Everyone has heard of GDP (Gross Domestic Product), but probably not everyone knows the FIL (Gross National Happiness), nor what relationship exists between these two indicators. What is the connection between GDP and FIL, between money and happiness? Let’s start by trying to give a definition of happinessremembering that, although it is a question of a universal emotionremains one of the least understood by neuroscientists.
Gross national happiness
Veenhoven, a Dutch psychologist and sociologist, tried to clarify the numerous definitions of happinessarguing that it is a judgment that the person expresses about their life, based on past experiences and expectations for the future. To formulate this judgment, and therefore to define themselves as happy, people use two systems: an emotional one and a cognitive one.
Emotionality And cognitionHowever, they do not always agree. It may happen that you feel good (emotional evaluation), despite knowing (cognitive assessment) of not having achieved what you wanted, or of feeling unhappy (emotional evaluation) and at the same time be reasonably convinced that you have a life you can’t complain about (cognitive assessment).
What does happiness depend on?
Veenhoven argues that, even if it is a subjective experience linked to the perception of a satisfying life, happiness depends on factors common to all human beings and transversal to cultures, such as the satisfaction of fundamental needs and the sense of meaning in life.
There perception of one’s own happiness it does not only depend on personal characteristics, but is also linked to the context in which the person lives. As for the individual characteristicsthose that seem to have the greatest impact on the perception of well-being are:
- health;
- the feeling of being able to control one’s environment;
- a good level of self-esteem.
With regard to the contextseveral studies reported in World Database of Happiness indicate that well-being is related to the wealth of the country and that it is greater in countries where the rule of law, freedom, civil citizenship and social participation exist.
Having children, however, does not seem to be a determining factor for happiness, while social position can have a certain weight, especially in non-Western countries. Other studies show that the average happiness of a nation it is lower in poor countries and is lower when facing unpleasant events.
Are richer countries happier?
While on the one hand people with greater economic resources are often happier than those with fewer, as emerges from the comparison between individuals from the same country, it is also true that rich countries are not necessarily happier than poor ones.
The Easterline paradox
According to the Easterline paradoxthere is no direct link between economic growth and the happiness of the members of a society, because people tend to invest many resources to increase their material goods, with possible negative effects on other dimensions of lifelike the family one.
Furthermore, according to the postmodern paradoxthe rise of individualism and materialism in richer countries is associated with a general decline in well-being. The happiest countries are those which, in addition to a high income, have a high rate of social equality, trust and quality of governance.
What is the relationship between income and happiness?
Veenhoven and Inglehart demonstrated that the relationship between income and happiness is curvilinear: once basic needs are satisfied, a further increase in income does not increase the level of happiness. Where economic resources are scarce, even small increases can bring benefits, but once a certain certainty has been achieved, further growth does not necessarily bring the same advantages.
For this reason, some economists look critically at measures such as GDP, asking themselves what it really expresses and whether it is an indicator capable of reflecting the well-being of citizens. One of the main criticisms of the GDP as an indicator of well-being is that it is a limited indexas it measures only one dimension and neglects many others.
An interesting example is the Bhutana country of about 700,000 inhabitants in the Himalayas, which has attracted the attention of several scholars. Despite being poor, Bhutan is among the top twenty countries in the world for level of happiness.
It was the first country in the world to replace the GDP rating with the PHILan index that measures the quality of a country holistically, unlike GDP. The art. 9 of the Constitution states that the State promotes the conditions that allow the pursuit of the FIL, believing that the development of society occurs when material and spiritual growth proceed together.
What scientific studies say about the relationship between money and happiness
In recent decades, numerous studies have attempted to clarify the link between income And happiness. A fundamental contribution came from the Nobel Prize winner in economics Daniel Kahneman and the economist Angus Deaton, who in 2010 analyzed the data of over 450,000 Americans. According to their research, emotional well-being tends to increase with income up to a threshold of approximately $75,000 per year (Kahneman & Deaton, 2010). Beyond this figure, further increases in income do not appear to lead to a significant increase in daily happiness.
These findings suggest that money can help reduce challenges related to basic needs and financial stress, but once a certain amount of financial security is achieved, other factors become more relevant to personal well-being. It is important to remember that this threshold may vary based on the cost of living and cultural context of each country.
New perspectives on the relationship between income and happiness
More recent studies have questioned the idea of a fixed threshold beyond which money no longer affects happiness. Matthew Killingsworth, a researcher at the University of Pennsylvania, published a study in 2021 that suggests how happiness may continue to increase even beyond the thresholds identified in the past, albeit at a slower pace (from the study published in 2021 by Killingsworth).
This evolution of the scientific debate shows that the relationship between money and well-being is complex and may depend on how people use their economic resources, personal expectations and social comparison. In other words, there is no single answer: for some people, earning more may actually translate into greater satisfaction, while for others, well-being may depend more on other aspects of life.
Practical implications: how the link between money and happiness can be interpreted
Understanding that money has a limited impact on happiness, especially after basic needs are met, can help you reflect on your priorities. Studies suggest that investing in significant experiencessuch as time spent with loved ones or activities that provide a sense of purpose, may contribute more to personal well-being than material wealth.
Furthermore, research highlights that the generosity and the sharing of one’s resources can increase personal satisfaction. For example, according to a study published in “Science” (Dunn, Aknin & Norton, 2008), spending money on others can make you happier than spending it just on yourself. These ideas can be useful for guiding your daily choices and promoting a more balanced vision of the relationship between money and happiness.
Concrete examples: money in everyday life
To make the link between money and happiness more tangible, we can consider some common situations:
- Manage unexpected expenses: Sufficient income reduces stress related to unexpected eventscontributing to greater emotional tranquility.
- Choose how to spend your time: Greater economic well-being can offer the opportunity to dedicate more time to one’s passions, family or volunteering, aspects often associated with greater personal satisfaction.
- Social comparison: In some cases, the perception of one’s own happiness can be influenced by comparison with the standard of living of others, generating dissatisfaction even in the presence of a good level of income.
These examples show how money is a tool that can facilitate well-being, but it is not the only source of it. The quality of relationships, the sense of belonging and the possibility of realizing one’s values remain central elements for a satisfying life.
Find your balance: the pursuit of happiness can be a conscious choice
While money can help satisfy needs and reduce some worries, happiness can often arise from what we choose to cultivate within and without ourselves: authentic relationships, meaningful experiences, and a sense of personal purpose. If you feel the need to reflect on your priorities, improve your well-being or simply find a balance between what you have and what you want, the support of a psychologist can be a turning point. With Evidence Network you can start a journey tailored to you, simply and safely, wherever you are. Take the first step towards more conscious happiness: start the questionnaire to find your psychologist online.
