Academically speaking, the answer to this question has, for a long time, been no. This is because of something called the Easterlin paradox – the theory that economic growth in a country does not result in greater happiness for citizens of that country.
But the theory is being challenged.
This week, writing in the Telegraph, Allister Heath cited two new academic papers that claim to disprove the Easterlin paradox. Both papers suggest that increased wealth does result in increased happiness.
The first paper cited by Heath is The New Stylized Facts about Income and Subjective Well-Being by Sacks, Stevenson, & Wolfers. This paper uses data on citizen’s life satisfaction from the Gallup World Poll and compares it against a measure of average income (real GDP per capita). The authors find that wellbeing does in fact rise with income. Moreover, the data show that the correlation stands within single countries, across countries, and over time.
The paper concludes with five “stylized facts” that include findings such as, “richer people report greater wellbeing than poorer people” and “richer countries have higher per capita well-being than poorer countries.”
The paper also offers an explain of why Easterlin came to the conclusions that he did in the 1970s: namely lack of data.
…[Easterlin] failed to find a statistically significant relationship between wellbeing and GDP …There was simply too little data to have the precision necessary to reach a conclusion in either direction.
The second paper cited in Heath’s article is The Easterlin illusion: economic growth does go with greater happiness by Ruut Veenhoven and Floris Vergunst.
This paper also finds that wellbeing rises with income. The authors reveal a positive correlation between GDP growth and a rise of in happiness in nations. They go on to say that both GDP and happiness have gone up in most nations, and average happiness has risen more in nations where the economy has grown the most.
So that’s it then. Money can buy you happiness after all. Or can it?
There remains a discussion as to whether disproving the Easterlin paradox is as simple as the two papers suggest. For example, wellbeing expert Carol Graham argues that it depends on the question that is asked in the survey.
Graham draws a distinction between life evaluation data and life experience data. Happiness data that capture citizens’ life evaluation correlate more closely with income compared to happiness data that capture life experience. This point is made by Daniel Kahneman and Angus Deaton here.
So can money buy happiness? It seems the jury is still out. Academically speaking, anyway.