rises with income until $100,000, then shows no further increase as income grows. For those in the middle range of emotional well-being, happiness increases linearly with income, and for the happiest group the association actually accelerates above $100,000.

Joining Forces to Ask: “Does Money Buy Happiness?”

The researchers began this combined effort recognizing that their previous work had drawn different conclusions. Kahneman’s 2010 study showed a flattening pattern where Killingsworth’s 2021 study did not. As its name suggests, an adversarial collaboration of this type — a notion originated by Kahneman — aims to solve scientific disputes or disagreements by bringing together the differing parties, along with a third-party mediator.

Killingsworth, Kahneman, and Mellers focused on a new hypothesis that both a happy majority and an unhappy minority exist. For the former, they surmised, happiness keeps rising as more money comes in; the latter’s happiness improves as income rises but only up to a certain income threshold, after which it progresses no further.

To test this new hypothesis, they looked for the flattening pattern in data from Killingworth’s study, which he had collected through an app he created called Track Your Happiness. Several times a day, the app pings participants at random moments, asking a variety of questions including how they feel on a scale from “very good” to “very bad.” Taking an average of the person’s happiness and income, Killingsworth draws conclusions about how the two variables are linked.

A breakthrough in the new partnership came early on when the researchers realized that the 2010 data, which had revealed the happiness plateau, had actually been measuring unhappiness in particular rather than happiness in general.

“It’s easiest to understand with an example,” Killingsworth says. Imagine a cognitive test for dementia that most healthy people pass easily. While such a test could detect the presence and severity of cognitive dysfunction, it wouldn’t reveal much about general intelligence since most healthy people would receive the same perfect score.

“In the same way, the 2010 data showing a plateau in happiness had mostly perfect scores, so it tells us about the trend in the unhappy end of the happiness distribution, rather than the trend of happiness in general. Once you recognize that, the two seemingly contradictory findings aren’t necessarily incompatible,” Killingsworth says. “And what we found bore out that possibility in an incredibly beautiful way. When we looked at the happiness trend for unhappy people in the 2021 data, we found exactly the same pattern as was found in 2010; happiness rises relatively steeply with income and then plateaus.”

“The two findings that seemed utterly contradictory actually result from data that are amazingly consistent,” he says.

Does It Matter Whether Money Can Buy Happiness?

Drawing these conclusions would have been challenging had the two research teams not come together, says Mellers, who suggests there’s no better way than adversarial collaborations to resolve scientific conflict.

“This kind of collaboration requires far greater self-discipline and precision in thought than the standard procedure,” she says. “Collaborating with an adversary — or even a non-adversary — is not easy, but both parties are likelier to recognize the limits of their claims.” Indeed, that’s what happened, leading to a better understanding of the relationship between money and happiness.

And these findings have real-world implications, according to Killingsworth. For one, they could inform thinking about tax rates or how to compensate employees. And, of course, they matter to individuals as they navigate career choices or weigh a larger income against other priorities in life, Killingsworth says.

However, he adds that for emotional well-being money isn’t the be all end all. “Money is just one of the many determinants of happiness,” he says. “Money is not the secret to happiness, but it can probably help a bit.”

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Money, Happiness and Satisfaction With Life Essay

Money has always been known as the symbol of wealth, the key to happiness, and the backbone of livelihood. There is also a widespread opinion that money positively affects the growth of happiness. However, with this drastic growth comes a severe decline, and this is because of the human instinct to be acquisitive. The current essay discusses happiness and argues that the veritable happiness and satisfaction with life come not from money but self-actualization and positive thinking.

One of the fundamental explanations of why happiness is not about money lies in flawed human nature. In the book Leviathan , the prominent philosopher Thomas Hobbes (1651) described the state of nature where people live before the government appears and argues that every person wants to possess as many goods as possible. However, the number of goods is finite, and, therefore, people enter into the state of war of all against all in pursuit of wealth (Hobbes, 1651). Thus, it becomes apparent that even though money gives people access to numerous goods, services, pleasures, and opportunities, they are not always a synonym for joy or health.

Some people might argue that richness is a synonym for happiness because it allows one to actualize oneself through helping people in need. For example, in 2000, Bill and Melinda Gates grounded a foundation aimed at fighting inequality, poverty, and diseases all over the world (Bill & Melinda Gates Foundation, n.d.). Nonetheless, this case is rather an exception from the common rule. Novack (2008) mentions statistics provided by the Internal Revenue Service revealing that “rich are evasive when it comes to taxes” (para. 1). Indeed, richness and greed seem to be closely related. As 18th-century Scottish economist Adam Smith (1776) famously said, “it is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest” (p. 30). World War II is an amplified example of how one persons strive for money and power led to 60 million casualties all around the world. Besides, the modern case of the trade war between China and the US, initiated by the Trump administration in 2018, shows what the ruling elites are capable of destroying the lives of citizens of other countries if financial gain is at stake.

