For ages, people have been debating whether money can buy happiness or not. Well, according to researchers in England, being wealthy can make you happier, but only if you have more money than your friends and colleagues. In other words, if you’re a millionaire in a neighborhood filled with millionaires, it won’t have the same impact on your happiness levels. The key takeaway here is that it’s not just the amount of money you have in your bank account that matters; it’s how much wealthier you are in comparison to those around you.
Since this is quite an interesting topic, let’s dive deeper into the factors that contribute to happiness and how wealth plays a role in your overall life satisfaction.
The Relative Income Hypothesis
The study mentioned above focuses mainly on the relative income hypothesis, which suggests that people’s income relative to others in their reference group is what truly affects their happiness. That is, your happiness isn’t determined by how much money you make, but rather how much money you make compared to those around you.
This hypothesis is supported by numerous studies and psychological observations, including one conducted by the University of Warwick, which found that the ranked position of a person’s income best predicted their life satisfaction.
“Earning a million (dollars) a year appears to be not enough to make you happy if you know your friends all earn 2 million a year,” observes lead researcher Chris Boyce from the University of Warwick’s Department of Psychology.
Social Comparison Theory
The relative income hypothesis is closely linked to the social comparison theory, which argues that individuals determine their self-worth and overall success by comparing themselves to others. In other words, our innate competitive nature plays a significant role in our feelings of happiness.
Some examples of social comparison include comparing your job title, salary, possessions, or social status to those around you. And while such behavior might be seen as a way to motivate oneself for self-improvement, it can also bring negative emotions like envy and jealousy, which can negatively impact your overall happiness.
Limitations of Money in Achieving Happiness
It’s essential to understand that while having more money than your peers might make you happier, there’s a limit to how much wealth can buy your happiness. Many studies have found that once a person’s basic needs are met, any additional income has a diminishing return on happiness.
For example, research conducted by Princeton University shows that happiness levels start to stagnate as income levels exceed $75,000 per year. So, while having more money than others around you can contribute to your happiness, it’s not the only factor, and there’s a certain point where the impact of wealth diminishes.
Other Factors Contributing to Happiness
It’s important to remember that money is only one component of a person’s overall happiness. There are many other factors, such as physical health, social connections, job satisfaction, and psychological well-being, which play a major role in determining your overall life satisfaction.
In other words, being wealthier than your peers may not guarantee a happy life, especially if other aspects of your life are lacking.
For example, research suggests that strong social connections and meaningful relationships are vital for overall well-being, with a Harvard study even finding that people with strong ties to friends and family have a lower risk of heart disease. This indicates that working on your relationships and social life could be just as crucial (if not more) as accumulating wealth when it comes to happiness.
How to Increase Your Happiness
Knowing that money only has a limited impact on happiness, it’s essential to focus on other aspects of your life when trying to improve your overall well-being. Here are some tips to boost your happiness:
- Create strong social connections: As mentioned earlier, having healthy relationships with friends and family members is vital for happiness. So, focus on building these connections and spending quality time with loved ones.
- Maintain a healthy lifestyle: Taking care of your physical health is a crucial component of well-being. Eating a balanced diet, getting regular exercise, and managing stress are all essential for happiness.
- Cultivate gratitude: Practicing gratitude can help shift your focus from what you don’t have to what you do have, leading to increased happiness, according to a study by the Greater Good Science Center at UC Berkeley.
- Pursue personal and professional growth: Constantly working on self-improvement and setting goals for personal and professional growth can lead to higher life satisfaction.
To sum up, while money might have some impact on your happiness, it’s not the only factor. It’s essential to remember that wealth’s contribution to happiness is relative, and there’s a certain point where its influence diminishes. Focusing on improving other aspects of your life, such as relationships, health, and personal growth, can significantly contribute to your overall happiness.
