We think money will make us happier, but will it? The answer may surprise you.

Can Money Make Us Happier? The Truth May Surprise You

  • Post author:Bob Haegele
  • Post last modified:March 14, 2024

Not too long ago, Constantly Curious posted a video that sparked a serious internal conflict. You might even say an all-out brawl between emotion and rationale. I highly recommend giving the video a watch, as it’s under five minutes long. However, the basic idea is this: having a ton of money might not make us much happier than we are today.

The funny thing is, that seemed obvious to me. It may be a bit of a cliché, but I firmly believe the idea that money can’t buy happiness. Yes, I am trying to take control of my financial future, but I’m doing that in the interest of reclaiming my time. I am not doing it just to make a bunch of money.

We often think money can make us happier. But is that really the case? You might be surprised.

Be that as it may, I’m sure not everyone is like me. For instance, I decided to share the above video in one of my Facebook groups. When I did, more than one person said they still wanted to win the lottery.

I then perused the larger comment section of the original video posting. Sure enough, more comments to the same tune.

And that was despite watching the video, which cited a study showing that lottery winners didn’t experience significantly increased levels of happiness.

Temptation Can Be Misleading

As per usual, let me be clear: I realize that not everyone has the same circumstances as me. I am comfortable. Not everyone is. And I’m not trying to stand here and talk down from my pedestal. I am simply trying to better understand what seems like a phenomenon of the human mind.

Let’s say I couldn’t make ends meet or had a mountain of credit card debt. I can definitely see why the lottery would be tempting in that scenario.

That, in a nutshell, is what I’m trying to understand. Are we actually pretty bad at predicting what will make us happy? Or, could it be that the study itself was flawed?

Personally, I don’t think it’s flawed. At least not so flawed as to be just plain wrong. What’s more likely is that no one person can predict how they will react to going from poor to rich overnight. Hence, such studies are helpful because looking at larger groups of people is much indicative of human behavior as a whole.

The real key, though, is that they assess levels of happiness after winning, rather than before. The people I mentioned from Facebook threads were speaking strictly hypothetically.

Satisfying Needs vs. Satisfying Wants

I have spoken before about Maslow’s Hierarchy of Needs. That’s because it is a critical concept when it comes to our financial health. Interestingly enough, I only just recently found that the Mad Fientist has also written about Maslow’s Hierarchy

The Hierarchy of Needs is important because it posits that we won’t seek to meet our needs at a higher level before all of our needs at a lower level are met. So, for example, we won’t go to great lengths to become respected by our community when we don’t even have a place to stay.

Of course, where the lottery fits into all of this is its ability to help us meet all of our basic needs. And, for the most part, the higher levels of the framework are less dependent on money. Anyone who had been struggling to make ends meet would no longer have to worry about being able to eat, pay rent, make their car payments, etc.

Instead, they could focus on the higher levels, such as being loved/respected, friendship, status in your community, and so on. In theory, that should make us much happier. But would it?

Hedonic Adaptation

Let’s bring it back to the Constantly Curious video linked at the very beginning of this post. The study mentioned was conducted by two guys named Brickman and Campbell. It was also one of the first studies to examine a new term which they coined: hedonic adaptation.

Because the lottery winners weren’t much happier after the initial excitement faded, they believed that hedonic adaption was the explanation.

Sometimes referred to as the hedonic treadmill, the theory states that humans eventually return to a “set level” of happiness. In other words, if you were miserable before an exciting event, you probably won’t be much happier months after the event takes place. You might be happier temporarily, but your long-term happiness would be unchanged.

The Lottery Study

The study monitored three groups. First, there were the 22 participants who, of course, won the lottery. There was also a control group of 22 who did not win. Finally, to make things interesting, they added another group: 29 people who were paralyzed in accidents.

The lottery study examined three distinct groups.
The lottery study examined three distinct groups.

Each group was asked to rate their happiness on a scale from one to five. And while things did technically go as expected, the differences were less drastic. The lottery winners came in at 4 out of 5, the control group was 3.85, and the accident victims scored 2.96 out of 5.

What I find perhaps most interesting from the experiment is, quoting the above-linked article:

Researchers were surprised that lottery winners didn’t report being significantly happier than non-winners, and that the average among people who had been in accidents was above the scale’s midpoint. Overall, winning the lottery didn’t increase happiness as much as others thought it would, and a catastrophic accident didn’t make people as unhappy as one might expect.

The way I interpret this is that yes, some of the lottery winners were probably much happier. But as a whole, the group was not. And the same can be said for the accident victims. In general, these events don’t affect our happiness as we might think they will.

Money and Predicting Happiness

Another article I read while researching this study made an interesting point:

A shorter commute would make you as happy as a 40 percent raise, getting a paid vacation from your boss would make you happier than receiving cash, and having more free time will make you happier than having more money, and yet people often guess that more money is the answer.