Many people believe that money is the key to happiness because money buys us tangible property such as cars, houses, and gadgets. Furthermore, money is used to pay tuition fees, electricity and water bills, purchase food and clothes, and, therefore, they are the primary means of survival. From this, one might fallaciously infer that money buys happiness. Still, one should not forget that money is incapable of purchasing the desire to learn or live. For instance, prominent actor Robin Williams, Linkin Parks singer Chester Bennington, and coal billionaire Dmitry Bosov committed suicide even though they were not poor and enjoyed fame and public acclaim. The reasons for suicide are another topic for discussion. Nonetheless, the previously mentioned examples should be used to remind us that money alone is not a guarantee of happiness, satisfaction with life, and good health. Money and fame could not prevent a person from depression, incurable illnesses, or alcohol and drug addictions. What is more, money could even stimulate the appearance of some of these problems. Thus, wealth is not a guarantee of happiness and satisfaction with life.

Finally, most people would love to get wealthy without the hard work and impossible tasks that come with it. They think that by doing so, they would never need anything from anyone ever again. From one point of view, money undoubtedly brings independence and is exempt from poverty. Even though there are ways how to earn easy money, these ways are not always legal, honest, or morally right. Without a doubt, winning a lottery is not a crime. Nonetheless, some researchers claim that money could bring self-satisfaction only if earned from hard work. The study conducted by Brickman, Coates, and Janoff-Bulman (1978) proves that lottery winners were in a better mental state before becoming wealthy without any effort. Undoubtedly, after the win, test subjects were immensely happy; however, after the lapse of time, their level of happiness equals one of the paralyzed people (Brickman et al., 1978). And this comes from the fact that with drastic growth in wealth comes a severe decline in happiness.

Taking everything into account, it is vitally important not to forget that one could find happiness in life regardless of any life circumstances. Joy and self-actualization are not about the size of income. Instead, it is about doing what one loves, having friends, staying fit and healthy, and loving and being loved. A person could be genuinely happy when looking at the shining sun, talking to parents, or reading a worthy book. The critical takeaway from the present paper is that joy with life could be accomplished by self-satisfaction and optimistically looking forward to the future without overabundance.

Works Cited

Bill & Melinda Gates foundation (n.d.). Web.

Brickman, P., Coates, D., & Janoff-Bulman, R. (1978). Lottery winners and accident victims: Is happiness relative?. Journal of personality and social psychology , 36 (8), 917-927. Web.

Hobbes, T. (1651). Leviathan . St. Pauls Church-yard.

Novack, J. (2008). Rich cheat more on taxes, new study shows. Forbes . Web.

Smith, A. (1776). The Wealth of Nations. (E. Cannan, Ed.). ElecBook Classics.

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IvyPanda. (2022, June 24). Money, Happiness and Satisfaction With Life. https://ivypanda.com/essays/money-happiness-and-satisfaction-with-life/

"Money, Happiness and Satisfaction With Life." IvyPanda , 24 June 2022, ivypanda.com/essays/money-happiness-and-satisfaction-with-life/.

IvyPanda . (2022) 'Money, Happiness and Satisfaction With Life'. 24 June.

IvyPanda . 2022. "Money, Happiness and Satisfaction With Life." June 24, 2022. https://ivypanda.com/essays/money-happiness-and-satisfaction-with-life/.

1. IvyPanda . "Money, Happiness and Satisfaction With Life." June 24, 2022. https://ivypanda.com/essays/money-happiness-and-satisfaction-with-life/.

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IvyPanda . "Money, Happiness and Satisfaction With Life." June 24, 2022. https://ivypanda.com/essays/money-happiness-and-satisfaction-with-life/.

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How Does Valuing Money Affect Your Happiness?

It may seem that money is a sure path to prestige and happiness. After all, many of our most well-paid citizens are held up as role models of success, leading seemingly perfect, enviable lives. Still, some people embrace the opposite idea: Money can’t buy you happiness. So, which of these is right?

In recent studies, scientists have found that the connection between wealth and well-being is not clear-cut. While some studies seem to tie wealth to well-being, others show that, after a certain point, a higher income will not bring more happiness or life satisfaction.

Now two new studies shed further light on the relationship between wealth and happiness. Their findings suggest that money doesn’t fulfill basic psychological needs, like belonging and competence. That’s why making more of it will not increase your happiness, even if you value money above other things. In fact, it may do the opposite.

What money can and can’t do for you

In one study , University of Buffalo researcher Lora Park and her colleagues investigated what happens when people tie their self-worth to financial success, scoring high on the “Financial Contingency of Self-Worth” scale, or FCWS. The researchers found that doing so made people engage in more social comparisons, experience more stress and anxiety, and feel less autonomy than those who didn’t tie their self-worth to income, regardless of their actual economic status.

