The Relationship Between Money and Happiness

A new study co-authored by Yale SOM’s Michael Kraus finds that our perceived wealth and status relative to others affects how happy we are. Although money doesn’t directly lead to happiness, this study suggests that it is more strongly related to happiness than some people think.

This is true particularly when people compare their income with someone else’s. This is contrary to earlier studies where decades of social science research shows a weak relationship between money and happiness, particularly in wealthy societies. This new research was motivated when this disparity in previous research was noticed – of weak links between income or money and happiness and the idea that many people actively seek out prestigious jobs and higher status. As inequality has increased in some societies, it has been noted that overall happiness has declined.