What Role Does Money Play in Our Happiness?
When money impacts happiness…
Does money make you more or less happy? It really depends on your motivations.
On the one hand, if you’re tight on money, getting a little bit more does alleviate that stressor and increase your well-being. So yes, more money does make you happier.
It isn’t the money, however, that drives happiness. It’s the fulfillment of basic and psychological needs afforded by income (Veenhoven, 1991). It’s also because, according to the Conservation of Resource theory (Hobfall, 1989, 2002), we seek possession of resources as a safety net, and achieving that makes us happier.
This trend however only applies to a certain point. As we’ve mentioned in another article, this effect wanes somewhere in the $50K-75K annual household income range. Beyond that, additional money doesn’t either help or hurt your well-being.
Why is this? Because as our income goes up, so too do our aspirations. In other words, all of a sudden we want better stuff (Hudders & Pandelaere, 2011). But perhaps the biggest factor is that no matter our income, we tend to compare ourselves to those who are richer than us (Ferrer-i-Carbonell, 2005). So no matter how rich we are, when money is on the mind, something is to be desired.
Your perspective about money (and materialism) and how it impacts happiness
In fact, the more we think about it, the worse off we are. Chasing materialism, defined as “viewing possessions and acquisitions as central to one’s life and happiness,” has been consistently linked to lower well-being (Dittmar, Bond, Hürst, & Kasser, 2014; Belk, 1985; Kasser & Ryan, 1993, 1996; Richins, 1994; Richins & Dawson, 1992; Van Boven, 2005).
Wanting money seems to have a toxic influence on happiness, especially if it is fueled by motives such as seeking power, showing off, and overcoming self-doubt (Srivastava, Locke, & Bartol, 2001).
Materialism is also fundamentally at odds with intrinsic values concerning personal growth, close personal relationships, and helping others …all stuff that drives happiness. In other words, when you choose to value materialism, it forces you to de-prioritize these other values (Schwartz, 1992).
What’s the impact? Materialism is associated with compulsive consumption, engaging more frequently in risky health-related behaviors (like smoking cigarettes and drinking alcohol), a more negative self-image, less positive affect, more depression, lower overall subjective well-being, a less positive self-image, more anxiety, lower-quality romantic and friend relationships, more symptoms of a variety of DSM Axis I disorders, worse physical health, more negative affect, and lower life satisfaction (Dittmar et al., 2014). In short, it’s pretty bad for you!
Not to be confused, getting a raise at work by landing that dream job with prestige and responsibility is not the same thing as materialism. If you’re excited for the right reasons (landing a job that makes you happy because it satisfies your core values), then that’s cause for celebration! But if the primary motivation is money, then the long-term effect on well-being will likely be more bad than good (Ryan & Deci, 2000).
Conclusion and Next Steps
So the jury is in. Leading with a materialistic mindset is pretty harmful to your happiness. So what should you do about it? The most effective way to change your mindset is always to change your behavior – your daily practices. For more on that, read our full article on how to spend your time and money to optimize for happiness (LINK).
In the meantime, there are some simple ways you can adjust your perspective to be less materialistic.
- #1 Focus on Intrinsic Values. Get out your journal and write about your two most important intrinsic values, then remind yourself of these values every day for a month, reflect on those values, and read inspirational quotes about those values.
- #2 Inward Reflection. Pause and reconsider the way in which you have previously rated your values. (This causes people to think twice and place less importance on extrinsic values.) Mindfulness and gratitude reflections also cause you to deprioritize materialistic values, as do reflections of your own death. Not for a brief moment – it has to be a deep, sustained reflection about your death.