“People in this society are often focused on pursuing money, and they don’t think there is anything bad about that,” says Park. “But in terms of your psychological well-being, there are all kinds of negative consequences.”

It also might affect your problem-solving ability. Park and her colleagues randomly assigned participants to write about their dissatisfaction with either an aspect of their financial situation—like not having enough money to pay rent—or their academic performance, like getting a bad test grade. Afterwards, they reported on what coping strategies they would use in response to the situation.

Research assistants analyzed the essays and found that participants who scored high in FCSW used more emotionally negative words and reported more disengagement strategies—like giving up or avoiding solutions—when writing about a financial stressor versus an academic stressor than people scoring low in FCSW. None of the results were affected by the actual income of the students.

People who are facing a problem should, logically, be focused on figuring out ways to solve it, says Park. “But what we found is that high financial contingency of self-worth somehow blocks that response.”

Why would this be?

Park believes that when people feel their self-concept is threatened in some way, they will become more self-protective so as not to experience low self-esteem. So, if your self-esteem is tied to money, a financial stressor will cause a lot more stress than it would for someone who doesn’t feel that way. Some support for her argument comes from another part of her experiment, where having participants high in FCSW remind themselves of their character strengths—like their intelligence or sense of humor—seemed to negate these avoidance effects.

Affirming Important Values

When your self-image takes a hit, reflect on what matters

“When people take a step back and have a broader perspective on their sense of self, that’s often enough to take them out of the self-esteem rumination/narrow focus they otherwise have,” says Park.

As prior research suggests, it can also be the case that people simply want money to do something that it cannot. “Self-esteem, like happiness, is a byproduct of meeting psychological needs—like meaning or purpose, feeling competent, having close relationships, or having a sense of autonomy—and basing your self-worth on financial success actually detracts from fulfilling those needs,” says Park.

Why community beats money

Park’s findings mirror other recent findings from the University of San Francisco’s Matthew Monnot, who studied financial success and well-being in China.

In his study , Monnot notes that, as China’s economy has grown, its citizens seem to be facing some of the same issues that Americans have faced. A growing number of people equate individual success with making more money and valuing money—an extrinsic reward—over other, more intrinsic rewards, like relationships or community. To see how this trend has affected well-being, he conducted a series of studies involving thousands of participants from several cities in China.

In one experiment, Monnot showed that job satisfaction did not rise in tandem with income. In fact, as with prior studies, wealth beyond a certain point tended to make Chinese workers no more satisfied with their jobs or their incomes, suggesting that money has only so much power to increase our life satisfaction.

“Our findings are pretty aligned with prior research,” says Monnot. “The correlation between income and job satisfaction is really small, to the extent that it predicts about five percent of job satisfaction.”

More on Money & Happiness

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Learn six ways to get more happiness for your money .

To tease out why, Monnot looked at how individual values shape the relationship between money and income satisfaction. He asked participants to pick the five factors they thought were most important for well-being from a list of 25 possible choices—including income—and then measured how satisfied they were with their income as it rose. Though one might expect people valuing income to be happier as they made more money, Monnot found the opposite: People who picked income as an important value were significantly less satisfied, even at higher levels.

“If income is important to you, then income is actually less satisfying as income goes up than if income is not important to you,” he says.

Though this seems paradoxical, Monnot says it makes some sense, when you understand how intrinsic versus extrinsic values affect our happiness.

“Not all goals are equal in terms of producing well-being, productivity, job satisfaction, or life satisfaction,” says Monnot. “If you say income is something really important to you, because income is an extrinsic reward and not part of your intrinsic needs, if you focus on it, it won’t make you happy.”

In other words, look inside of yourself, not your wallet, for happiness.

Monnot was curious to see how living in different cities in China might affect the relationship between valuing income and well-being. After all, if the government is developing policies to increase income in certain areas of the country, it would be good to know the impact this is having on happiness.

Again, he had people pick out five things they valued; but this time he separated people into different groups depending on whether they placed high value on materialistic things, like income and status, and placed low value on relationships and community, or vice versa. When he compared these two groups, people who valued relationships or community versus materialistic things had greater job satisfaction and overall life satisfaction. This was true regardless of their city’s per-capita income.

“The big idea is that higher GDP or people having more money is all great—especially at a societal level. You want your economy to be more productive and to have more resources and money available,” says Monnot. “Well, maybe that’s not necessarily in and of itself something that’s going to produce a happier population.”

Both Monnot and Park hope that their research might lead people to think a bit differently about the supposed benefits of striving for more money. Though neither would deny that we need money to survive, valuing it too highly or tying it to your self-worth is clearly a mistake.

Monnot hopes his research might help individuals—and business leaders and policymakers—to realize that fulfilling psychological needs is more important to happiness than making a lot of money.


“Autonomy, developing a skill set to be good at what you do, being affiliative with others, having a sense of connection to your community—these are all things that we as researchers are fairly convinced are innate, evolved human tendencies that bring happiness,” he says.

