Happiness
Happiness: Why Purpose Beats Money Every Time
Why true happiness lies in purpose and connection, not just wealth or success.
Updated February 3, 2025 Reviewed by Lybi Ma
Key points
- Money boosts happiness up to a point, but studies show diminishing returns after a threshold.
- Interpersonal connections, not wealth, are the strongest predictors of long-term happiness.
- Pursuing "little p" purpose fosters joy, attracting people and building meaningful communities.
- Happiness thrives in purpose-driven connections, not in wealth or material achievements.
There’s been a lot of debate about whether money can buy happiness. Some argue convincingly that it can, while others strongly disagree. In this blog post, I’ll explore why I believe money cannot buy happiness and discuss some of the most well-known studies on this topic. These studies ultimately suggest that purpose—specifically, “little p” purpose—may hold the key to happiness instead.
The Studies on Money and Happiness
The idea that money correlates with happiness has been analyzed extensively, and many findings suggest a complex relationship. Let’s look at three studies that have shaped this discussion.
The 2010 Kahneman and Deaton Study
In 2010, Daniel Kahneman and Angus Deaton conducted a study analyzing data from the Gallup Pathways Well-being Index. This survey collected information from 450,000 U.S. residents in 2008 and 2009, asking participants to reflect on their life satisfaction and emotional experiences. Since the data was already collected, this was a retrospective study.
The researchers found that income did, in fact, correlate with happiness—but only to a point. Their findings suggested that happiness increased with income up to around $75,000 per year (adjusted for inflation today, this figure would be higher). Beyond that threshold, additional income didn’t significantly improve emotional well-being.
While the study provided valuable insights, it had limitations: it only analyzed a narrow timeframe (just one to two years) and relied on self-reported data. Because of this, I believe its conclusions should be viewed with caution.
The 2016 Matthew Killingsworth Study
In 2016, Matthew Killingsworth conducted a follow-up study using a modern approach. He collected data through an app-based platform called Track Your Happiness, which prompted participants multiple times a day to report their emotional state, activities, and context in real time. This study, like Kahneman and Deaton’s, was retrospective.
Killingsworth’s findings were similar: as income increased, so did happiness. Interestingly, his study suggested that even beyond the $75,000 threshold, additional wealth could still bring incremental increases in happiness—but not to the same degree as the earlier gains.
While this study used innovative data collection methods, it also had its limitations: it spanned only seven or eight years and still couldn’t establish causation between money and happiness—only correlation.
The Harvard Study of Adult Development
For a more robust perspective, let’s turn to one of the longest-running and most comprehensive studies of happiness: the Harvard Study of Adult Development. Unlike the previous two studies, this was a prospective study, meaning it followed participants over time, collecting data at regular intervals throughout their lives.
The study began in 1938 with 724 men, split between Harvard undergraduates and boys from disadvantaged neighborhoods in Boston. Over the decades, it expanded to include their spouses and children, eventually encompassing thousands of participants. Researchers conducted interviews, questionnaires, medical exams, and more, tracking participants for 80 years.
The results were surprising. Happiness, they found, wasn’t most strongly correlated with income, wealth, achievements, or even purpose itself. Instead, happiness was most closely tied to interpersonal connections—our relationships and sense of community.
Why Purpose Still Matters
You might be wondering: If happiness is most correlated with interpersonal connections, where does purpose come in? After all, I’ve written extensively about how purpose—specifically “little p” purpose, or process-oriented purpose—contributes to happiness, health, and longevity.
Here’s how I connect the dots: When you pursue your little p purpose—the activities that light you up and make you come alive—you naturally become your best self. And when you do that, people are drawn to you like moths to a flame. You build relationships and community around the things you love.
Purpose-driven people attract collaborators, students, and teachers. They form communities centered on their passions. In this way, purpose becomes the foundation for building the connections that the Harvard study identified as essential for happiness.
Conclusion: The Pursuit of Purpose-Driven Communities
To answer the age-old question, I don’t believe money buys happiness. While studies like those by Kahneman, Deaton, and Killingsworth show a correlation between wealth and happiness, they don’t establish causation—and their short-term, retrospective designs limit their applicability.
The Harvard Study of Adult Development, on the other hand, offers a more compelling conclusion. Over 80 years of prospective research found that happiness is rooted in interpersonal connections. And when you pursue your little p purpose, you naturally build those connections. You create purpose-driven communities, which may be the true key to a happy life.
Don’t chase money for happiness. Chase your purpose, and the connections—and joy—will follow.
References
Kahneman, D., & Deaton, A. (2010). High income improves evaluation of life but not emotional well-being. Proceedings of the National Academy of Sciences, 107(38), 16489-16493.
Killingsworth, M. A. (2016). Experienced well-being rises with income, even above $75,000 per year. Proceedings of the National Academy of Sciences, 118(4), e2016976118.
Harvard Study of Adult Development. (2023). Longitudinal findings on happiness and interpersonal connections.