The Psychology of Money: The happiest people don't earn the most

A recent analysis involving more than 100,000 people from all around the world has drawn an interesting conclusion. In general, happier people are more likely to be successful on a wide range of measures, from income to educational achievement to personal relationships-- but on some of these measures (including income) the very happiest people come out behind moderately happy folks.

Three researchers published a journal article in December 2007 with the provocative title "The Optimum Level of Well-Being: Can People Be Too Happy?" The authors summarize it by saying:

Our analyses of large survey data and longitudinal data show that people who experience the highest levels of happiness are the most successful in terms of close relationships and volunteer work, but that those who experience slightly lower levels of happiness are the most successful in terms of income, education, and political participation. Once people are moderately happy, the most effective level of happiness appears to depend on the specific outcomes used to define success, as well as the resources that are available.

That summary seems rather even-handed about the implications of the research, but most of the press coverage has focused on the question in the title, with a conclusion that the answer is yes-- a conclusion that appears to be promoted by at least some of the authors. For example, from Newsweek:

In surveys of 118,519 people from 96 countries, scientists examined how various levels of subjective well-being matched up with income, education, political participation, volunteer activities and close relationships. They also analyzed how different levels of happiness, as reported by college students, correlated with various outcomes. Even allowing for imprecision in people's self-reported sense of well-being, the results were unambiguous. The highest levels of happiness go along with the most stable, longest and most contented relationships...

In contrast, "once a moderate level of happiness is achieved, further increases can sometimes be detrimental" to income, career success, education and political participation, Diener and colleagues write in the journal Perspectives on Psychological Science. On a scale from 1 to 10, where 10 is extremely happy, 8s were more successful than 9s and 10s, getting more education and earning more... "If you're totally satisfied with your life and with how things are going in the world," says Diener, "you don't feel very motivated to work for change. Be wary when people tell you you should be happier."

I'm not sure if there's evidence to back up this negative take on the desirability of being less traditionally succesful but ranking your happiness as a 10 out of 10. But to me, it doesn't seem like that bad a deal. Sure, if you're extremely happy you're less motivated to change things-- but what's so bad about contentment?

If people who are mostly happy make more money than people who are extremely happy, is it reasonable to assume that those who earn more but have lower life satisfaction are "more successful" and "better off" than those who tell researchers that they couldn't be happier about how their life's going? Isn't it at least equally valid to read the results as suggesting that being extremely happy is associated with a lower focus on making the most money you can?

I guess there's an argument that it's better to feel slightly less happy at the moment but also be motivated to get more education, which might help you be happier in the long term (for example, if you're extremely happy today but then you lose your job and it's hard to find a new one because you don't have a degree so your happiness falls.) And if people aren't participating politically because they're satisfied with their own life and aren't concerned about fellow citizens who're worse off, that's too bad-- but on the other hand, the happiest people are the ones who volunteer the most, which doesn't sound like selfishness to me. And the happiest people have closer and more stable relationships, which I'd consider a pretty big plus.

What do you think about these findings? Do they sound accurate to you? And what's your take on the implications? Do you think it's better to be mostly satisfied and driven to get more education and make more money-- or to be extremely satisfied and more content and complacent?

The Psychology of Money is an ongoing series that highlights some insights we can gain about ourselves and our personal finance decisions from psychological research; click here for previous posts.