“If you can get people to focus on fulfilling those needs, they’ll become happier. The research is strongly in favor of that.”

About the Author

Jill Suttie

Jill Suttie, Psy.D. , is Greater Good ’s former book review editor and now serves as a staff writer and contributing editor for the magazine. She received her doctorate of psychology from the University of San Francisco in 1998 and was a psychologist in private practice before coming to Greater Good .

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More Proof That Money Can Buy Happiness (or a Life with Less Stress)

When we wonder whether money can buy happiness, we may consider the luxuries it provides, like expensive dinners and lavish vacations. But cash is key in another important way: It helps people avoid many of the day-to-day hassles that cause stress, new research shows.

Money can provide calm and control, allowing us to buy our way out of unforeseen bumps in the road, whether it’s a small nuisance, like dodging a rainstorm by ordering up an Uber, or a bigger worry, like handling an unexpected hospital bill, says Harvard Business School professor Jon Jachimowicz.

“If we only focus on the happiness that money can bring, I think we are missing something,” says Jachimowicz, an assistant professor of business administration in the Organizational Behavior Unit at HBS. “We also need to think about all of the worries that it can free us from.”

The idea that money can reduce stress in everyday life and make people happier impacts not only the poor, but also more affluent Americans living at the edge of their means in a bumpy economy. Indeed, in 2019, one in every four Americans faced financial scarcity, according to the Board of Governors of the Federal Reserve System. The findings are particularly important now, as inflation eats into the ability of many Americans to afford basic necessities like food and gas, and COVID-19 continues to disrupt the job market.

Buying less stress

The inspiration for researching how money alleviates hardships came from advice that Jachimowicz’s father gave him. After years of living as a struggling graduate student, Jachimowicz received his appointment at HBS and the financial stability that came with it.

“My father said to me, ‘You are going to have to learn how to spend money to fix problems.’” The idea stuck with Jachimowicz, causing him to think differently about even the everyday misfortunes that we all face.

To test the relationship between cash and life satisfaction, Jachimowicz and his colleagues from the University of Southern California, Groningen University, and Columbia Business School conducted a series of experiments, which are outlined in a forthcoming paper in the journal Social Psychological and Personality Science , The Sharp Spikes of Poverty: Financial Scarcity Is Related to Higher Levels of Distress Intensity in Daily Life .

Higher income amounts to lower stress

In one study, 522 participants kept a diary for 30 days, tracking daily events and their emotional responses to them. Participants’ incomes in the previous year ranged from less than $10,000 to $150,000 or more. They found:

• Money reduces intense stress: There was no significant difference in how often the participants experienced distressing events—no matter their income, they recorded a similar number of daily frustrations. But those with higher incomes experienced less negative intensity from those events.
• More money brings greater control : Those with higher incomes felt they had more control over negative events and that control reduced their stress. People with ample incomes felt more agency to deal with whatever hassles may arise.
• Higher incomes lead to higher life satisfaction: People with higher incomes were generally more satisfied with their lives.

“It’s not that rich people don’t have problems,” Jachimowicz says, “but having money allows you to fix problems and resolve them more quickly.”

Why cash matters

In another study, researchers presented about 400 participants with daily dilemmas, like finding time to cook meals, getting around in an area with poor public transportation, or working from home among children in tight spaces. They then asked how participants would solve the problem, either using cash to resolve it, or asking friends and family for assistance. The results showed:

• People lean on family and friends regardless of income: Jachimowicz and his colleagues found that there was no difference in how often people suggested turning to friends and family for help—for example, by asking a friend for a ride or asking a family member to help with childcare or dinner.
• Cash is the answer for people with money: The higher a person’s income, however, the more likely they were to suggest money as a solution to a hassle, for example, by calling an Uber or ordering takeout.

While such results might be expected, Jachimowicz says, people may not consider the extent to which the daily hassles we all face create more stress for cash-strapped individuals—or the way a lack of cash may tax social relationships if people are always asking family and friends for help, rather than using their own money to solve a problem.

“The question is, when problems come your way, to what extent do you feel like you can deal with them, that you can walk through life and know everything is going to be OK,” Jachimowicz says.

Breaking the ‘shame spiral’

In another recent paper , Jachimowicz and colleagues found that people experiencing financial difficulties experience shame, which leads them to avoid dealing with their problems and often makes them worse. Such “shame spirals” stem from a perception that people are to blame for their own lack of money, rather than external environmental and societal factors, the research team says.

“We have normalized this idea that when you are poor, it’s your fault and so you should be ashamed of it,” Jachimowicz says. “At the same time, we’ve structured society in a way that makes it really hard on people who are poor.”

For example, Jachimowicz says, public transportation is often inaccessible and expensive, which affects people who can’t afford cars, and tardy policies at work often penalize people on the lowest end of the pay scale. Changing those deeply-engrained structures—and the way many of us think about financial difficulties—is crucial.

