Money relates to happiness in two completely different ways, depending on where a person ranks on the economic scale.

A little bit of money can make a great deal of difference to people who are trapped in desperate poverty. It can mean the difference between eating or starving; between having a roof over your head or sleeping in the open; between wearing decent clothing or dressing in rags; or between buying the medicine you need or doing without. Obviously, people who are well-fed, warm, dry, adequately clothed, and taking the medicine they need are are going to be happier than people who are hungry, cold, wet, dressed in rags, and needlessly suffering from disease.

However, once you rise above the poverty level, money starts to become less important. The change from desperate poverty to satisfying your basic needs brings a much larger increase in happiness than the change from having what you need to having a little more than what you needs. The higher you rise on the economic scale, the less effect an increase in money has on your level of happiness. Economists would call this "diminishing returns."

For relatively successful, middle-class people, money becomes what sociologists call a "non-dissatisfier." That's an odd-sounding word for a relatively simple concept. The idea is that since people in the middle class are accustomed to having a certain amount of money, they tend to take it for granted. Money becomes something they expect to have as a matter of course, like air to breathe and a place to sit.

So money doesn't bring happiness or satisfaction to such people. Money has no real emotional effect on them at all, unless for some reason they don't have as much as they are used to. A sudden lack of money will cause intense dissatisfaction. So money is something that prevents dissatisfaction, but cannot bring satisfaction by itself. Hence the term "non-dissatisfier."

Of course, a windfall propels them into the upper class, such as winning the lottery, will make them very happy - for a while. But, once they get used to their new wealth, they will find that all their personal problems are still with them. If they were basically unhappy as middle class people, they will still be unhappy as super-rich people. If they were well-adjusted in the middle class, they will remain well-adjusted in the upper class. At this economic level, money has absolutely no effect on happiness whatsoever.

Learn more about this author, Matthew Lieff.
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