Does Money Lead To Happiness


The relationship between money and happiness has long been a subject of scrutiny. The reason being that elements that makes happiness are interdependent and influence each other in a bigger latitude.


Merely, well-being encompasses  satisfaction in life which is attributed to standards of living, psychological feelings and level of income which are all interchangeable.


This leads to a question ‘ Does Money Lead To Happiness ?

Researchers have increasingly performed experiments based on theory of utility. Most people have the intuition that wealth and happiness are closely connected if not in ‘linear’ terms. Probably because the more income you earn, the less stresses  in settling the daily expenses.


In this theory where poll was conducted, it stems from the prediction of life evaluation. Income was a strong indicator of satisfying one’s standard of living well being and ownership of convenient ‘lifestyle. Therefore money is seen as an effective tool for providing consumer choices that satisfies psychological needs.

Aristotle’s motivation theory which describes the hierarchical level of needs draws a parallel paradigm of  GALLUP WORLD POLL satisfaction in each succeeding stage.



It is an ‘Apex Structure’ which states that lower levels get motivation through securing their physiological and safety needs while the top are concerned with esteem and self actualization.


The interpretation is hinged on the assumptions that people have different aspirations in life which makes them ‘move further’ each time they accomplish a thing thus having a perception of never ending trend. However it is not clear whether the success of the higher levels are directly related with levels of personal satisfaction.

The dynamic model by (Van Prang and Kapten 1973) supports the fact that happiness is increased by income in the short term but cannot hold long since other factors come into play including social comparisons and psychological needs. This model tries to explain the importance of relative utility whereby raising of the income may not increase average long term happiness because additional income allows the additional needs to be be filled by the person.

Based on motivation and well being, researchers have been exploring the elements that contributes to happiness to individual. SDT, Ryan and Deci 2000 ‘Self Determination Theory’ predicted that a person will be happiest when three basic psychological needs were satisfied namely:

aAutonomous – When actions are internally motivated ,freely chosen and guided

bCompetence – When talents and abilities are used to master a skill or learn a new task.

c. Relatedness – When a person is connected to activities that develop supportive relationship and feels understood by others.

In discovering relationship between money and happiness, it is easily to conclude that  money is important to happiness to a certain point. Researchers estimates that happiness is under personal control and translate in how well you spend your money. Definitely money buys freedom from worries of basics in life!

Individuals plays a central role in determining the ‘right‘ type of spending to increase well-being.  If money is spend well it increases happiness and vice versa.

Money spend on non- personalised products produced a greater results of life satisfaction than  spending on participant’s personality in terms of increasing happiness. This is because non- personalised products have a higher value of recognition due to experience it creates in one’s mind.

In essence, there needs to be a strong relationship between money and life satisfaction where the causal effect of one variable would not have an abnormal effect on the other. The strength of match should be moderated so that happiness will be under control.

I hope you have enjoyed reading. Please if you have any query, opinion or comment you are free to post and I will get back to you soon.



Founder :

Email :