Income is tied to happiness and hope for the future

Money can't buy happiness, but try being hopeful and broke at the same time.

hands holding empty wallet
Credit: Perfectlab/Shutterstock
  • A new study finds money alone doesn't make people happy—they need some hope for the future too.
  • The study adds to the increasing pile of literature on the subject of how hope influences our wellbeing.
  • The findings, particularly on when this effect doesn't work, may have implications for future policy decisions.

While the adage that money can't buy happiness may be true, it has also been said that it can rent happiness for a long time. The scientific literature on the topic seems to bear this out, as studies show that more money tends to make people happier, but not always. How much people get out of the money can be extremely variable.

One surprisingly unstudied aspect of this is how our income and wellbeing relate to hope, specifically how people think the future will turn out for them. While it is known that people are more hopeful when things are going well for them and that how we perceive the future can dramatically impact our mood, no study has looked directly at the connection between income and hope.

Given that the connection between money and wellbeing is known to be positive but subject to various other factors, this missing data is particularly strange. Correcting for this, a new study published in the aptly named Journal of Happiness Studies surveyed hundreds of Americans to determine if hope can buy the things money can't.

A group of 515 American participants selected from the Prolific platform were initially involved in the study, however many of them failed to answer all relevant questions over the course of three years.

Participants were asked each year to fill out a questionnaire covering their income level, their life satisfaction, overall happiness, experiences of positive and negative emotions, and expectations on their future standard of living. They were contacted multiple times over three years to determine if changes in income impacted their levels of hope and life satisfaction. Their answers were then statistically analyzed for relationships.

To the surprise of no one, those making more money tended to report higher levels of life satisfaction. Also, as expected, higher levels of income tied to higher levels of hope. Increases in hope were strongly and directly linked to improved levels of satisfaction, and the ability of statistical models to predict how happy a participant was more than doubled by adding in their levels of hope.

However, the effect didn't exist for those making less than $1800 a month; increases in income below that point didn't increase hopefulness much. It is worth noting that this is around the poverty line for a multi-person household with children at the time of the study. The authors speculate that "this might be explained by the (lack of) capabilities that an income below $1800 can offer," and note that many of their test subjects would fit into the category of multi-person households at that level.

It seems money can buy happiness, or at least hope, but that it is more expensive than many people can afford.

There are a few caveats. While the study's demographics were similar to that of the United States overall, there were points of significant departure. Notably, the median test taker made less than the median American, was more likely to be unreligious, and rated their overall happiness slightly lower than other tests show Americans tend to do. While these differences may not prove substantial, the mentioned findings held up across all demographics involved in the survey; they may temper claims of how universal the results are.

The authors themselves admit that casualty cannot be inferred from these findings. It might be the case that a higher income causes people to be hopeful, which, in turn, improves their level of life satisfaction, or it could be that the causation runs the other way, with optimistic people making more money as a result of their already being hopeful.

In any case, hope does mediate the relationship between income and life satisfaction. While perhaps intuitive, this finding will advance the literature on the subject and has many practical applications.

This study provides further evidence that while having enough money to get by is necessary for happiness, it is not having piles of money alone that make people happy. It appears that it is what people can do (or at least believe they can do) as a result of having more money that actually increases their wellbeing. People looking to improve their outlook on life might do well to remember this.

The authors also suggest that there are policy implications in these findings. They conclude their study by pointing out:

"Our findings signal that policy aimed at increasing wellbeing through higher wages should take into account that the stability of income matters, and that only over a certain threshold income can offer enough possibilities to invest in a better future and as such create more hopeful and happy lives."

That is, since the hope, income, and satisfaction relation only kicked in above a certain income level, any policy geared towards improving people's lives will have to focus on getting them above that level to see lasting effects.

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