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Does Money Make People Happy?

Does Money Make People Happy?. Andrew Gibson, Kieran Francis, Harriet Brown, Emily Williams, Claire Massett and Felicity Lindsay. Research Paper 1 From Wealth to Well-Being? Money matters, but less than people think. Aknin et al. 2009 Research Paper 2

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Does Money Make People Happy?

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  1. Does Money Make People Happy? Andrew Gibson, Kieran Francis, Harriet Brown, Emily Williams, Claire Massett and Felicity Lindsay

  2. Research Paper 1 From Wealth to Well-Being? Money matters, but less than people think. Aknin et al. 2009 Research Paper 2 Money and Mental Well-Being: A longitudinal study of medium-sized lottery wins. Gardner et al. 2006

  3. Background • People are obsessed with money • Concern about losing money • More time spent at work • Assume that more money leads to greater level of happiness

  4. Aknin et al. 2009: From wealth to well -being? Money matters, but less than people think. • Study 1 – To find a link between household income and happiness • Study 2 – To assess how happy participants will be with different levels of income

  5. Aknin et al. 2009 – Study 1 • 429 Americans asked to report and predict happiness levels • Part of wider online survey where points could be redeemed for prizes • Asked to rate their life satisfaction on a scale 0-10 • Asked to predict life satisfaction of 10 people with different household incomes

  6. Aknin et al. 2009 – Results Actual and predicted happiness levels for the 10 household income point estimates

  7. Aknin et al. 2009 – Results • Higher levels of income associated with greater level of happiness • Moderate correlation found • Accurate prediction about higher household income being linked to increased happiness • Vastly underestimated the happiness of people earning lower levels of household income

  8. Aknin et al. 2009 – Study 2 • 315 Americans from same research pool as used in Study 1 • Identical methodology to Study 1, but instead participants were asked to predict how happy THEY would be with different levels of income, before making predictions for others • Predicted Study 2 would mispredict association between money and happiness, whether or not it’s in reference to themselves

  9. Aknin et al. 2009 – Results Actual and predicted happiness levels for both oneself and another at the 10 household income point estimates

  10. Aknin et al. 2009 - Discussion • People accurately predicted the emotional benefits of being rich, but vastly overestimated the emotional cost of being poor • Believe money and happiness more tightly linked than in reality, overemphasising the importance of money • People work harder, driven by the fear of loss • People spend more time in the office to get more money – sacrificing family and leisure time

  11. Aknin et al 2009 – Critique • American population only • Surveys attracted certain demographic • No mention of the right to withdraw from the study • May not answer truthfully • Possible other reasons for level of happiness • Previous income was not taken into account

  12. Gardner et al. 2006 - How much money to make you happy? • Statistically well-determined link between income and reported wellbeing • Natural experiment using lottery winners’ data • Used a standard mental well-being measure contained in BHPS called the GHQ score • Longitudinal as opposed to cross-sectional study

  13. Gardner et al. 2006 - Background • 12 question survey • Psychological health questionnaire (GHQ-12) • 33,605 observations • 4,822 “Medium winners” / 137 “Bigger winners” • Control group – No win / Medium winners • Experimental group – Bigger winners

  14. Gardner et al. 2006 - Results Table1 shows the average wins of the groups and the relevant GHQ scores

  15. Gardner et al. 2006 - Results Table1 shows the average wins of the groups and the relevant GHQ scores

  16. Gardner et al. 2006 - Results Table1 shows the average wins of the groups and the relevant GHQ scores

  17. Gardner et al. 2006 - Results Table1 shows the average wins of the groups and the relevant GHQ scores

  18. Gardner et al. 2006 – Data Analysis • Gender differences • Demographics don’t matter for big wins • People who have a higher GHQ level were more positively affected by big wins • Evidence is robust

  19. Gardner et al. 2006 - Discussion • Winning the lottery shows some improvement on mental health • Higher income houses have a lower GHQ after winning the lottery than those from lower income households • Supports evidence of Diener et al. (2002)

  20. Gardner et al. 2006 - Critique • No previous knowledge of participants’ wealth • Only UK sample used • Stopped using certain data during study with no stated reason • No mention of ethics • No p value – no test of significance • Lower income households more likely to play lottery

  21. Gardner et al. 2006 Critique Graphs to demonstrate how the differing range in Y axis values can influence our interpretation of results

  22. Comparison of Papers 1 & 2 • Both studies show a very slight link between money and happiness • Both point to other factors having a greater effect on happiness • Both studies use similar research methods

  23. General Discussion • There is an apparent link between money and happiness • Financial resources appeared to act as a mechanism translating life circumstances into life satisfaction (Diener 2002) • People may lie about happiness • Other factors • Type of expenditure Dunn et al. • Attitude towards money Vohs et al. • Status Nettle 2005

  24. Real World Implications • Money and happiness appear to link • Not the only cause of happiness • Just because you have money does not mean you will be happy

  25. Thank you for listening. Do you have any questions?

  26. References • 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. • Diener, E. Biswas-Diener, R. (2002). Will money increase subjective wellbeing? Social Indicators Research 57, 119-169 • Dunn, E. Aknin, L. And Norton, M. (2008) Spending Money on Others Promotes Happiness Science 21Vol. 319 no. 5870 pp. 1687-1688 . • Gardner, J. & Oswald, A.J. (2006). Money and mental well-being: A longitudinal study of medium-sized lottery wins. Journal of Health Economics, 26, 49-60.

  27. References • Johnson, W. , and Krueger, R. F. (2006). How Money Buys Happiness: Genetic and Environmental Processes linking finances and life satisfaction. Journal of Personality and Social Psychology, 90, 680-691 • Kahneman, D., Krueger, A., B.Schkade, D., Schwarz, N. & Stone, A.A. (2006). Would You Be Happier If You Were Richer? A Focusing Illusion Science, 312 (5782), 1908-1910. • Nettle, D., 2005b. Social Gradients in Subjective Wellbeing: Is It Money or Person Control that Matters? Department of Psychology, Brain and Behaviour, University of Newcastle: working paper. • Vohs, K. Mead, N. Goode, M. (2006) The Psychological Consequences of Money Science 17 Vol. 314 no. 5802 1154-1156 • Haisley, E., Mostafa, R. and Loewenstein, G. (2008), Subjective relative income and lottery ticket purchases. J. Behav. Decis. Making, 21: 283–295.

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