After all, society as a whole may feel the ripple effects of the financial hardships some people face, since financial strain is linked with lower job performance, problems with long-term decision-making, and difficulty with meaningful relationships, the research says. Ultimately, Jachimowicz hopes his work can prompt thinking about systemic change.

“People who are poor should feel like they have some control over their lives, too. Why is that a luxury we only afford to rich people?” Jachimowicz says. “We have to structure organizations and institutions to empower everyone.”

[Image: iStockphoto/mihtiander]

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Money can’t buy love. but happiness maybe.

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Money might not buy love, but a new study suggests that it is more strongly related to happiness than some people think — particularly when people compare their income with someone else’s.

Writing in the journal Psychological Bulletin, researchers describe an association between people’s subjective socioeconomic status — how they perceive their own income, education, and occupation standing in comparison with others — and happiness.

That association, they say, is significantly larger than the connection between people’s objective socioeconomic status — as measured by income and educational attainment — and their level of happiness.

“ There is a conventional wisdom in social science that relationships and experiences are more important than money in producing happiness,” said co-author Michael Kraus , associate professor of organizational behavior at the Yale School of Management. “But we found that when people consider their wealth relative to others, there is a stronger association between money and happiness.”

The study, which was led by Jacinth Tan, an assistant professor of psychology at Singapore Management University, contradicts decades of social science research that shows a weak relationship between money and happiness, particularly in wealthy societies, the authors say.

“ The size of the relationship we observed in our study has policy implications in the sense that lawmakers must acknowledge that the relationship between money and happiness remains consequential and cannot be ignored,” said Kraus. “Policy considerations that help people obtain good jobs and protect people from financial ruin during this pandemic may have an added benefit of improving people’s happiness.”

The new research was motivated by an apparent disparity in previous research that has showed weak links between income and happiness and the idea that many people actively seek out prestigious jobs and higher status, the authors say. Moreover, as inequality has increased in some societies (including the United States), overall happiness has declined. That outcome wouldn’t be expected if wealth and material resources were inconsequential, the researchers say.

This gap between research findings and observation suggests the possibility that objective measures, such as income, do not adequately capture the influence of money on happiness, the researchers said. They wanted to test the idea that happiness is more dependent on what people  think  they have compared with others than how much they  do  have.

For the study, the researchers performed a meta-analysis of 357 different studies that have examined questions related to associations between objective and subjective measures of socioeconomic status and people’s subjective wellbeing — their sense of happiness and life satisfaction. Collectively, those studies involved data from more than 2.3 million participants gathered in publicly available datasets, such as the World Values Survey, as well as in private datasets.

In their analysis, the researchers applied the MacArthur Scale of Subjective Status — a 10-rung ladder in which people indicate their perceived social status — to test the association between comparative resources and happiness. Their findings suggest that that social comparison is an important driver of how much money or material resources will increase happiness.

The researchers also found that the effect of social comparison was stronger in countries, such as Singapore, with high population density. This finding makes sense, the researchers say, since there often is greater competition for resources in places where population density is high.

Tan pointed out that social comparison can lead to unhappiness when a person determines their status compares less favorably to others. She cited a quote attributed to Mark Twain: “Comparison is the death of joy.”

“ Our findings also suggest that improving from past levels of material resources alone is insufficient for increasing happiness,” she said. “Even if people today are earning higher wages or attaining higher educational levels than their parents or compared to 10 years ago, there is going to be limited impact on their happiness if they are not doing at least as well as, if not better than others at the present. In people’s minds, social mobility is not simply the ability to ascend one’s own socioeconomic ladder, but also to ascend the ladder of the broader, collective society.”

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Money can't buy happiness, a neuroscientist explains why

We all need enough funds to cover our basic needs, but beyond that the connection between wealth and wellness is less clear.

Dean Burnett

"Money can’t buy you happiness" is either a widely accepted insight or a tired cliché. Is it right , though? Scientifically speaking, the answer is… mixed.

A recent study carried out at the University of Bath has once again looked at the relationship between income and happiness .

It seems that, up to a point and within a specific set of circumstances, money can buy happiness. But beyond that, the relationship between money and happiness becomes much looser and uncertain.

What makes us happy?

At the most immediate and fundamental levels, the things that make us happy, or at least the provoke a positive, reward response in our brains, are those that satisfy our basic biological needs. Put simply, we humans, living organisms, need many things to ensure our survival, such as food, water, air, sleep, and security. Our brain recognises these things as being ‘biologically significant’, so if we obtain them, we experience a sense of reward.

Because the human brain can make intuitive and abstract leaps, it can easily recognise that receiving money means we can now more easily obtain food/water/shelter etc. This, as a study carried out by the Wellcome Trust in 2007 found, can be both rewarding and motivational , two things that could fall under the umbrella of happiness.

