People think that money affects happiness more than it really does

With dogged determination we lie, rob, borrow, gamble and sometimes work too, in the hope of boosting our income. So zealous is our pursuit of money, it's as if we think it will somehow make us happier. Strangely enough, whilst psychologists and economists have conducted numerous studies showing that the relationship between income and happiness is weak, only one prior study has asked what lay people really believe about money and happiness (and this was focused on middle-income, working women). It's into this empirical desert that Lara Aknin and colleagues arrive with a survey of hundreds of North Americans of mixed age, gender and wealth. Aknin's team have found that people do indeed overestimate the link between money and happiness, especially at lower levels of income.

The study worked by asking people what their own income and happiness levels were and then asking them to estimate the happiness of people on lower or higher incomes than themselves. The participants' estimates of the happiness of people on high incomes was largely accurate, but they massively underestimated the happiness of people on lower incomes. The picture was the same in a second study that asked people to estimate how happy they'd be if they earned more or less than they really did.

More detailed analysis showed that people on higher incomes were more likely to overestimate the relationship between money and happiness, perhaps because they had more to fear from losing the ability to maintain their current standard of living.

"We demonstrate that adult Americans erroneously believe that earning less than the median household income is associated with severely diminished happiness," the researchers said. "[This is] a false belief that may lead many people to chase opportunities for increased wealth or forgo a reduction in income for increased free time."

Further reading

Aknin, L., Norton, M., & Dunn, E. (2009). From wealth to well-being? Money matters, but less than people think The Journal of Positive Psychology, 4 (6), 523-527 DOI: 10.1080/17439760903271421