- Aknin, L.B., Sandstrom, G. M., Dunn, E.W., & Norton, M. I. (2011). It’s the recipient that counts: Spending money on strong social ties leads to greater happiness than spending on weak social ties. PLOS ONE, 6(2), e17018. doi: 10.1371/journal.pone.0017018
- Banwell, C., Hinde, S., Dixon, J., & Sibthorpe, B. (2005). Reflections on expert consensus: A case study of the social trends contributing to obesity. The European Journal of Public Health, 15(6), 564-568. doi:10.1093/eurpub/cki034
- Belk, R. W. (1985). Materialism: Trait aspects of living in the material world. Journal of Consumer Research, 12(3), 265-280. doi: 10.1086/208515
- Bhattacharjee, A., & Mogilner, C. (2014). Happiness from ordinary and extraordinary experiences. Journal of Consumer Research, 41(1), 1-17. doi: 10.1086/674724
- Caprariello, P. A., & Reis, H. T. (2013). To do, to have, or to share? Valuing experiences over material possessions depends on the involvement of others. Journal of Personality and Social Psychology , 104(2),199. doi: 10.1037/a0030953
- Carstensen, L. L., Isaacowitz, D. M., & Charles, S. T. (1999). Taking time seriously: A theory of socioemotional selectivity. American Psychologist, 54(3), 165-181. doi: 10.1037/0003- 066X.54.3.165
- Carter, T. J., & Gilovich, T. (2012). I am what I do, not what I have: The differential centrality of experiential and material purchases to the self. Journal of Personality and Social Psychology, 102(6), 1304-1317. doi: 10.1037/a0027407
- Chan, C., & Mogilner, C. (2017). Experiential gifts foster stronger social relationships than material gifts. Journal of Consumer Research, 43 (6), 913-931. doi: 10.1093/jcr/ucw067
- Cozzolino, P. J., Sheldon, K. M., Schachtman, T. R., & Meyers, L. S. (2009). Limited time perspective, values, and greed: Imagining a limited future reduces avarice in extrinsic people. Journal of Research in Personality, 43(3), 399-408. doi: 10.1016/j.jrp.2009.01.008
- Cozzolino, P. J., Staples, A. D., Meyers, L. S., & Samboceti, J. (2004). Greed, death, and values: From terror management to transcendence management theory. Personality and Social Psychology Bulletin, 30(3), 278-292. doi: 10.1177/0146167203260716
- Dittmar, H., Bond, R., Hurst, M., & Kasser, T. (2014). The relationship between materialism and personal well-being: A meta-analysis. Journal of Personality and Social Psychology, 107, 879–924.
- Dunn, E. W., Aknin, L. B., & Norton, M. I. (2008). Spending money on others promotes happiness. Science, 319(5870), 1687-1688. doi: 10.1126/science.1150952
- Etkin, J., & Mogilner, C. (2016). Does variety among activities increase happiness? Journal of Consumer Research, 43(2), 210-229. doi: 10.1093/jcr/ucw021
- Ferrer-i-Carbonell, A. (2005). Income and well-being: An empirical analysis of the comparison income effect. Journal of Public Economics, 89 , 997-1019.
- Gasiorowska, A., Zaleskiewicz, T., & Wygrab, S. (2012). Would you do something for me? The effects of money activation on social preferences and social behavior in young children. Journal of Economic Psychology, 33(3), 603-608. doi: 10.1016/j.joep.2011.11.007
- Gilovich, T. & Kumar, A. (2015). We’ll always have Paris: The hedonic payoff from experiential and material investments. In M. Zanna and J. Olson (Eds.), Advances in experimental social psychology, Vol. 51 (pp. 147-187). New York, NY: Elsevier.
- Gimenez-Nadal, J. I., & Molina, J. A. (2015). Voluntary activities and daily happiness in the United States. Economic Inquiry, 53(4), 1735-1750. doi: 10.1111/ecin.12227
- Goodin, R. E., Rice, J. M., Bittman, M., & Saunders, P. (2005). The time-pressure illusion: Discretionary time vs. free time. Social Indicators Research, 73(1), 43-70. doi: 10.1007/s11205-004-4642-9
- Gino, F., & Mogilner, C. (2014). Time, money, and morality. Psychological Science, 25(2), 414-421. doi: 10.1177/0956797613506438
- Hershfield, H. E., Mogilner, C., & Barnea, U. (2016). People who choose time over money are happier. Social Psychological and Personality Science , 7(7), 697-706. doi: 10.1177/ 1948550616649239
- Hobfall, S. E. (1989). Conservation of resources: A new attempt at conceptualizing stress. American Psychologist, 44, 513-524.
- Hobfall, S. E. (2002). Social and psychological resources and adaptation. Review of General Psychology, 6, 307-324.
- Hudders, L., & Pandelaere, M. (2011). The silver lining of materialism: The impact of luxury consumption on subjective well-being. Journal of Happiness Studies, 13(3), 411-437. doi:10.1007/s10902-011-9271-9
- Jabs, J., Devine, C. M., Bisogni, C. A., Farrell, T. J., Jastran, M., & Wethington, E. (2007). Trying to find the quickest way: Employed mothers’ constructions of time for food. Journal of Nutrition Education and Behavior, 39(1), 18-25. doi: 10.1016/j.jneb.2006.08.011
- Kahneman, D., Krueger, A. B., Schkade, D. A., Schwarz, N., & Stone, A. A. (2004). A survey method for characterizing daily life experience: The day reconstruction method. Science, 306(5702), 1776-1780. doi:10.1126/science.1103572
- Kahneman, D., & Deaton, A. (2010). High income improves evaluation of life but not emotional well-being. Proceedings of the National Academy of Sciences, 107(38), 16489-16493. doi: 10.1073/pnas.1011492107
- Kasser, T., & Ryan, R. M. (1993). A dark side of the American dream: Correlates of financial success as a central life aspiration. Journal of Personality and Social Psychology , 65(2), 410-422. doi: 10.1037/0022-35126.96.36.1990
- Kasser, T., & Ryan, R. M. (1996). Further examining the American dream: Differential correlates of intrinsic and extrinsic goals. Personality and Social Psychology Bulletin , 22(3), 280-287. doi:10.1177/0146167296223006
- Kasser, T., & Sheldon, K. (2009). Time affluence as a path toward personal happiness and ethical business practice: Empirical evidence from four studies. Journal of Business Ethics, 84(2), 243-255. doi:10.1007/s10551-008-9696-1
- Krueger, A. B., Kahneman, D., Schkade, D., Schwarz, N., & Stone, A. A. (2009). National time accounting: The currency of life. In A. Krueger (Ed.), Measuring the subjective well-being of nations: National accounts of time use and well-being (pp. 9-86). Chicago, IL: University of Chicago Press.
