Does Money Buy Happiness?


One of the most intense debates in the science of happiness – the effort to study who’s happy and why in a scientific manner – concerns the relationship between money and happiness. “Money can’t buy happiness,” people say. But those who disagree believe the science backs them up. “Money Buys Happiness and You Can Never Have Too Much, New Research Says” announces Derek Thompson at The Atlantic. Over at Vox, Dylan Matthews adds: “Work by economists Betsey Stevenson and Justin Wolfers … has found that there’s no satiation point” – meaning a point where more money does not translate into more happiness.

A minor point first. Normally, scientists say that they have established some claim when they’ve shown that the other possibility can confidently be rejected. Showing that money buys happiness therefore requires rejecting the hypothesis that it doesn’t. But this is not what Stevenson and Wolfers do. Instead, they show that you cannot reject the hypothesis that money buys happiness. From this fact – if it is one – you still can’t infer that money buys happiness. If you did, you’d be guilty of the sort of thing your Psych 101 professor would call a fallacy. This is why Stevenson and Wolfers in their actual work only conclude that they “find no evidence of a satiation point” – not that “there’s no satiation point,” as Matthews claims.

But this sort of concern is probably of greater interest to intro-to-psych professors than to anybody else. The issue I figure Thompson, Matthews, and their readers are most interested in is whether they’ll be happier if they become lawyers, take the high-flying jobs, accept the promotions, work longer hours, and do whatever else is required to bring in more cash.

Suppose it is true that there is no satiation point, and that happiness is always increasing in money. Does this mean that you should try to make more of it?

Well, it doesn’t, and the reason is (or should be) familiar to all students of economics. Whenever you take some action to make more money, there is always another course of action you do not take. When you become a full-time lawyer, you can’t also become a full-time writer; when you work longer hours, you have less time to spend with your kids; and so on.

And it’s always possible that the other course of action will give you even more happiness. Even if the extra money you make as a hard-working lawyer would make you happier, it is certainly possible that writing or hanging out with your kids would make you even happier.

Ignoring this fact amounts to ignoring the opportunity cost of pursuing more money, and that’s also a fallacy.

On the question of money and happiness, in spite of it all, the science is far from conclusive.

Erik Angner is Associate Professor of Philosophy, Economics, and Public Policy at George Mason University and a Scholar with Virtue, Happiness, & the Meaning of Life.