Evidence shows a link between our income and happiness to a certain point, but what truly makes us happy?
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What really makes us happy, beyond earning a certain level of income?
Astudy by Princeton Universityin 2010 showed that, in the US, those on very low incomes have increased rates of stress and decreased happiness. Then as income increases up to $75,000, our happiness increases along with it because we can meet our basic needs. However surprisingly, the study found on average people who earned more than $75,000 experienced decreased happiness and more stress.
So, what are the factors that are essential to our happiness?
In this article, we look at:
- What are our needs and which are most important for happiness?
- What factors are most important in being happy?
- How does happiness in Australia compare to other nations and what we can learn from this?
- What can we learn about happiness from our experience of the pandemic?
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VicHealth CEO Dr Sandro Demaio spoke with ABC Radio Melbourne about the importance of factors other than income in being happy.
What are our needs and which are most important for happiness?
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You might have heard people refer toMaslow's hierarchy of needs, a theory that we behave according to how well our basic needs are met. Meeting our basic needs is most important, then once this is achieved, we can look at things like finding creative satisfaction and being recognised, which are less important in Maslow’s theory.
Our basic needs include:
- air
- water
- food
- sleep
- health
- shelter
“Those on very low incomes are unable to meet basic needs like food, housing, health care, [and this] is associated with increased stress and decreased happiness,” said Dr Demaio.
Other basic needs outlined in Maslow’s theory that are not requirements for survival, but essential for our quality of life, include:
- safety
- financial security
- love
- friendship
What factors are most important in being happy?
A2010 studyby Princeton University indicated that a higher income resulted in greater sense of security and contentment only to a certain point. The study indicated that beyond $75,000, higher income is neither the road to experienced happiness nor the road to the relief of unhappiness or stress.
“It gets to the point where you have enough money to be happy to cover most of life's expenses, most of the stresses are taken off the table, and then increased income actually starts to get your happiness back down again,” Dr Demaio explained.
So, if being rich doesn’t make us happy what does? According to Dr Demaio these factors are key to happiness:
- time with family and friends
- meaningful connections with friends and colleagues
- good physical and emotional health
- having a sense of purpose and meaning
- feeling connected to community
- feeling independent and free to make informed choices
How does happiness in Australia compare to other nations and what can we learn from this?
“Here in Australia we do have higher levels of inequality, unfortunately, and the evidence suggests we work some of the longest hours in the world. So, I think we've probably still got a little way to go to work out the work life balance, myself included. But we're not bad [according to] the global rankings,” said Dr Demaio.
According to anIpsos survey, Australia has dropped to 6th on the global happiness scale since the COVID-19 pandemic started. Australians who took part in the survey were given 29 options, and they ranked the following five as the sources of “greatest happiness”:
- My relationship with partner/spouse (47%)
- My health/physical well-being (43%)
- My children (42%)
- My living conditions (39%)
- Feeling my life has meaning (38%)
What can we learn about happiness from our experience of the pandemic?
"What's really got us through COVID are our loved ones," said Dr Demaio. "It's the connection to community. I think these are much more important than the kind of material perks that really drive many of us.
“COVID really reminded me of the importance of the non-financial things in life that give you a great sense of meaning. Now is a good time to reflect on that. As we return to normal, what are some ofthose things we want to hold on to, and what's kept us going over the last 12 months that we want to take forward?"
Beyond an income that enables us to feel financially secure, the really meaningful factors in being happy are our personal relationships and our sense of purpose.
Take time to reflect on what has given you a sense of wellbeing and comfort throughout the pandemic, and make these part of your life as we return to normal. That might be dinner with family, regular Zoom calls, meditation, outdoor walks or listening to music.
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FAQs
You don't want to be rich — you want to be happy. Many people mistakenly believe that the former leads to the latter. While it's certainly true that money can help you achieve your goals, provide for your future, and make life more enjoyable, merely having money doesn't guarantee happiness.
Is being rich the key to happiness? ›
Money contributes to happiness when it helps us make basic needs but the research tells us that above a certain level more money doesn't actually yield more happiness.
