Princeton researcher Daniel Kahneman, PhD, and colleagues have come to the conclusion that it is only an illusion that wealth brings happiness. Kahneman shared the 2002 Nobel Prize for applying the principles of psychology to economics.
As Kahneman and colleagues have observed in their extensive research on people's reported happiness and life satisfaction "When someone reflects on how additional income would change [their sense of] well-being, they are probably tempted to think about spending more time in leisurely pursuits such as watching a large-screen plasma TV or playing golf. But in reality, they should think of spending a lot more time working and commuting and a lot less time engaged in passive leisure. ... By itself, this shift in time is unlikely to lead to much increase in experienced happiness."
The results of their research have been published in the June 30 issue of Science
According to the researchers people are likely to overrate the joy-bringing effect of whatever they're thinking about at the time, whether it's money or the number of dates they had last week.
However in reality has shown that increase in income has a relatively brief effect on life satisfaction. Other factors that were observed were that countries experiencing a sudden increase in income do not show a corresponding increase in citizens' sense of well-being. The researchers also found that while life satisfaction does increase as a nation's per-capita income rises, there is little increase in life satisfaction once per-capita income goes above $12,000 a year. In fact psychological studies only show that the wealthier people are the more intense negative emotions they experience. None of these studies have shown a link between wealth and greater experienced happiness.
Research has shown that increased income has little effect on happiness because of the following factors:
--The amount of money people say they need rises along with their income.
--Relative income, rather than any certain level of income, affects well-being. If you get richer than your peers, you may feel you're better off than they are. But soon you'll make richer new friends, so your relative wealth won't be greater than it was before.
-- When you start making more money, you spend more time making money -- and have less leisure time -- than you did before.
--People quickly get used to all the new stuff their money can buy.
Kahneman and his colleagues say, "The activities that higher-income individuals spend relatively more of their time engaged in are associated with no greater happiness, but with slightly higher tension and stress".
They add, "This focusing illusion may lead to a misallocation of time, from accepting lengthy commutes (which are among the worst moments of the day) to sacrificing time spent socializing (which are among the best moments of the day). "The long-term effect of income gains becomes relatively small because attention shifts to less novel aspects of daily life."