Research by Nobel-winning psychologist Daniel Kahneman found that increasing income level does increase happiness but only up until about $75 000. After that more money just brings … more money!
But even under $75 000, money is not nearly as important as something else. Researchers at University of California University asked groups of people who knew one another to fill out a questionnaire about their level of income and happiness. They found that those with more wealth were no happier then those with less. This came as a surprise. For a long time we’ve known that money doesn’t sustainably boost happiness – watch the Human Experiment episode on “How to be happier than a lottery winner” to see why. But psychologists still believed that socioeconomic status mattered. Your socioeconomic status measures the amount of success and money you have in comparison to those close to you. The theory was that if a close friend or family member had a nicer car or home that could create envy. Yet surprisingly this didn’t have much bearing on happiness.
The revelation came when researchers asked people to rate how much they respected and admired one another. Here they found a direct connection. The more admired and respected a student, the happier she was. Psychologists call this sociometric status – the degree to which someone is liked or disliked by their peer group.
To boost your happiness, you don’t need more money what you need is to be more liked and respected. How do you do that? People like people who are givers. Get engaged with your peer group, contribute, add value. The key to happiness is not getting, it’s giving.