Using Your Money To Be Happier — Key Takeaways
Prioritizing time over money — choosing fewer hours and less pay over more income — is empirically linked to greater happiness, stronger relationships, and more meaningful work.
Key takeaways
Income-happiness link is tiny: $15K vs $250K = 5 points on 100-pt scale
Income-happiness link is tiny: $15K vs $250K = 5 points on 100-pt scale
- Correlation between log income and happiness is only 0.09 in experience-sampling data — a near-zero relationship.
- A fourfold income difference equals the happiness effect of a weekend, and is less than 1/3 the effect of having a headache.
Happy people gain well-being from more income; unhappy people plateau
Happy people gain well-being from more income; unhappy people plateau
- 2023 adversarial collaboration reconciling conflicting 2010 and 2021 studies found baseline happiness determines whether income keeps helping.
- For already-unhappy people, happiness plateaus around $85K (experienced) or $137K (life evaluation) in today's dollars.
Homeownership doesn't make people happier than renting
Homeownership doesn't make people happier than renting
- US sample of 600 women: homeowners no happier than renters and spent less time on enjoyable activities.
- German sample: homeownership raised life satisfaction far less than buyers anticipated when making the purchase decision.
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In this video
- 1mIntroduction: Personal Finance and the Good Life
- 2mTwo Types of Happiness and the PERMA-V Model
- 5mIncome, Money, and Happiness: What the Research Shows
- 10mAdaptation, Prediction Errors, and the Hedonic Treadmill
- 13mApplying the Research: Time vs. Money, Housing, and Spending Choices
- 18mRegret, Compounding Decisions, and Goal-Setting
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