Money and Happiness: Investigating the Effects of Income, Wealth, and Spending on Subjective Well-Being

Jolliffe, Jack

Publication

Money and Happiness: Investigating the Effects of Income, Wealth, and Spending on Subjective Well-Being

Jolliffe, Jack

Date

2016

Additional date(s)

2016-05-19

Abstract

The link between money and happiness has long been debated. A somewhat elusive and subjective idea, happiness is difficult to quantify, and thus it is challenging to determine the distinct ways in which happiness is impacted by various economic factors. However, there has been ample research providing insight into individual subjective well-being and the roles that income, wealth, and spending play in affecting it, such as Richard Easterlin's renowned paradox (Easterlin, 1974). The following thesis paper begins with a review of the prior research that has been done on several areas of financial well-being to outline the complex relationship that exists between money and happiness. Derived from such theoretical findings, the hypothesis I tested was that economic factors, such as GDP per capita, tendency to donate money, and economic freedom, are positively correlated with individual levels of subjective happiness across countries. Utilizing univariate and multivariate regressions with global happiness metrics and other economic measures, it was proven to be true that there is an identifiable positive relationship between some of such economic measures and happiness. I determine that the levels of income and wealth of a country, the degree of economic freedom, and the tendency to donate money are all associated with greater levels of happiness at an aggregate level, whereas the amount of consumption adjusted for GDP level is actually negatively correlated with the average happiness of a nation's people.