- Kurtz, J. L. (2008). Looking to the future to appreciate the present: The benefits of perceived temporal scarcity. Psychological Science, 19(12), 1238-1241. doi: 10.1111/j.1467-9280.2008.02231.x
- Lathia, N., Sandstrom, G. M., Mascolo, C., & Rentfrow, P. J. (2017). Happier people live more active lives: Using smartphones to link happiness and physical activity. PLOS ONE, 12(1), e0160589. doi:10.1371/journal.pone.0160589
- Layous, K., Kurtz, J., Chancellor, J., & Lyubomirsky, S. (2017). Reframing the ordinary: Imagining time as scarce increases well-being. The Journal of Positive Psychology, 1-8. doi: 10.1080/17439760.2017.1279210
- Liu, W., & Aaker, J. (2008). The happiness of giving: The time-ask effect. Journal of Consumer Research, 35(3), 543-557. doi: 10.1086/588699
- Lynch Jr, J. G., Netemeyer, R. G., Spiller, S. A., & Zammit, A. (2009). A generalizable scale of propensity to plan: the long and the short of planning for time and for money. Journal of Consumer Research, 37(1), 108-128. doi: 10.1086/649907
- Mochon, D., Norton, M. I., & Ariely, D. (2008). Getting off the hedonic treadmill, one step at a time: The impact of regular religious practice and exercise on well-being. Journal of Economic Psychology , 29(5), 632-642. doi: 10.1016/j.joep.2007.10.004
- Mogilner, C. (2010). The pursuit of happiness: Time, money, and social connection. Psychological Science, 21(9), 1348-1354. doi: 10.1177/0956797610380696
- Mogilner, C. (2010). The pursuit of happiness: Time, money, and social connection. Psychological Science, 21(9), 1348-1354. doi: 10.1177/0956797610380696
- Mogilner, C., & Aaker, J. (2009). “The time vs. money effect”: Shifting product attitudes and decisions through personal connection. Journal of Consumer Research, 36(2), 277-291. doi: 10.1086/597161
- Mogilner, C., Aaker, J., & Kamvar, S. D. (2012). How happiness affects choice. Journal of Consumer Research, 39(2), 429-443. doi: 10.1086/663774
- Mogilner, C., Chance, Z., & Norton, M. I. (2012). Giving time gives you time. Psychological Science, 23(10), 1233-1238. doi: 10.1177/0956797612442551
- Mogilner, C., Kamvar, S. D., & Aaker, J. (2011). The shifting meaning of happiness. Social Psychological and Personality Science, 2(4), 395-402. doi: 10.1177/1948550610393987
- Nakamura, J., & Csikszentmihalyi, M. (2009). Flow theory and research. In C. R. Synder & S. J. Lopez (Eds.), Handbook of positive psychology (pp. 195-206). New York, NY: Oxford University Press.
- Norton, M.I., Mochon, D., & Ariely, D. (2012). The IKEA effect: When labor leads to love. Journal of Consumer Psychology, 22(3), 453-460. doi: 10.1016/j.jcps.2011.08.002
- Perlow, L. A. (1999). The time famine: Toward a sociology of work time. Administrative Science Quarterly, 44(1), 57-81. doi: 10.2307/2667031
- Quoidbach, J., & Dunn, E. W. (2013). Give it up: A strategy for combating hedonic adaptation. Social Psychological and Personality Science, 4(5), 563-568. doi: 10.1177/1948550612473489
- Reed, A., Aquino, K., & Levy, E. (2007). Moral identity and judgments of charitable behaviors. Journal of Marketing, 71(1), 178-193. doi: 10.1509/jmkg.71.1.178
- Rheault, M. (2011). Lack of money tops list of Americans’ financial worries. Gallup Poll Social Series: Consumption Habits. Retrieved from: http://www.gallup.com/poll/148625/lack- money-tops-list-americans-financial-worries.aspx
- Richards, J., Jiang, X., Kelly, P., Chau, J., Bauman, A., & Ding, D. (2015). Don't worry, be happy: Cross-sectional associations between physical activity and happiness in 15 European countries. BMC Public Health, 15(1), 1-8. doi: 10.1186/s12889-015-1391-4
- Richins, M. L. (1994). Special possessions and the expression of material values. Journal of Consumer Research, 21(3), 522-533. doi: 10.1086/209415
- Richins, M. L., & Dawson, S. (1992). A consumer values orientation for materialism and its measurement: Scale development and validation. Journal of Consumer Research, 19(3), 303-316. doi: 10.1086/209304
- Ryan, R. M., & Deci, E. L. (2000). Self-determination theory and the facilitation of intrinsic motivation, social development, and well-being. American Psychologist, 55, 68-78.
