Key Finding

10. It's true that money can’t buy happiness ... unless you are poor

The notion that money doesn’t make people happy is more than a truism. It is rooted in the evidence. Only in the poorest countries does money have a significant effect on people’s satisfaction. This makes sense, given its direct and positive impact on life's most basic needs. On a scale of 1 to 10, an increase in a country’s per capita income from $0 to $3,000 leads to a 2 point increase in life satisfaction among its residents – a huge effect. However, once a nation rises from extreme poverty, money begins to diminish fairly quickly as a source of happiness. By the time a country grows rich, money has an almost negligible effect. An increase from $30,000 to $33,000 in per capita income only leads to a 0.06 point increase in a nation’s happiness.

INSIGHT: For the poorest countries, raising people’s incomes is the surest route to improving their quality of life and increasing their levels of happiness. As countries develop, however, the rule of law, good health, strong relationships, and other quality of life factors matter more than money.