However, this doesn’t mean ‘more money’ automatically means ‘more happiness’. Money may be recognised by our brains as biologically significant, but there’s an upper limit on how rewarding even biologically significant things can be. For example, eating food can often be pleasurable, but at some point you’ll be sated, after which point eating more causes actual discomfort. Same with drinking. Even things like shelter and security; build too many barriers around yourself and you can feel isolated and oppressed.

There’s also the phenomenon of habituation, where the fundamental parts of our brains learn to not react to things that occur predictably and reliably. As evidenced in a 2011 study carried out by Dr Ruth Krebbs at Ghent University, this is why things that are novel, as in surprising and unexpected, are often more rewarding than familiar things .

In many cases, the same thing happens with money. Receiving your regular pay is reassuring, but receiving unexpected money, even if it’s much less, often makes you much happier.

Also, when we actively and tangibly need it for our survival, obtaining money is very rewarding. But when we go beyond that point, when we’re ‘financially secure’ as they say, money can still be rewarding, but it’s power to make you happy is significantly reduced , a study carried out at San Francisco State University found. More psychological, experience-based stimuli (e.g. travelling, forging new relationships, helping others etc.) have a greater ability to make you happy.

Granted, in the modern world you usually need money to do all those things too, but this ultimately means money’s link to happiness is more indirect, as a means to an end, rather than directly rewarding in its own right.

Is there a threshold amount of money that can make us happy?

That there’s a certain cut-off amount of money where it stops making people has a lot of implications, particularly in the present day. With much talk of wage stagnation, rising prices, and trials of universal basic income becoming increasingly common, the question of how much money people need to be happy is an increasingly salient one.

Unfortunately, there can be no easy answer, at least not one that applies to all people equally, because the factors that determine how much money is ‘enough’ for security and happiness are highly subjective, and vary considerably from person to person.

Some people feel they’d be happy for life with surprisingly modest sums, others don’t think they’d ever feel they had ‘enough’ money. Studies carried out by researchers at the University of Bath have also found that these significant variations are even more apparent when you compare people from different cultures , suggesting the link between money and happiness is at least as much learned as it is ‘innate’.

But even within the same capitalist culture, people’s ideas about financial security can differ drastically, with people who have ample money sometimes being much less happy than those with far less money because they have more worries about.

Can too much money make us unhappy?

This introduces another factor; money can make you unhappy . Or reduce happiness in other ways. Studies have shown that being paid to do something you enjoy can make you less motivated to do it, suggesting it actively reduces potential happiness. This would explain why people are often reluctant to turn a hobby into a job, or actively regret doing so.

Also, in our modern world, money is not static. If we have more money than we strictly need, we don’t hoard a big pile of gold coins in our spare room like modern-day dragons. Money is fluid, often intangible, and typically ends up being tied up with things like investments, stocks, properties, savings accounts, and more.

All these things are subject to the whims of politico-economical factors and more, meaning the person whose money it is has less control over it and less certainty than if they’d gone for the ‘big pile of gold’ option. Loss of control and uncertainty are two reliable sources of stress and unhappiness for the human brain.

Ultimately, rather than “money can’t buy you happiness”, it might be better to say “money can buy you safety and security”, and these things make it easier for us to be happy. But there’s no direct one-to-one relation between money and happiness, and how it affects us ultimately depends on who we are and how we’ve been raised.

Read more about happiness:

• Is waving back at a stranger on a bridge a sign of happiness?
• National happiness mapped over the last 200 years
• Why does chocolate make us happy?
• Could being happier help you fight infectious disease?

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Essay on Money Is Important for Happiness

Students are often asked to write an essay on Money Is Important for Happiness in their schools and colleges. And if you’re also looking for the same, we have created 100-word, 250-word, and 500-word essays on the topic.

Let’s take a look…

100 Words Essay on Money Is Important for Happiness

Introduction.

Money is often linked to happiness. Having enough money can bring joy as it helps meet our needs and desires.

The Role of Money

Money is vital for survival. It buys food, clothes, and shelter, which are basic human needs. Without money, life becomes challenging.

Money and Freedom

Money offers freedom. It allows us to travel, explore new things, and have unique experiences, all of which can make us happy.

Money and Security

Money provides security. Knowing we have enough money to handle emergencies gives peace of mind, contributing to happiness.

While money isn’t everything, it plays a significant role in achieving happiness.

250 Words Essay on Money Is Important for Happiness

The essential role of money in achieving happiness.

Money, often portrayed as a villain, is in fact a crucial element in the pursuit of happiness. While it is not the sole determinant, it undeniably contributes significantly to our overall well-being.

Money as a Means to Meet Basic Needs

Firstly, money is essential in fulfilling our basic needs such as food, shelter, and clothing. These necessities form the foundation of Maslow’s hierarchy of needs, a psychological theory that posits the fulfillment of basic needs as a prerequisite to achieving happiness. Without money, the struggle to meet these needs can lead to stress and unhappiness.

