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Does money make you happy? Absolutely

BEAWIHARTA / Reuters

 Linda Carroll writes ...

Scientists have finally shredded the old saw about money and happiness. Apparently, money can purchase a whole lot of happiness.

After poring over data from 140 countries, researchers from The Wharton School concluded that the more money you have, the more satisfied you are with life – and that relationship holds true whether you are a citizen of the United States or of Burundi. As it turns out, the happiness effect isn’t relative; it’s based on a person’s absolute income.

What that means is that your happiness is very dependent on the economic prosperity of the country in which you live. As a general rule, the wealthier a nation is, the happier its citizens are.

Intuitively that makes a lot of sense, says study co-author Justin Wolfers, an associate professor of business and public policy at The Wharton School of the University of Pennsylvania. Being from a developed country means we have a much easier life.

“We don’t have to worry as much about our kids dying,” he explains. “We’re rarely in pain. We don’t have to earn a living through manual labor.”

All of this makes perfect sense to Emanuel Maidenberg, an associate clinical professor of psychiatry at the University of California, Los Angeles. “Satisfaction increases when you feel you have more control over your life,” Maidenberg says. “And you have more control over your life if you have more financial resources.”

Earlier studies on money and happiness suggested that people were concerned only with the wealth of their next door neighbors. So, if you were keeping up with – or better yet, surpassing – the Jones’s you were fine. By that logic, people in impoverished countries could be happy if they were just a little bit better off than those around them.

That conclusion was very appealing to people from prosperous nations, Wolfers says. “If you start thinking about the human misery in the poorest countries in the world, that’s incredibly depressing,” he explains. “The older research said that people got used to their poverty and so you didn’t have to feel bad as you drove down the road in your BMW.”

Wolfers and his colleagues also looked at changes in happiness over time. They found that, as a general rule, citizens of countries that were experiencing economic growth tended to become happier with time. But not in the United States.

Wolfers explains: “That may be because all the income growth went to the very rich. So only a small number of people got richer.”

This might be a good reason for nations to make sure they share the wealth. Perhaps if the standard of living in Egypt and Tunisia were higher, things would be quieter there.

Wolfers data doesn’t answer that particular question. But it might make an interesting line of research for the future, he says.