Money Buys Happiness -- As Long As You Don't Keep It

Last Updated Sep 27, 2010 1:58 PM EDT

Harvard Business School professor Michael Norton says money can make you happy -- if you give most of it away.

Writing on Forbes.com, Norton details his study of 315 Americans, who were asked to rank their current state of happiness and to predict how happier they would be if they made more money.

The results:

  • Those making $25,000 a year predicted their happiness would double if they made $55,000. But in truth, the change in their happiness was only 7%.
  • Once people earn about $60,000 a year, near the country's median income, "the happiness return on additional income is very small."
  • What does make people happier is giving money away. In another experiment, people were given up to $20 each. Half were told to spend it on themselves, the other half on someone else. Interviewed later, the group that gave away their money was much happier.
"Money certainly makes some things in life easier, but many aspects of life remain irritatingly the same," Norton writes. "You might make more money, but you're still stuck with the same in-laws, siblings, traffic jams and software glitches."

So, please feel free to make money. But if you want to be happy, give most of it away.

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(Photo by Flickr user Two Ladies & Two Cats, CC 2.0)
  • Sean Silverthorne

    Sean Silverthorne is the editor of HBS Working Knowledge, which provides a first look at the research and ideas of Harvard Business School faculty. Working Knowledge, which won a Webby award in 2007, currently records 4 million unique visitors a year. He has been with HBS since 2001.

    Silverthorne has 28 years experience in print and online journalism. Before arriving at HBS, he was a senior editor at CNET and executive editor of ZDNET News. While at At Ziff-Davis, Silverthorne also worked on the daily technology TV show The Site, and was a senior editor at PC Week Inside, which chronicled the business of the technology industry. He has held several reporting and editing roles on a variety of newspapers, and was Investor Business Daily's first journalist based in Silicon Valley.