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Money can’t buy happiness

According to psychology, the age-old aphorism “money can’t buy happiness” is actually true… after a certain point. Studies have shown more than once that GDP per capita (commonly held to represent a nation’s standard of living) doesn’t have much correlation to the population’s overall happiness. It is definitely true that the extremely poor are unhappy, since they can’t even satisfy their base needs, but once a person gets enough money to survive the line gets blurrier.

Below the $75 000 per year income line, happiness increases with money, as you might expect. But after $75k, it plateaus — if you’re only counting money, at least. Once you get beyond a certain point of having enough money to get by, your happiness has more to do with your own personal feelings of autonomy and mastery in your life. This has to do with your mind’s interpretation of intrinsic vs. extrinsic rewards — the former being your inner motivation to do things because you genuinely want to, the latter being your motivation to do things because you serve to gain something (e.g., money, social status, experience points).

A study published in the Journal of Personality and Social Psychology involved researchers separating artistic children into three groups and giving them different instructions: the first group was told that they would be rewarded if they drew a picture during play time; the second group wasn’t told, but was still rewarded if they drew a picture; and the third group wasn’t rewarded no matter what. The findings reported in the study showed that the last two groups drew just as many pictures after they began the study as they did before — but the first group, the one that had been promised a reward, drew less pictures.

When you have a carrot dangling in front of your face, the carrot becomes your motivation. It doesn’t matter if you would have enjoyed running without the carrot. This is due to something called the overjustification effect: your mind only attributes reasoning to your actions after you’ve already done them, so when there’s an extrinsic motivation, the mind will assume that it was the source of your satisfaction, robbing you of your personal accomplishment. This is why people being paid by the hour do the least work possible to get their money, even if they enjoy the work. (This also might be why politicians seem to get so much worse once they’re in office, getting paid.)

If you’re making less than $75k per year, money might be a potent extrinsic motivation. But once you have enough money that you don’t really need it anymore, your personal satisfaction in gaining that money starts to disappear. Continuing to gain money after a certain point will not only not make you happier, it can actually poison your enjoyment of things you previously enjoyed due to the overjustification effect.

What I’m saying is, don’t turn what you love into a meaningless job. If you make sure you do the things you love because you love them, not because you want money, you’ll be more motivated to do those things in the future. Always strive to be better: autonomy, your ability to control your own destiny, is a major part of your happiness; the other major part is mastery, your desire to improve at what you love. If you’re stagnating and sticking to a formula because you’ve been successful doing that in the past, you’re bound to fail. Even if the quality of your work doesn’t drop, you’ll have failed yourself.

As annoying as human motivation can be, look on the bright side: without our love of mastery and autonomy, we wouldn’t have open source software, we wouldn’t have Wikipedia, and we wouldn’t have Everything2. If we didn’t feel that need to create something great just because we can, we would be a lot worse off as a species.


  1. Deaton, Angus. “Income, Health, and Well-Being Around the
    World.” Journal of Economic Perspectives, 2008, Vol. 22, No. 2. [link]
  2. Lepper, Mark R. & Greene, David & Nisbett, Richard E. “Undermining children’s intrinsic interest with extrinsic reward.” Stanford University, University of Michigan. Journal of Personality and Social Psychology, 1973, Vol. 28, No. 1, 129-137. [link]
  3. Benjamin, Daniel J. & Heffetz, Ori & Kimball, Miles S. & Rees-Jones, Alex. “Do People Seek to Maximize Happiness?” Cornell University, University of Michigan. [link]
  4. Easterlin, Richard A. “Does economic growth improve the human lot?” From Paul A. David and Melvin W. Reder (eds.), Nations and Households in Economic Growth: Essays in Honor of Moses Abramovitz. 1974. New York: Academic Press, Inc.
  5. McRaney, David. You Are Not So Smart: The Overjustification Effect.
  6. RSA Animate. The surprising truth about what motivates us
Written by Likes to Ramble

1 Comment

  1. Jay · March 3, 2012

    That experiment with the artistic children is CRAZY. Suddenly I know why the “go to college or you’ll be poor forever” situation produces so many disinterested students, even when they’re in programs that interest them.

    I’d be interested to see a study done on the happiness of upward-social-mobility people– people who started off in one income bracket and moved to another. I seem to remember something about unhappy lottery winners, but that’s a little different because it’s not like you earn lottery winnings.

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