Sep 24, 2020
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Research Shows That Spending Money Makes People Happier Than Making Money

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GONGHUIMIN468 / PIXABAY Many folks have felt that if we made additional cash life would be better. We’d be able to afford nicer things go on fancier vacations and feature more freedom. But is this actually the case? A team of psychologists led by Gordon Brown of the University of Warwick in the United Kingdom tested the hypothesis that more income would lead to improvements in life satisfaction

 

What they discovered however was slightly different than what they hypothesized. It turned out that the ability to spend additional cash increased people s well-being more than the ability to earn more of it. Much research into the relationship between economic circumstances and subjective well-being has focused at the relationship between income and life satisfaction state the authors

 

Here we show for the 1st time [. ] that changes in life satisfaction are associated with changes in consumption not changes in income. To reach at this conclusion the researchers gathered data from the Panel Study of Income Dynamics (PSID) a longitudinal survey of American families curated by a collection of scientists at the University of Michigan

 

Brown and his team tracked the responses of five 664 U. S. adults from 2009 to 2013 on three questions. First they tracked individuals self-reported life satisfaction from the question: Please consider your life as a whole. How satisfied are you with it? Are you happy very satisfied somewhat satisfied not very satisfied or never satisfied? The researchers also tracked individuals income (that is how much they earned in a given year) and their consumption (how much they spent in a given year) around the four-year time period

 

Interestingly they discovered that consumption was a miles stronger predictor of life satisfaction than income. They write Estimates imply that the effect of a rise in consumption is at least five times as large as the effect of a similar increase in income. [. ] A one standard deviation increase in consumption leads to a rise in life satisfaction of approximately 5

 

2% of a common deviation. PROMOTED UNICEF USA BRANDVOICE | Paid Program
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VT Engage Rally The Youth Vote On Campus Next Brown and his team explored whether certain varieties of consumption were more strongly associated with improvements in life satisfaction than others

 

They discovered evidence to support this idea. Specifically they reported that purchases meant to signal status and prosperity including buying a complex car or a bigger house were more strongly associated with improvements in life satisfaction than non-conspicuous varieties of consumption (for example utilities and healthcare). They also explored whether experiential purchases were from now on or less satisfying than material purchases

 

Past research working example has found that buying experiences including a family vacation increases happiness more than buying material items including new clothing or a new car. They did not however find any difference in life satisfaction between these two varieties of purchases. The authors conclude Ours is the 1st study to apply large-scale longitudinal household panel micro-data with comprehensive consumption data to address the relationship between consumption and well- being

 

Our findings demonstrate the significance of using consumption rather than income to estimate the effects of commercial resources on well-being

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