Can money really buy you happiness?

A smiling family look over the Thames from the Millennium Bridge in London with St Paul's Cathedral in the background
View from the bridge: exactly what makes Brits happy? Credit: Getty

We all know the old saying that money doesn’t buy you happiness. But how accurate is it? Rich House, Poor House, which launches on Channel 5, explores whether wealth really is the key feel-good influencer on our sense of well-being.

Channel 5’s new series Rich House, Poor House explores that all-important question by giving families at opposite ends of the wealth spectrum a chance to swap homes and lifestyles for a week.

Inside each swapped home, a pile of cash will represent that household’s weekly income after tax. A detailed activities planner will guide each family as they try to live the other’s life in terms of spending and daily schedules.

As well as the experiences of the families involved, the series will explore whether happiness is more influenced by socioeconomic factors – based on wealth-influenced social position – or sociometric factors, which centre around the importance of being liked and respected by peers.

Perception vs reality

While academic studies suggest sociometric status is ultimately more important to our sense of well-being than absolute wealth, there is also evidence that perceived social unfairness contributes to unhappiness, although different countries seem to vary.

Recent research from Oxfam found Britain the most unequal country in the EU

The most game-changing academic study into sociometrics was a 2011 report by US psychologists that drew on data from 45,000 Americans over a 37-year period. It found that what rankled people was not income itself, but perceptions of inequality and of being unfairly left behind.

“Income disparity has grown a lot in the US since the 1980s,” says researcher Shigehiro Oishi. “With that, we’ve seen a marked drop in life satisfaction and happiness.”

Perhaps unsurprisingly, this dissatisfaction only affected those with lower income levels – basically, rich Americans saw nothing unfair in their wealth.

The US vs the UK

And yet the latest research in the UK suggests people in Britain don’t share the attitude of folk across the Atlantic.

The income disparity stats are similar. Recent research from Oxfam found Britain the most unequal country in the EU. People in the bottom 10 per cent of the population have average net incomes of less than £9,000 a year – around a tenth of the average of the top 10 per cent.

The report also found that about 634,000 Britons were worth 20 times as much as the poorest 13 million people.

And last year’s Luxembourg Income Study, which compares income equality of 30 countries across the world, found the UK to be the fourth most unequal country in Europe in terms of income distribution.

With wealth inequality rising, why are many Americans getting less happy while Britons are getting more happy?

Much of this is due to soaring house prices since the 1980s. Nearly 500,000 Britons became dollar millionaires in 2014, mostly just by sitting on London property. This 30.5 per cent increase in the number of UK dollar millionaires compares favourably with a 14.5 per cent rise in France, 14.1 per cent in Germany and 13 per cent in the US.  

What’s more, in 2015 the Social Market Foundation (SMF) analysed the changing incomes and savings of thousands of Britons, and found the rich were 64 per cent richer than before the 2008 crash and the poor 57 per cent poorer. Surely cause for gloom?

To find out, we can turn to surveys carried out since 2014 by Government statisticians to measure levels of British happiness. The Office of National Statistics (ONS) surveys people using four measures of personal well-being: how satisfied people feel with their lives; how worthwhile they feel the things they do are; how happy they were yesterday; and how anxious they felt yesterday.

Remarkably, the ONS report of March 2016 found that, despite the yawning gap between the top and bottom UK wealth levels, Britons seemed to be getting happier. The proportion of adults giving the highest ratings for all four measures significantly increased compared with the previous year.

A new measure of happiness

So with wealth inequality rising on both sides of the Atlantic, why are many Americans getting less happy while Britons are getting more happy? It would appear that sociometrics may be winning out against socioeconomics on this side of the pond.

It looks like there might be plenty to discuss – including whether or not the age-old aphorism about money and happiness is past its prime.

Rich House, Poor House

Does money really buy happiness? Is wealth only to do with bank balances, or are there other enrichments to consider? Find out in Channel 5’s new series, Rich House Poor House, running every Thursday at 9pm, featuring two families from opposite ends of Britain’s wealth divide as they swap homes, budgets and social status for seven days of living each other’s lives. How much will they find they have in common – and what will they learn about money and happiness?

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