Asked whether they are happy, 94% of Bhutan people answer yes. In Japan, level of life satisfaction has slightly deteriorated during the last years. Life satisfaction of Germany and the UK is high, but not higher than the one in Costa Rica or Vanuatu. And yet, Japan, Germany and the UK, along with most “Western” countries have experienced continuous growth and income increase over the last decades. While a country like Bhutan has placed much less importance on the question of growth. How is this possible?

Isn’t growth and having more to spend a fundamentally positive thing which should influence our happiness?
And if the numbers are correct: Do ‘we’ not know what is good for us? Or is the nearer but more painful explanation to the riddle the solution: We are focussing on the wrong ends? And if we are, is it save to say that “money doesn’t make happy”?

Income matters!
Not quite! There is a correlation between the two factors ‘income’ and ‘happiness’: Until a level of about $10.000 per person per year (adjusted for purchasing power) income growth clearly influences life satisfaction. But after this level is reached, correlation declines and at length disappears completely.
So yes, money does matter. But the question is for what? The level of $ 10.000 is surprisingly low compared with average incomes in Germany for example.
We need money. But what we in fact need (through money) is being able to cover our basic needs: Have enough food, enjoy save shelter, have access to clean water. Cutting into any of those will definitely deteriorate our level of life satisfaction.
And in many parts of the world, the safest way to secure the satisfaction of these needs is by enjoying a in this way sufficient income. On the question of how much influence money has on happiness, also see the interview below with Junko Edahiro from Japan for Sustainability, the one expert here at the WRF who raised this issue.

Money matters! But the question is: How much? And if the answer here is “Not much” then what other factors do? And how can we increase these other factors’ comparative importance?