Happiness Levels and Income Levels

Last Updated: 05 Aug 2020
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A very popular question in today’s society is whether money can buy happiness. Happiness has been shown to be related to many things. It is found to be related to social class, success, power, health, valued belongings, religious beliefs, companionship, being employed in a secure job, having a full social life, and more or less accumulation of money.

Research shows that money does not buy happiness but it comes indirectly from the higher rank in society that money brings. “The rank-income hypothesis” was tested and found that the ranked position of an individual’s income predicts general life satisfaction. Once someone has a large amount of money they may become part of a different social group which brings more confidence and satisfaction. A persons’ satisfaction and self-esteem will increase if his social rank increases or if those who once had the same social rank him decreases. People naturally feel better and more satisfied if they are better than others. People dedicate so much energy in trying to make more money when having more money does not make them that much happier. People may be happy with their current level of wealth and stop trying to accumulate more if not for the urge humans have to compare themselves with others in every way possible: attractiveness, intelligence, height, weight, and crucially, financial success. The writer H. L. Mencken said, "A wealthy man is one who earns $100 a year more than his wife's sister's husband. This frustration of seeing someone “better” than you become a huge motivator when it comes to making more money. People are very concerned with the phenomenon of “Keeping up with the Joneses. ” Hollywood made a movie about a wealthy and good looking American family and the effects they have on the people living in their neighborhood. The movie presents us with “conspicuous consumption” and comparing each other’s expensive possessions and social rank. People will always try to move ahead of as many of their friends as possible in order to” improve” themselves.

People try to enhance their social hierarchy by making unnecessary investments in order to satisfy their preoccupation with their relative social standing which the socio-economic class isn’t Ariella Dayan  Quantitative Research Methods- Shani Greenp to do, although we can see this form of competitiveness in the socio-economic class as well. A recent study shows that a group of people in the US who are most opposed to an increase in the minimum wage are those who make just above the minimum wage. Because of the minimum wage increases, these people will now be in "the last place", along with all the people whom they used to feel superior to. Another reason why money translated to happiness often is that money has a property that many other things that matter in life do not. Money is something that can be counted. When people reflect on whether they are better off this year than last, they cannot always give an exact answer. A person cannot say that their life is 32 percent more meaningful. This is not a calculation we are accustomed to making. Salary, on the other hand, is measurable.

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If a person is making a better salary they will think that they are doing better in their life. This also may explain why people are always buying larger houses and larger televisions. As people become richer, they quickly grow accustomed to bigger houses, flashier cars, and designer garments, but their possessions don't actually make them much happier. Studies show that even lottery winners, after an initial period of adjustment, don't become much happier. The reason for this is because the faster people try to get ahead, the quicker they end up back where they started. Another research conducted at the University of British Columbia in Vancouver asked people to predict how happy they would be if their annual income was anywhere from $5000 up to $1 million. After this, the people were asked how much money they really earned and how happy they were with their lives. It was found that people generally overestimated the impact of money on happiness. Those who earned $25,000 a year predicted that their happiness would double if they made $55,000. But when we measured the happiness of people at these two levels of income by having them rate their satisfaction with life on a call from 1 to 10, it was found that the wealthier group was only 9 percent happier.

On the other hand, people who make very little money do become significantly happier when they earn more. But a large survey of people in the US showed that the impact of additional income on happiness Ariella Dayan Methods- Shani Greenp tends to fade around an annual salary of $75,000. There is no data suggesting that making more money makes people less happy but it does stop making them much happier. What people can do in order to gain happiness in a better manner is by doing something unusual with it or “giving it away”. It turns out that spending money on yourself does not make you any happier, but spending on others does. Donating to a charity or buying coffee for a friend is an efficient way of turning cash into happiness. A worldwide survey was created in 2006 by Gallup. He asked people to imagine themselves on a ladder with steps numbered from zero to 10, with the bottom of the ladder representing "the worst possible life for you" and the top representing "the best possible life for you. The respondents were then asked to say which step they were standing on. If you instruct people to think about the best possible and worst possible lives they could be living, you are surely inviting them to compare their living standards with those of people elsewhere. This methodological quirk alone could easily explain why residents of poor countries report low scores and residents of rich countries report high ones, and it wouldn't have anything to do with money-making people happier.

The conclusion is that happiness and money do correlate but only to a certain extent. People are more concerned with their social class, “getting ahead” and where money can get them in life than the actual amount of money. This topic should continue to be researched in order to find it in today's generation a person can actually be happy with what he or she has without comparing themselves to their peers and surroundings.


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