Yet another term, affective forecasting, is our ability to predict what will make us happy. Although we often think money will be the answer to our problems, it turns out that in many cases, the intangibles are as good as or better than money. Frugal living isn’t everything, but it turns out that maybe large sums of money isn’t, either.

Affective forecasting means predicting what will make us happier.
Affective forecasting means predicting what will make us happier.

Once I began to understand this concept, I began to wonder. I began to wonder if those who said, despite the research, that they still wanted to win the lottery, could be falling victim to an error in their affective forecasting.

Sure, the money might move them up a rung or two in Maslow’s Hierarchy. But the real question, in this case, is whether they would really be happier. And again, that is an answer that isn’t as predictable is we might expect.

Socioeconomic Status

One thing I was not able to find while researching the study is any information about the participants’ socioeconomic status. My assumption here is that that information simply wasn’t collected. The study was conducted in 1978, so it may be that socioeconomic status didn’t seem important at the time. And while I am not certain that would have made a difference, I think it could have been valuable.

The reason I say this is that, while the results of the study were not as drastic as expected, each participant did respond at least somewhat differently. So the question I would ask is whether those with lower incomes are more greatly affected in a positive way by winning a large sum of money. Again, no guarantee, but I think it would make for an interesting analysis.

You Don’t Know What You Don’t Know

This is yet another cliché phrase, but I think it happens to be fitting in this case. My take away in all this is that we think we know what a large sum of money will do to our mental state. And while that may be true, it may also not be true.

That said, our desire to meet our basic needs is definitely one that makes sense. After all, we can’t survive if we can’t eat. What’s fascinating though is that after those needs are met, there is a possibility our mental state will eventually return to where it had been previously.

What does this all mean? Well, obviously survival is pretty darn important. So if your basic needs aren’t being met, that is clearly an issue. But because reaching higher and higher levels of wealth may not make us much happier, meeting our basic needs actually might just be enough.

Beyond that, maybe chasing that extra dollar isn’t as important as we think it is. As long as we’re surviving, perhaps there is more to life than dollars and cents.


Hey there. My name is Bob Haegele and I'm a personal finance writer who has been freelancing since 2018. Since then, I've built a six-figure career as a freelance writer. My work has been featured in Business Insider, Forbes Advisor, TIME.com, USA Today, and many other outlets. Interested in starting a blog of your own? Check out my post on starting a blog.

This Post Has 18 Comments

  1. Xrayvsn

    I think people definitely confuse money with happiness all the time. Money in itself can create problems (mo money mo problems is a famous line). I’m sure winning the lottery is great but then everyone will start expecting handouts or helping out with their problems. Many a lottery winner has become broke by overextending themselves trying to help everyone.

    I also think your innate personality will never change whether you have money or not. If you are a miserable person, having money will just make you a rich miserable person.

    Also the people who win these lotteries tend to have no financial acumen and they think they can have everything they want all the time and never run out only to face the sad reality a few years later and even if they end up in the same situation they were in before the lottery it is worse because they had a taste of “the good life”.

    If money did bring happiness we wouldn’t have all these celebrity suicides lately.

    1. Bob

      Totally agree, Ray. I think there can be exceptions, but again, less often than we might think.

  2. Kristopher lee

    More money, more problems. It kind of balances itself out. That’s why I like to think of money as a means to an end. If I could get to an end without having to deal with all that messy money, I’d do that and cut out the middleman.

    1. Bob

      Totally agree. I’ve been saying for a while that money is more of a tool. I think of credit cards in a similar way. I don’t see the sense in obsessing over money, but to each their own, I guess!

  3. Janita

    I could agree with this more! While I have definitely said I would love to win the lottery, I don’t want millions, just enough to pay off my debt and give my family a fresh start. I don’t think money buys happiness, but memories, friends and family do. Materialistic things won’t make me happy. Of course it would be nice to own a boat, camper, big house and so on, but I want more than that from life. I really think you did a great job at explaining your point of view ?

    1. Bob

      For sure! Like I said, having those basic needs met. Everything is negligible after that. 🙂

  4. Tawnya

    Interesting study. It makes sense though. Money can only buy material things, and as you mention, give you greater security in those lower levels of need. However, you must go out and achieve those higher levels of need, and although money can make the path easier, it doesn’t buy it for you. I think that’s probably why people weren’t happier, because they still hadn’t found ways to meet those higher needs. I would be interested to know how long after winning the lottery this study was done, and if the results would change with having the money longer. Maybe these people simply didn’t have the time to significantly improve their life other than the material aspects? Or maybe that’s all they focused on was material aspects, which we know don’t make us happier.

    1. Bob

      I agree, there are some pieces of information that would probably be valuable but seem to be missing. Very interesting concept though.