What is better than being rich? ›
Happy. As I mentioned, once our basic needs have been met, money contributes very little to our overall happiness and well-being. Gratitude, generosity, and contribution produce far more. And that is the real goal: to live lives of joy and fulfillment and help others to do the same.
Should you do what makes you happy or money? ›
We've heard the adage, “Money can't buy happiness,” but research shows that's essentially false. More than a decade ago, a Princeton University study found that a higher income can deepen your satisfaction with how your life is going.
Can a person be rich but not happy? ›
Indeed, some wealthy individuals are even said to suffer from “affluenza,” a social condition among those who are excessively focused on material possessions and consumerism, to the point where their personal values and behaviors are negatively impacted.
Why is it important to be rich? ›
Importance of wealth
Wealth not only grants you access to the infinite pleasures of the world, but it also gives you peace of mind that you don't have to work day-in and day-out to make a healthy, peaceful, and prosperous living. It gives you financial freedom and free time that you can use to pursue happiness.
Who is happier between the rich and poor? ›
And, interestingly, income may not have as much bearing on that at all. Money, it seems, can't buy everything. In fact, new research shows that richer and poorer people are generally as happy as each other. Where they differ is in their level of sadness: higher-income individuals are markedly less sad on a daily basis.
Are rich or poor people happier? ›
The research between salary and happiness suggests similar insights. Even those on the Forbes 100 wealthiest were only slightly happier than the average Americans, according to a study by Ed Diener of the University of Illinois.
Does more money make us happy? ›
By looking at the progress of participants' unhappiness diminishing, rather than their happiness increasing, the new research confirmed the earlier findings that a higher income is correlated with less dissatisfaction, or a higher level of happiness.
How much money is considered rich? ›
Americans need at least $2.2 million in assets to be considered rich, according to Charles Schwab's 2023 Modern Wealth Survey. The investment platform surveyed 1,000 Americans to determine the average net worth required to be considered wealthy in America.
Being rich with no friends means having financial stability and the ability to afford a comfortable lifestyle. However, it also means lacking emotional support, companionship, and the sense of belonging that comes with having friends.
What makes someone rich? ›
Someone who has $1 million in liquid assets, for instance, is usually considered to be a high net worth (HNW) individual. You might need $5 million to $10 million to qualify as having a very high net worth while it may take $30 million or more to be considered ultra-high net worth.
Should I follow money or happiness? ›
In the world we live in, it's necessary to make money, but that doesn't mean it needs to be our top priority when choosing our careers. Ultimately, you will do better and work your way up faster at a job you genuinely care about, so instead of following the money, follow your passion and give your career a boost.
Is money necessary for a happy life? ›
People living in poverty are generally less happy than those whose needs are met. Being able to pay for your bills and having enough to get by financially will help you succeed in feeling happy. Having more money than you need, however, will not bring you extra happiness. Money and happiness are not proportional.
Is money important for a happy life? ›
If we have less than what we need, or if what we have is costing us too much, we can never be happy. We need money to eat, sleep, dress, work, play, relate, heal, move about, and enjoy comforts.
Are rich or poor people more happy? ›
The research between salary and happiness suggests similar insights. Even those on the Forbes 100 wealthiest were only slightly happier than the average Americans, according to a study by Ed Diener of the University of Illinois.
Is it more important to be happy or successful? ›
The connection between success and happiness
Work hard, earn good grades, get a raise, and you'll feel satisfied. But recent research suggests that it's actually the other way around. Setting career goals can lead to stress and disappointment, while focusing on being happy first can help you succeed.
Are rich people happier or sadder? ›
“Using the most sophisticated measures of emotional well-being in a large-scale survey of the American population, we found that wealthier individuals reported less sadness but no more happiness during their daily activities,” says the study, which is published in the journal Social Psychological and Personality ...
What is more important money or life? ›
Money should not cost us our soul, relationships, dignity, health, intelligence and joy in simple things of life. People who figure out what they truly value and then align their money with those values have the strongest sense of financial and personal well-being.
