Would making more money make you happier?

Sure it will help you buy a nicer car, bigger house, nice meals at expensive restaurants, but would you really be happier?

It’s a question that plagues us all. A big pay cheque, at least in part, drives ambition. Wouldn’t you agree?

Well, according to reports from a recent study on the effect of higher incomes on emotional well-being and life evaluation, you may want to think twice before accepting that high paying job. The study, conducted by Daniel Kahneman and Angus Deaton of the Centre of Health and Well-Being, Princeton University, found that a higher pay cheque might not heighten happiness. More money does translate into greater life evaluation. That is, you could be more satisfied with how you think about your life, but you won’t feel any better about it.

The study reveals that there is a sharp distinction between emotional well-being, (the “emotional quality of an individual’s everyday experience”), and life evaluation, (the “thoughts people have about their life when they think about it”). The study’s findings suggest that once a household reaches a comfortable income of $75,000, more money doesn’t necessary translate to more happiness. The authors conclude that “$75,000 is a threshold beyond which further increases in income no longer improve individuals’ ability to do what matters most to their emotional well-being, such as spending time with people they like, avoiding pain and disease, and enjoying leisure”.

However, even though an individual’s happiness stabilizes at $75,000, a person who makes more money may still be increasingly satisfied with the way they perceive their life. Phyllis Korkki’s New York Times article “Big Money vs. Job Satisfaction” points out, there are some people that are “just hardwired to make more money”. People, for whom making the big bucks is a primary goal, experience increases in perceived life satisfaction with the more they make. Essentially, achieving their primary goal brings satisfaction (not to be confused with happiness).

This isn’t the way it works for everyone. Some people who currently have, or who have had a high paying job, realize that while the money is nice, they don’t like the work. Further, they are not happy with the time it takes away from the things that do make them happy.

To push this point home, Korkki’s article quotes Nicholas Lore, founder of the Rockport Institute, a career coaching firm, and author of The Pathfinder. Mr. Lore “ recently coached a lawyer who decided to forgo his high pay in favor of teaching law, an investment banker who decided to switch to a green energy company and a dentist who decided to become a schoolteacher.” Lore asks then remarks, “how can someone say they’re successful if they’re not happy doing their work? To me, that’s not success.”

He has a point. More money does provide the opportunity to afford pleasures, but it doesn’t necessarily afford you the time to enjoy them. Reaching a comfortable household income, that relieves financial strain but still allows for leisure, is certainly an attractive goal.

What do you think? Does less money (relatively speaking), equal more happiness?