- Schwartz, S.H. (1992). Universals in the content and structure of values: Theory and empirical tests in 20 countries. In M. Zanna (Ed.), Advances in experimental social psychology, vol. 25, (pp. 1–65). New York: Academic Press.
- Shah, A. K., Mullainathan, S., & Shafir, E. (2012). Some consequences of having too little. Science, 338(6107), 682-685. doi: 10.1126/science.1222426
- Shah, A. K., Shafir, E., & Mullainathan, S. (2015). Scarcity frames value. Psychological Science, 26(4), 402-412. doi: 10.1177/0956797614563958
- Smeets, P., Whillans, A., Bekkers, R., & Norton, M.I. (2017). Control over time predicts greater life satisfaction among millionaires. Working paper.
- Spiller, S. A. (2011). Opportunity cost consideration. Journal of Consumer Research, 38 (4), 595-610. doi: 10.1086/660045
- Srivastava, A., Locke, E. A., & Bartol, K. M. (2001). Money and subjective well-being: it’s not the money, it’s the motives. Journal of subjective well-being: it’s not the money, it’s the motives. Journal of Personality and Social Psychology, 80, 959–971.
- Strazdins, L., Griffin, A. L., Broom, D. H., Banwell, C., Korda, R., Dixon, J., ... & Glover, J. (2011). Time scarcity: Another health inequality? Environment and Planning A, 43(3), 545-559. doi: 10.1068/a4360
- Trope, Y., & Liberman, N. (2010). Construal-level theory of psychological distance. Psychological Review, 117(2), 440-463. doi: 10.1037/a0018963
- Van Boven, L. (2005). Experientialism, materialism, and the pursuit of happiness. Review of General Psychology, 9(2), 132-142. doi: 10.1037/1089-26188.8.131.52
- Veenhoven, R. (1991). Is happiness relative? Social Indicators Research, 24, 1-34.
- Vohs, K. D., Mead, N. L., & Goode, M. R. (2006). The psychological consequences of money. Science, 314(5802), 1154-1156. doi: 10.1126/science.1132491
- Vohs, K. D., Mead, N. L., & Goode, M. R. (2008). Merely activating the concept of money changes personal and interpersonal behavior. Current Directions in Psychological Science, 17(3), 208-212. doi:10.1111/j.1467-8721.2008.00576.x
- Vohs, K.D., Wang, Y., Gino, F., & Norton, M.I. (2013). Rituals enhance consumption. Psychological Science, 24(9), 1714-1721. doi: 10.1177/0956797613478949
- Wang, F., Orpana, H. M., Morrison, H., De Groh, M., Dai, S., & Luo, W. (2012) Long-term association between leisure-time physical activity and changes in happiness: Analysis of the prospective national population health survey. American Journal of Epidemiology, 176 (12), 1095-1100. doi:10.1093/aje/kws199
- Weinstein, N., & Ryan, R. M. (2010). When helping helps: Autonomous motivation for prosocial behavior and its influence on well-being for the helper and recipient. Journal of Personality and Social Psychology, 98(2), 222-244. doi: 10.1037/a0016984
- Whillans, A. V., Weidman, A. C., & Dunn, E. W. (2016). Valuing time over money is associated with greater happiness. Social Psychological and Personality Science , 7(3), 213-222. doi: 10.1177/1948550615623842
- Whillans, A. V., Seider, S. C., Chen, L., Dwyer, R. J., Novick, S., Gramigna, K. J., ... & Dunn, E. W. (2016). Does volunteering improve well-being? Comprehensive Results in Social Psychology , 1(1-3), 35-50. doi: 10.1080/23743603.2016.1273647
- Whillans, A.V., Dunn, E.W., Smeets, P., Bekkers, R., & Norton, M.I. (2017). Buying time promotes happiness. Proceedings of the National Academy of Sciences, 114 (32), 8523-8527. doi:10.1073/pnas.1706541114
- Zauberman, G., & Lynch Jr, J. G. (2005). Resource slack and propensity to discount delayed investments of time versus money. Journal of Experimental Psychology: General, 134 (1), 23-37. doi: 10.1037/0096-34184.108.40.206