On one otherwise unremarkable day, countless eons ago, one of our shrewder ancestors first exchanged puka shells, a red pebble, or a nugget of shiny metal for a wildebeest steak and human commerce was born. Or, more accurately, money was born. Ever since then people have been trying to link money and happiness. Are we happier with more money? Are we less happy with less money?

When asked if she is happy, Lara Aknin just laughs. Aknin is a doctoral student working with Dr. Michael Norton, Assistant Professor at Harvard Business School, and Dr. Elizabeth Dunn, Professor of Psychology at UBC. They are part of a growing body of researchers examining the links between money and happiness.

Lara speaks enthusiastically about her research and the conversation ranges from various psychological theories, to the recent economic crisis, to the country of Bhutan, the small Himalayan kingdom which measures its Gross National Happiness (GNH) along with its GDP.

“Money is only one factor that influences happiness,” Aknin says. “Work in the fields of Social and Positive Psychology, shows that personal relationships, religious beliefs, exercise, feelings of gratitude, random acts of kindness, as well as higher income, can all affect our sense of well being.”

Aknin is co-author of a recently published paper entitled “From wealth to well-being? Money matters, but less than people think,” that appears in the Journal of Positive Psychology.

According to their research, “a striking inconsistency surrounds the relationship between money and happiness.” It suggests that people “engage in behaviors designed to increase or maintain their wealth because they overestimate the impact that income has on well-being.”

People at different levels of income were asked to report on their own happiness and to predict the happiness of others. As one might expect, those surveyed accurately predicted the “moderate emotional benefits associated with being wealthy”. The big surprise was that they expected “low household income to be coupled with very low life satisfaction”, but that wasn’t necessarily the case.

As Aknin points out, this research might have important practical considerations for career choices, shorter work weeks or early retirement.

I frequently reassure my clients looking at a career transition or early retirement that a reduced income might not be nearly as bad as they fear. Now, thanks to Aknin and her colleagues, I have the research to back up my pep talks. As for finding an extra day for myself every week? That’s something that would make me very happy! – Karin Mizgala

Karin Mizgala is a Vancouver-based fee-only financial planner with an MBA and a degree in psychology. She’s the President of LifeDesign Financial and co-founder of the Women’s Financial Learning Centre.