The Freedom and Opportunities Money Provides

Secondly, money affords us freedom and opportunities. It provides the means to pursue hobbies, travel, and explore new cultures, all of which can enrich our lives and increase our happiness. Moreover, money can also enable us to pursue further education or start a business, thereby fostering personal growth and satisfaction.

Money’s Role in Alleviating Suffering

Lastly, money can help alleviate suffering. It can provide access to quality healthcare, allowing us to maintain good health and longevity. It also enables us to help others, either through charitable donations or supporting loved ones, which can bring immense joy and fulfillment.

In conclusion, while money cannot buy happiness outright, it plays a pivotal role in creating conditions conducive to happiness. Recognizing this can help us approach money with a healthier mindset, seeing it not as an end in itself, but as a tool for achieving a happier and more fulfilling life.

500 Words Essay on Money Is Important for Happiness

Money, a medium of exchange, is a crucial element of life. It is an undeniable fact that it plays a significant role in shaping up the happiness and well-being of individuals. The concept of money and happiness has been debated for centuries, with various perspectives on its importance. This essay will explore the multifaceted relationship between money and happiness, shedding light on why money is significant for happiness.

The Necessity of Money for Basic Needs

To begin with, money is necessary for meeting basic human needs, which include food, shelter, and clothing. Without money, it would be challenging to fulfill these needs, leading to a life of hardship and, consequently, unhappiness. Maslow’s hierarchy of needs supports this perspective, placing physiological needs at the base of the pyramid, which are essential for survival and can only be met through financial means.

Money as a Means to Improve Quality of Life

Beyond basic necessities, money also allows individuals to improve their quality of life. It provides access to better healthcare, education, and opportunities for self-improvement and growth. These elements contribute significantly to one’s overall happiness. Moreover, money can be used to acquire experiences that bring joy, such as travel, hobbies, or spending time with loved ones.

Financial Security and Mental Peace

Financial security, facilitated by money, is another crucial factor contributing to happiness. The absence of financial stress can lead to better mental health and overall well-being. Money can provide a safety net for unexpected situations, giving individuals peace of mind and the freedom to pursue their passions without the constant worry of financial instability.

The Limitations of Money in Achieving Happiness

While the importance of money for happiness is evident, it is essential to recognize its limitations. Research suggests that beyond a certain income level, additional money does not significantly increase happiness. This is known as the ‘Easterlin Paradox.’ Furthermore, an excessive focus on money can lead to materialism, which can negatively impact relationships and personal satisfaction.

In conclusion, money plays a crucial role in facilitating happiness by meeting basic needs, improving quality of life, and providing financial security. However, it is not the only determinant of happiness, and its pursuit should be balanced with other aspects of life, such as relationships, passions, and personal growth. Therefore, while money is important for happiness, it is not the sole ingredient and should be viewed as a tool to achieve happiness rather than the end goal.

That’s it! I hope the essay helped you.

If you’re looking for more, here are essays on other interesting topics:

• Essay on Money Can Buy Everything
• Essay on Importance of Saving Money
• Essay on Importance of Money

Apart from these, you can look at all the essays by clicking here .

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IELTS Practice.Org

IELTS Practice Tests and Preparation Tips

• Sample Essays

Sample essay: does money bring happiness?

by Manjusha Nambiar · Published April 7, 2014 · Updated April 23, 2024

IELTS essay prompt

Some people believe that money brings happiness; others are of the opinion that having too much money is a problem. Discuss both views and give your own opinion.

Sample response

Almost all of us are motivated by money. The only reason that most of us spend 8 to 10 hours at the workplace is to earn money. Money probably doesn’t bring happiness, but not having enough money to take care of our basic needs will seriously limit our happiness. No one wants to live in poverty and no one will lend to the poor.

Money helps us lead a comfortable life. It helps us provide the best possible education for our children. It ensures that our near and dear ones have access to medical attention whenever they need it. Having more money than you need is unlikely to increase your levels of happiness, but not having enough will definitely destroy your peace of mind.

There is a limit to the amount of money that we can spend on ourselves. Still, the richest among us have amassed wealth they or their progeny will never use in their lifetime. Still, they aren’t satisfied. They want more. That is the lure of money. It never makes people content. Those who don’t have it want to have it. Those who have it want to have even more of it. Unfortunately, in our pursuit of riches, we often forget to live. We forget to appreciate the little joys that make our lives worth living.

Having a lot of money is definitely a problem. It even threatens our safety and security and makes us the target of thieves. Look at the richest people. They can’t move around freely like you or I. They are always surrounded by their personal security guards and often live their entire lives in constant fear of getting attacked.

To conclude, money is unlikely to make us happy, but we must still earn enough. However, in our pursuit of riches, we must not lose our souls. True happiness comes from spiritual awakening. Money has hardly anything to do with it.

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Manjusha Nambiar

Hi, I'm Manjusha. This is my blog where I give IELTS preparation tips.