  5. Jessica

    I’ve never won the lottery and I can’t say that I would like to because I don’t play the lottery so I guess I don’t have the desire to win lol. But I did want to say that I’ve been in a situation where most of my needs were met but the absolute bare minimum. Then my income increased 4 times. I am much happier and enjoy life more easily than when I was broke just trying to survive. However, I have suffered with depression most of my life and having the extra money does not make that go away. Sometimes I’m happier and sometimes I want to throw it all away because the material things just bring more problems. More to clean, more to fix, more to budget, more to control. When I was broke life was simple.

    1. Bob

      Very interesting perspective, Jessica! I think this really highlights the fact in a lot of cases, our relationship with money is far from black and white. Thanks for sharing. 🙂

  6. Steveark

    I have thought about lottery studies a lot and I think the biggest fallacy in these studies is that there is an accurate and repeatable way to empirically measure happiness. Asking someone if they are a one or a five is pretty meaningless. Maybe my three is happier than your four? Maybe your three today is happier than your four was when you were younger. Maybe if you are very poor a two to you is the same as a one to someone with wealth.

    Also using lottery winners as a subject group is using a group that is riddled with selection bias. Without studying the issue I would guess that people that play the lottery are not particularly intelligent, are poor, come from damaged homes, have a higher incidence of mental and physical health problems and on and on and on. In other words they may already be chronically unhappy or they wouldn’t throw money away in what any statistician would call a fool’s game. I do not know this to be true but it seems possible.

    Now I know some, a few, well balanced and well off people do play, but I’ve looked at the parking lots of the casino’s in Mississippi and it would be hard to find a sea of sadder cars. Walmart parking lot looks a lot flusher, just sayin. Gamblers as a group are just not a representative cross section of America, they are skewed to less successful demographics. To me it makes sense that giving gamblers/lottery players an unearned ton of money is asking for trouble. That doesn’t speak to whether money will make “normal”(as in non-gambling) people happy or not. For instance I inherited a million dollars after I was already financially independent, did it make me happy? I was already happy. The money had very little impact on me, it just changed the size of one of my investment accounts, no big deal.

    1. Bob

      I agree, definitely a very complex subject. And I don’t have anywhere near all the answers, but wanted to point out that it’s actually a pretty fascinating topic.

  7. Steveark

    It is indeed and it was a fascinating post, great writing!

    1. Bob

      Thank you, Sarah! I’m glad you enjoyed it – and you are totally right. 🙂

  8. I’m loving reading your blog today Bob! 😀 I’ve heard of this study before and completely agree. Money can make life easier but does not make you happier. I’ve recently started listening to a podcast by Brooke Castillo called The Life Coach School, where she talks about mindset and happiness amongst other things. Her point is that your capacity for happiness is always the same because it can only come from inside of you, based on your thoughts, which cause your feelings which in turn determine your actions and results. Only you can be responsible for you and how you feel 🙂 No external factors can really change YOU. It takes a bit of wrapping your head around but thought I’d share it with you in case you wanted to give it a listen 🙂

    1. Bob

      I agree. It’s a complex situation. I still believe that meeting your basic needs matters – i.e., if you are literally starving, you aren’t going to be happy. But once that threshold is crossed where your basic needs are being met, your level of happiness probably won’t increase that much. I’ll have to check out this podcast!

  9. Anna | Yes, Little Hummingbird

    The idea that money can’t buy happiness has been sociologically, scientifically, and psychologically disproven… Money buys financial stability, which in term buys luxury / leisure time, which in turn creates an environment with net positive effects on happiness (though happiness in relation to financial stability / money does plateau after a certain point).

    Is buying stability directly the same (semantically or otherwise) as “buying” happiness? Well no, of course not. But to think that a stable environment free of financial stress doesn’t directly and significantly impact overall happiness is both absurd and completely irrational… It’s also a mentality of privilege; it’s easy to say that “money doesn’t buy happiness (even if it buys financial security)” and that financial security and happiness are different / divorced from one another in a tangible manner…. When you already have a feasible measure of stability + security. Maybe not significantly, but definitely so much that you’re not worrying about either feeding your kids OR having your electricity shut off that month- or, potentially, even losing your house because you’re going to be 2 days late on a rent payment for the 5th consecutive month.

    More importantly, though? High intensity emotional changes that occur after significant events which trigger short term, high intensity emotions (such as winning the lottery, for instance) are NOT positive, nor accurate, indications of one’s emotional state over the long term; you can’t look at a group of lotto winners and say “well they’re not AS happy now as they were when they WON” and posit that it obviously means
    “money doesn’t significantly change your emotional state over the long term- ergo it doesn’t buy happiness”… That’s not only absolutely NOT how responsible science works in the first place, but it’s also not how long term emotional states works- and nor is it how you would reasonably or accurately measure their overall consistency and trends… It’s just bad science.

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