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 Economic downturn: Can money buy happiness?
POSTED 19 FEBRUARY 2009

Different strokes for different folks

Researchers who examined the relationship between happiness and income in the developed world found something surprising. Having money was correlated with happiness, but rather weakly. That's good news for people who think money cannot (or should not) buy happiness. But when the same question was asked in places where money was scarcer, the relationship was much stronger.

An Indonesian family with two small children laughs around a guitar player in a poor part f town
Photo of Semarang, north coast of Java, Indonesia by Ahron de Leeuw.
They aren't rich, but they sure look happy! Researchers have found that the link between happiness and income is tightest at the very bottom of the income scale.

In a recent re-analysis of 56 studies concerning money and happiness in developing countries, for example, Ryan Howell of the department of psychology at San Francisco State University, and colleagues found a strong correlation among the poorest people, who lived in households earning roughly 75 cents per day, per person.

A correlation statistic is meaningless to civilians, so we asked Howell to explain: "If you had two groups of people in the same economy, one wealthy and one poor, this means 40 in 100 are happier if they are wealthy."

Happy News

European-Americans, who report being happier than Koreans, Japanese, and Asian-Americans, are slower to rebound after a setback.

Aspirin, in comparison, is considered good for preventing second heart attacks, but it only affects about three in 100, "so this a big number," Howell says.

Given how difficult it is to feed and house a family on such meager income, Howell admits that correlating happiness and income was not exactly shocking. But he was surprised by how quickly the money-happiness link faded as household income begins to exceed a dollar or two per person, per day. "Once you break through that, the correlation goes down really dramatically."

What gives?

One explanation for the changing relationship comes from psychologist Abraham Maslow's theory on the hierarchy of needs. Maslow said that needs must be satisfied in order, with physiological needs at the bottom of the pyramid, followed by safety and then the higher order needs.

Maslow has not gotten a lot of respect lately from a psychology that has become preoccupied with experimental data, says Howell. "Maslow's theory has not been well validated, not been well tested, but there is not tremendous evidence against it either."

In order of primacy, physiological, safety, love, esteem, and self-actualization needs are listed.
Graphic: J. Finklestein.
Psychologist Abraham Maslow's theory on the hierarchy of needs was an influential effort to view the big picture of human happiness and satisfaction.

Getting needy

Instead of looking at the whole hierarchy, Howell says researchers have carved off individual needs, such as the almighty dollar, for study: "An underlying theme of my research is to look at how people use money to satisfy their basic needs."

And Maslow indeed can explain the surprising tapering-off of the relationship between income and happiness, Howell says. In a poor country, "a few dollars is the difference between eating and not eating. If we take Maslow really seriously, once you have your basic needs satisfied, then happiness is predicated by other factors. If you can feed yourself and your family, and have adequate shelter, other parts of life become more important."

Is it truly better to give than to receive?
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Terry Devitt, editor; Nathan Hebert, project assistant; S.V. Medaris, designer/illustrator; David Tenenbaum, feature writer; Amy Toburen, content development executive

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