While some may believe that big happiness comes from a big dollar sign, a new study suggests otherwise. The study, published in Health Economics, Policy, and Law, suggests that psychological therapy could be tremendously more cost effective at making people happy than winning the lottery or getting a pay raise.
In the study, British psychologists Christopher Boyce and Alex Wood analyzed information provided by thousands of people about their psychological well-being. Boyce and Wood also examined a wide range of studies calculating the monetary costs or benefits of large life events like getting married or losing one's health. Through this analysis, they found that a happiness boost does occur after an individual wins a medium sized lottery, but they determined that this is nothing compared with the boost that occurs through psychological therapy. In fact, they found that therapy could be as much as 32 times more cost effective than financial compensation: to equal the happiness boost that comes from a course of therapy costing $1,329, you'd need a pay raise of more than $41,542.
These findings have widespread implications, even beyond our personal calculations for how to maximize our happiness. For example, in courtrooms across the country, judges find themselves having to put a monetary price on the "pain and suffering" experienced by plaintiffs. This study shows that financial compensation is not the only, nor is it the most effective, way of restoring a person's mental health to what it was before an injustice occurred.
Boyce and Wood's results suggest that we might overestimate the importance of money for improving well being—that new high-paying job might not be the surest route to happiness. The authors note that for society at large, "mental health in its own right is something to be valued alongside economic progress. … It needs to be understood that aspiring to good mental health can often be more important than aspiring to high income for well-being."