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Ielts exam preparation for a higher band score., ielts essay: money is an important source of happiness.

IELTS Essay Topic:

Some people like to save money because they consider it is an important source of happiness. Others believe that money should be spent as it is the way to fulfill our dreams.

Discuss both the views and give your opinion.

Give reasons for your answer and include any relevant examples from your own knowledge or experience.

Sample Answer: Money is an important factor to achieve happiness. Different people use money in different ways. There has been a considerable debate on the issue whether we should save money or spend all on our needs.

On one hand, it is believed that money should be spent on things and on our needs, because it is a major source of getting happiness in life, if we do not have money, we cannot survive in this modern world anymore. So, it is rightly said that life is like an ice-cream, so we should enjoy it before it melts. In other words, we should take benefits from each and every moment of the life. For instance, with the help of money people can easily uplift their status in the society, because every individual wants to develop his or her living standard, which in turn helps them to raise their personality in the world.

On the other hand, it is considered that, people should save money in order to secure their future. Mostly people save money for their children, because the savings will help them in their further life for their better education and basic needs, which are necessary and play a significant role in one’s life. Money is a valuable thing, because nowadays without money, it is very difficult to stand in the society. So that is why people should save money for the rainy days, because everyone goes through the ups and downs in life and who knows when we need some extra savings.

In conclusion, both aspects have their own values and that is why we should spend money within a limit- for important and basic needs, because if we spend all the money we earn, there will be no money for the better future.

[Written by – Arman Josan]

2 thoughts on “ IELTS Essay: Money is an important source of happiness ”

This short essay deeply inspired me showing me how to deal with money.

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Greater Good Science Center • Magazine • In Action • In Education

Can Money Buy Happiness? It Depends on Why You’re Spending It

Imagine that someone gives you a cash gift and tells you that, instead of saving or investing it, you need to spend it right now. What should you put your money toward if you want to make yourself happiest?

According to past research , we’ll be happier if we spend money on an experience than if we buy a material object—like traveling or going out for a meal instead of buying the latest product we see on social media. For example, people report more gratitude when they spend on experiences rather than possessions.

On the other hand, we can all probably think of times when we’ve spent money on an experience that ended up not being worth it. Maybe you bought pricey event tickets to avoid missing out, only to realize on the day of the event that you’d much prefer a cozy night at home. Or perhaps you went out to dinner with a friend at a fancy restaurant, only to find that your friend was more focused on posting the meal to Instagram than having a deep conversation.

It turns out that there might be another factor at play beyond whether we spend money on an experience or a material item: According to a new study published in the British Journal of Social Psychology , it may also matter how our purchases align with our goals.

In the study, researchers asked 452 participants in an online survey to describe a recent purchase. They were asked to write about something they had spent money on in the last three months (ranging from about $60 to $1,200), excluding everyday expenses such as bills and groceries. After describing it, people were asked to indicate the extent to which the purchase helped to fulfill different goals. They also noted how much they felt the purchase contributed to their happiness and life satisfaction.

According to self-determination theory , goals reflect our intrinsic and extrinsic motivations. Extrinsic goals are things that other people expect for us: for example, working hard at a job not because you’re passionate about the work, but because you need the money or want a high-status job to impress others. Intrinsic goals, on the other hand, are ones that we have a strong internal motivation to pursue. In the survey, extrinsic goals included gaining wealth or social status, whereas intrinsic ones included cultivating relationships, helping other people, and contributing to growth, learning, and development.

The researchers found that, the more a purchase reflected people’s intrinsic goals, the more they thought it improved their well-being. In other words, the greatest well-being occurred when people spent money on something that was personally important to them.

To compare this finding with past research, the current study also asked participants to indicate to what extent their purchase was an experience or a material item. As in past research, participants did report higher well-being from experiences. However, when the researchers looked at both factors together, they found that how much a purchase reflected intrinsic goals explained more of the differences in well-being than whether something was material or experiential.

So, what does this research mean for our spending habits? Olaya Moldes Andrés, lecturer at Cardiff University and the study’s author, points out that we’re under a lot of pressure to spend money these days; just think about the number of targeted ads you see each time you open social media. However, this pressure to spend has a downside: In past research , Moldes Andrés has found that people who are exposed to more materialistic messages have lower well-being.

Before purchasing something, she recommends pausing to think about the reason for our purchase, and what use we will get out of it. If we’re spending money on trying to impress people or project a certain image (in other words, extrinsic goals), the purchase may not actually be worth it.

So, next time you’re planning to buy something, take a moment to think about whether it’s something you’re buying because you feel it’s what’s expected of you—or whether it’s truly something that you want.

About the Author

Elizabeth Hopper

Elizabeth Hopper, Ph.D. , received her Ph.D. in psychology from UC Santa Barbara and currently works as a freelance science writer specializing in psychology and mental health.

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