They say that money can't buy happiness, but that may not be entirely true. Research conducted by Harvard Business School professor Michael Norton and Ph.D. student Grant Donnelly found that self-made millionaires worth over $8 million are happier than less wealthy millionaires, and that millionaires who earned their wealth were happier than those who didn't.
Norton and Donnelly worked with Tianyi Zheng from the University of Mannheim and Emily Haisley, behavioral finance director at BlackRock to survey over 4,000 millionaires around the world in order to better understand the ways wealth impacts happiness.
The study titled, "The Amount and Source of Millionaires' Wealth (Moderately) Predict Their Happiness" was published in the Personality and Social Psychology Bulletin in January.
"Many people aspire to great wealth, and becoming a millionaire is a commonly used reference for financial success, says Donnelly to PsyPost's Eric Dolan. "The question of whether more wealth leads to greater happiness has interested economists, behavioral scientists and the general public for decades."
Previous research has lead researchers to believe that wealth increases overall life satisfaction but with diminishing marginal returns. This means that having enough money to cover basic necessities decreases stress and effectively makes people happier — but only to a certain extent. Once individuals have enough money to take care of themselves and their families, money tends to have less of an effect on their happiness. But Donnelly and Norton's research indicates otherwise.
"In general, our understanding is that wealth matters, but there is diminishing marginal utility. One limitation of our understanding is what happens at the higher end — the millionaires of the world," said Donnelly to Dolan.
With new data in hand from a large international sample, the researchers found that even among the wealthiest people in the world, money still brings happiness.
"The general finding is that more money does lead to more happiness," explains Donnelly. "So, while we've believed before there is diminishing marginal utility, the curve doesn't diminish as quickly as we once thought — and even when basic needs have been met, acquiring more wealth does increase happiness."
The researchers discovered that how millionaires earn their money also affects their reported happiness.
"Participants who reported primarily inheriting or marrying into wealth reported less happiness," says Donnelly. "It appears that those who earned their wealth attach more happiness to it."
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