Insightology

This question has been asked for millennia and before any research was done there were three possible answers: yes, no, maybe so. After some research was done in the 70's, we had what was called as the Easterlin paradox which seemed to show that money and happiness were not related. More recent research from the Wharton School at the University of Pennsylvania with data from many countries around the globe seems to indicate that people with more money are, in fact, happier.

Take a look at this chart. It shows the relationship between life satisfaction and GDP per capita, or happiness and richness of nations. Without a doubt there is a positive relationship between happiness as measured in the surveys and how rich a country is. But there are also interesting anomalies that are worth exploring. For example, would the level of individual freedom have anything to do with the happiness level of people in a country?

One would expect that people in countries with more individual freedom would be happier and generally speaking that is true. But look at the positions of the U.S. and Saudi Arabia, two countries that are quite different in terms of individual liberties. Both show the same level of life satisfaction. Is that because people in Saudi Arabia are really as happy as those in the U.S.? Or is there something about the way the survey was conducted (sampling, scale usage etc) that provides this result? Myanmar and Hong Kong, while vastly different in terms of per capita GDP are virtually identical in terms of life satisfaction. Yet it is not unreasonable to say that these are two very different countries.

Inevitably studies of this nature raise a lot of questions such as what we mean by happiness, what is the direction of causation, is the question actually measuring happiness, is saying you are happy the same as actually being happy etc. The authors, Justin Wolfers and Betsey Stevenson acknowledge that many questions are open and cannot be fully answered with the data they have on hand.

Based on the evidence we have so far it appears that people in richer countries are happier. The same authors have studied the happiness issue within the U.S. and found that rich people are happier than poorer people. This kind of comparison is a little bit easier because we are not looking across cultures, but is it still based on specific survey questions that may or may not measure "happiness" properly (if in fact there is a proper way to measure happiness). So while there is evidence for a positive link between happiness and money, there are plenty of questions a skeptic could raise.