‘Money Has Never Made Man Happy’: But Therapy Has


“Money has never made man happy, nor will it, there is nothing in its nature to produce happiness. The more of it one has the more one wants.” ~ Benjamin Franklin

Benjamin Franklin knew a lot on an extensively large variety of topics –and pretty much liked to tell everyone about it at any opportunity. It grew wearisome in America–but the French women took to it with surprising enthusiasm. Or perhaps his pithy sayings were lost on them, as they admired his bald head [it was an era of extravagant wigs in France], sat on his abundant lap, and called him ‘Papa.’

The fact that the cosmopolitan and lovely women of Europe found the rather homely Franklin so charming that they fought over his affections reminds me of one of life’s truisms:

You never can tell.

I’d say that pretty much fits the bill here with today’s research.

Money Does Not Equal Happiness

We start with a premise that might be hard for some to buy: Money does not, in fact, increase happiness.

Economist Richard Easterlin, founder of a field called ‘happiness studies,’ has published extensively on happiness over his career–and offers broad support for the theory that money doesn’t just fail to buy love, as the Beatles so clearly told us–it fails to buy happiness, as well.

Easterlin determined that subjective measures of life satisfaction and well-being in the U.S. have stagnated since 1945, in spite of significant increases in income. [The study has been replicated for most developed countries.]

The trend has continued even past his original work. In an article entitled The Dismal Science Tackles Happiness Data” in The Regional Economists’s January, 2010 issue, the authors graphed mean happiness and income from 1972, and. . .well, you can see the results for yourself:

Underwhelming performance, if you’re on Money’s side.

The situation was absolutely no different when researchers factored out for the response ‘very happy,’ perhaps in the thought that the ‘very happy’ must have some financial reasoning for such an exuberant response. But the graph (as displayed on the Positive Psychology News Daily) website indicates quite the contrary:

Those particularly happy people are ‘very happy’ with no thanks to improvement in income.

And contrary to the belief of every lottery-ticket buyer in the land, a small study of 22 lottery winners compared with 22 controls was published in 1978 under the title “Lottery winners and accident victims: Is happiness relative?” The authors found that the lottery winners were no happier than the controls, and “took signficantly less pleasure from a series of mundane effects,” like, for example, reading a book.

It just doesn’t look good for Money in the Happiness game.

So the question becomes: If money isn’t increasing individual happiness efficiently. . . well, what in the world does?


Money Required to Bring Back Happiness After A Loss

To find out, we have to travel through some fairly ugly terrain.

Believe it or not, researchers have been hard at work for years putting a monetary value to the happiness quotient of a multitude of events across the human lifespan–and this includes human life itself.

Researchers have calculated monetary values for marriage, social relationships, fear of crime, noise (for real), health, and disabilities.

While I thought getting married was generally a pretty good deal (if we factor out toilet seats sometimes rather inconveniently being up, or a dearth of properly-replaced toilet rolls), and was pleased enough to leave it at that, certain un-like-minded people were hard at work putting a monetary value to my union.

Researchers David Blanchflower and Andrew Oswald, from the Departments of Economics at Dartmouth College and Warwick University in England, respectively, figure in their 2004 article that marriage is worth (ready? have any guesses?). . . an estimated $100,000 a year in happiness dollars. [For a moment of seriousness–not a million dollars a year could replace the happiness I have with my husband. It makes you wonder who they used in these studies, doesn’t it?]

Employment? Only $60,000 annually.

All well and good–but what would it cost to compensate a person (as if that could truly be done) for their loss–that is, to include emotional suffering in the payout for a lost spouse or lost job, and to return the person to their initial sense of happiness and well-being, as if the event had never happened?

First, how to assess ‘well-being’ or happiness?  Researchers Andrew J Oswald, Professor of Economics at the University of Warwick,  and  Nattavudh Powdthavee (seek elsewhere for a pronunciation guide), assistant professor in economics at Nanyang Technological University, set up a means to determine well-being, using two different measures: a 7-point scale (1 = very dissatisfied; 7 = very satisfied), and a more complex 12-point-scale record of mental health status.

Using similar scales Ada Ferrer-i-Carbonell and Bernard M.S. van Praag from the University of Amsterdam computed loss of health and subsequent decline in well-being using percentages of reduction in income.  Working westerners with hearing difficulties suffer declines of well-being equal to the reduction of income between 17.6-20%. Working westerners with more serious illnesses, such as diabetes, suffer a decline in well-being as much as reducing their income by 41-59%.

