Dr. Naomi Grant, PhD

Six years ago, the CEO of Gravity Payments Dan Price made headlines when he reduced his salary by $1 million in order to implement a $70,000 “minimum wage” for every single one of his employees. It’s a decision Price does not regret. Since then his business’s revenue has tripled, Price's company is now a Harvard Business School case study and his employees caused a mini real-estate boom when 10 times more of them were able to buy homes.

It’s clear that some money is good for everyone, but the idea that all the money (like Jeff Bezos' billions) will make you happy is actually false.

We spoke to Dr. Naomi Grant, PhD, an associate professor of psychology at MRU, about how happiness and what’s in our wallet are related.

Dr. Naomi Grant, PhD

Will winning the lottery or making a lot of money make a person happy?

“Not really,“ Grant says. “There’s a famous study called 'Lottery winners and accident victims: Is happiness relative?' that was done in the late '70s that found if you win the lottery you might get a blip in your happiness, but then you kind of go back to your baseline. We adapt to our life circumstances. If I win the lottery, or even if I get a big raise, I’m just going to adapt to that new situation and my happiness will go back to similar levels.”

Money can “buy” happiness, but mainly for those who don’t have enough in the first place, Grant says. Those who are worried day to day about being able to afford food and necessities will feel happier with more money. Wealthier nations such as Canada, Scandinavia, Germany, the Netherlands, Iceland, Australia and so on, report higher levels of happiness, however within those nations the research shows that having a higher income doesn’t make much of a difference to overall happiness if basic needs are being met.

A more recent study titled “Happiness, income satiation and turning points around the world” looked at global Gallup Poll data worldwide and tried to figure out the perfect amount of income for satisfaction and emotional well-being. It was found that “satiation (or fulfillment) occurs at $95,000 for life evaluation and $60,000 to $75,000 for emotional well-being.” There was a great variation in findings depending on where people lived, and researchers also found a detrimental effect — at least in certain nations — of having more than that “perfect” amount.

“I think the idea is, the more you have, the higher your expectations are going to be as well. If I’m making a ton of money, I ‘should’ be happy. And so, if I’m not, then I can end up even more unhappy,” Grant says.

“We’re always engaging in social comparison. If you have more money, you’re just going to be comparing yourself to a different population than you would be if you had less. If you live in a fancy neighbourhood, there’s always going to be somebody who has more money than you. With social media, we can now compare ourselves not only to our neighbours, but all the rich and famous people.”