Money vs Happiness

A curious relationship which might just surprise you…

“There is a paradox at the heart of our lives. Most people want more income and strive for it. Yet as Western societies have got richer, their people have become no happier.”

So begins Professor Richard Layard in his book, Happiness: Lessons from a New Science (an exceptional read, highly recommended).

This is a FACT proven by many pieces of scientific research. What is astounding, as Professor Layard continues to write, is that all of the evidence shows that people are no happier today than they were 50 years ago. How can this be? — This is despite incomes more than doubling in that time period. Interestingly, this paradox is equally true for the UK, US and Japan.

Surprised? Let’s explore this further…

Surely our lives are infinitely more comfortable, as Professor Layard writes. We have MORE things, and MORE of those things — more food, bigger houses, more central heating (and air conditioning — on the rare occasions we need it!), more cards, more holidays abroad, a shorter working week, nicer work and working conditions, and better health. And yet we are not happier.

We are left with this fact: Despite average income and living standards more than doubling, happiness in the West has not increased since 1950. Professor Layard, writes that happiness in Britain has been static since 1975; in continental Europe, there has been a slight increase in happiness, but even in this case the change in happiness is small relative to the huge increases in incomes.

These findings are surprising since in any given society rich people are substantially happier than poorer people.

One thing has become apparent — once subsistence income is guaranteed, making people happier is not easy.

Abraham Maslow and the “Heirarchy of Needs”

This is where the work of the infamous Abraham Maslow becomes relevant. Maslow was one of the earliest psychologists to focus on happy individuals, making happiness and self-fulfilment a central part of his life’s work. Unlike many other experts of his era, he wanted to understand what it was that motivated the great people in history, and to understand human potential as fully as he could.

His work involved studies and interviews with ‘exemplary people’ at that time, for example Albert Einstein and Eleanor Roosevelt.

In his quest to understand human motivation and the pursuit of happiness, Maslow put together a list of key human needs (ingredients) that he found were necessary for optimum psychological health. He came to categorise a heirarchical list of needs that need to be fulfilled for increased life satisfaction.

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Abraham Maslow’s ‘Hierarchy of needs’, depicted in the popularised pyramid form
  1. PHYSIOLOGICAL needs (the most basic needs)

When these are not fulfilled, people become pressured with filling these needs.
e.g. In a warzone, starving people can be oblivious to the dangers around them when in search of food.

2. SAFETY needs
This includes many forms of ‘safety’ — including physical safety, family safety, job safety, etcetera.



5. SELF — ACTUALIZATION (the “highest” need)
This is where Maslow had seen the most successful people had reached.
– Where you are acting in true accordance with yourself
– Fulfilling your true, maximum potential
– Such people are found to experience a strong, grounded sense of well-being and satisfaction with their lives
– They are independent thinkers, not overly influenced by general culture

n.B. Maslow termed the bottom 4 needs as the “deficiency needs” — these are the fundamentals that humans cannot do without. Once these are satisfied and you are a ‘healthy person’, then you are (more) motivated by growth and fulfilment (i.e. the pursuit of self-actualization).

“Heirarchy of Needs” — additional notes

– Though represented in the form of a (pyramid) heirarchy, with one level atop another level, it is being increasingly accepted by experts to think of the representation more accurately, not as levels atop one another, but rather one level nested inside the previous level. This gives rise to a more organic and integrated relationship between the levels.
(Please note that Maslow himself did not use the popular “pyramid diagram” to represent his work).

– Furthermore, Maslow pointed out that the individual levels are NOT fixed — and that each level does NOT have to be 100% fulfilled for one to move on to the next level.
e.g. even if we are struggling with food and sleep, we still have a need to pursue safety and stability at home, and love within our social circles and communities, and pursuing/attaining these will give rise to a positive impact upon our psychological health.


Now, looking at the ingredients/needs within the heirarchy, how many of those can we say are directly (or indirectly) associated with money/income? Beyond ‘physiological’ and ‘safety’ needs, it becomes difficult to see exactly what role income has.

This also fits with the work of Professor Layard and the research he refers to — showing that money has (far greater) impact in nations which are below the poverty line, and where (greater) income can lead to fulfilment of the most bottom-most rungs of the heirarchical ladder.

Perhaps this goes some way in explaining why, remarkably, average levels of happiness have not changed since 1950.

Just as relevant, and more worryingly, more and more of us are being affected by depression and mental health-related disorders; on average, we are all “sliding down” the mental health scale towards the lower end. Clearly, something is not right here.

Where are we going wrong? Should we really be striving towards more income, based on the evidence that we are seeing? Should we be managing our lives better, in addition to purely focusing on wealth-based goals?

This post was originally posted at

This post contains many references from Professor Richard Layard’s book, Happiness: Lessons from a New Science. Thank you Professor Layard for your inspiring work. Aside from a Google search, more on Professor Layard and his work can be found by clicking here

For more recent research into modern-day testing of Maslow’s work, please refer to the work of Ed Diener — start by looking here.

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