First, let’s be clear that those are two different things (I’ve posted about this distinction before here and here.)
Money and luxuries increase life satisfaction but don’t do much for happy feelings.
Happy feelings are associated with “the fulfillment of psychological needs: learning, autonomy, using one’s skills, respect, and the ability to count on others in an emergency.”
The Gallup World Poll, the first representative sample of planet Earth, was used to explore the reasons why happiness is associated with higher income, including the meeting of basic needs, fulfillment of psychological needs, increasing satisfaction with one’s standard of living, and public goods. Across the globe, the association of log income with subjective well-being was linear but convex with raw income, indicating the declining marginal effects of income on subjective well-being. Income was a moderately strong predictor of life evaluation but a much weaker predictor of positive and negative feelings. Possessing luxury conveniences and satisfaction with standard of living were also strong predictors of life evaluation. Although the meeting of basic and psychological needs mediated the effects of income on life evaluation to some degree, the strongest mediation was provided by standard of living and ownership of conveniences. In contrast, feelings were most associated with the fulfillment of psychological needs: learning, autonomy, using one’s skills, respect, and the ability to count on others in an emergency. Thus, two separate types of prosperity-economic and social psychological-best predict different types of well-being.
Source: “Wealth and happiness across the world: material prosperity predicts life evaluation, whereas psychosocial prosperity predicts positive feeling.” from J Pers Soc Psychol. 2010 Jul;99(1):52-61.
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