Money doesn't make you happy, says everyone, reassuringly, about not having enough money. Money does make you happy after all, says a new paper published by the UK government. "An individual’s level of personal well-being is strongly related to the level of wealth of the household in which they live," says the report, which was designed to measure the relationship between wealth and happiness in the U.K. population. The key here is the word household—personal levels of wealth were found to be much less important than the general level in your home.
The survey is part of the Wealth in Great Britain series of studies, and uses data from the Wealth and Assets Survey (WAS), from June 2011 to July 2012. The results were controlled for sex, age, ethnicity, and other factors, in order to tease out the singular relationship between money and happiness. Participants were asked four questions to self-rate their own level of happiness and self-worth.
The results show that living in a financially stable home greatly improves your happiness. "Life satisfaction, sense of worth and happiness are higher, and anxiety less, as the level of household wealth increases," says the report. This effect is stronger than just being individually wealthy, which suggests that the financial safety net provided by the other members of your household is the important factor. That is, the feeling of security brought by wealth is the key to feeling happier. Perhaps this explains why buying material goods doesn’t make us any happier. "Anxiety has a significant negative relationship with wealth," it says, "meaning that on the whole individuals living in households with higher wealth report lower anxiety levels, holding other factors equal."
Individual wealth does have an effect, though. Whereas the household income affects life satisfaction and overall happiness, your own personal income also correlates with a sense of self-worth. That is, we value ourselves by our salary, which doesn’t sound too healthy.
The net financial wealth of the household appears to be the type of wealth most strongly associated with personal well-being. In particular, life satisfaction will be higher in households with greater net financial wealth.
So, more money does make you happier after all, although not for the reasons we may have thought. Buying new shoes and cars, taking vacations, or spending in general might not cheer you up at all, but having enough money to live on can ease anxiety, and let you stop worrying enough to enjoy your life, even if that money isn’t your own. It’s a surprising result, but it makes a lot of sense, too.