Oswald and Powdthavee computed happiness loss and compensation in actual monetary amounts.  Partially by using lottery winning results and subsequent reported well-being, they figured out compensation prices for bereavement damages.

The pivot of all the following arguments lies in what the two found in regards to loss and increase in financial benefit:

Even if a person experiences a devastating loss, his or her happiness will increase at the same rate as a person who has not experienced the loss if he or she receives a particular sum of money.

And apparently any loss, even of health, can be ‘made up for’ on the happiness scale–with enough money.

It’s fascinating research–and it’s part of the theory that lies behind awarding damages in the courts for pain and suffering.

So. . . how much money are we talking about?

Well, there’s an answer for that–for every case.

For loss of a spouse, a person would need to be compensated with at least £114,000 [today’s $176,297.57] to re-coup well-being. But the price tags go down from there for other family members.

According to Oswald and  Powdthavee,

 there a significant variation in the compensation valuation between our loved ones.  Losing a partner is extremely damaging to subjective well-being and requires on average a compensation package of £114,000,000 (€160) [currently $176,279.57] in real income to make the person feel indifferent about the situation.  Death of a child, on the other hand, is equivalent to an additional income of £89,000 (€125,000) [currently $137,621.77] a year.  The loss of a sibling has one of the smallest compensation packages at around £16,000 (€22,000) [currently $24,749.99].

Nothing if not morbid, I suggest, but clearly there’s a ‘well-being’ coefficient, a financial sum required to help a person regain happiness, and it varies with the severity of the loss.

So far so good–I guess.

But even a whole passel of money won’t make up happiness points if there is emotional scarring from a loss that is traumatic and devastating.

Enter, stage right: Therapy.*

We Love a Bargain: Therapy Facilitates a Return to Happiness More Efficiently Than Money–32 Times More, To Be Precise

Apparently psychological therapy can help people return to their happiness levels much more efficiently, from a financial perspective, than payouts of money.  I would have never thought to look at it that way–but the articles did interest me.

First I wanted to know how we got from the point of computing how much money is required to recoup well-being from a loss, to a cost-benefit analysis of psychological treatment. It didn’t seem an obvious transition.

 Well, researchers were there ahead of me, data and formulas in hand.

Chris Boyce is currently a Research Fellow in the School of Psychological Sciences at the University of Manchester who studies effects on happiness, but did the seminal paper on alleviating mental distress with money with Alex Wood while at the University of Warwick. Wood, at the University of Manchester, and Boyce looked at data of thousands of people reporting on well-being.

They then analyzed how well-being changed due to sudden increases in income, such as through lottery wins, pay raises, or financial windfalls after lawsuits–and compared that to changes in well-being due to psychological therapy in their 2010 paper, “Money or mental health: The cost of alleviating psychological distress with monetary compensation versus psychological therapy.”

Past research has determined the cost-effectiveness of psychological treatment, both with more directed cognitive-behavioral therapy (CBT), and less-directed counseling.

“The Cost-Effectiveness of Psychotherapy in the Treatment of Depression” quotes a study examining the impact of the treatment of depression on costs. From 1992, the study computes numbers that most likely need to be seriously corrected for inflation. The researchers ( Kamlet et al. 1992) calculated that interpersonal psychotherapy [IPT]  [the Boyce/Wood equivalent of ‘less-directed counseling’]

leads to improved quality of life and to reduced treatment costs because of fewer depressive episodes. [With indirect costs such as long income from work computed in. . .] IPT alone yields a lifetime savings of US$9,000.

Very efficient. But here come the real calculations [with my ad hoc conversion to dollars, to make it real to those of us Stateside]:

The Boyce/Wood paper figured that a 12-month course of either therapy had

[an] average total cost, which even included indirect costs such as work time lost, [of] less than £1,500 [that’s today’s $2319.47]. In fact, the improvement was achieved by both CBT and non-directive counselling within the first four months at a total cost of less than £800 [$1237.05 today].

Aha. That being the case, as opposed to the 114,000 pounds [or $176,279.57] estimated to make up well-being after loss of a spouse according to Oswald and  Powdthavee,

. . .. Pro-rata it would cost less than £600 [less than $927.79 today] to help the individual adjust to such a difficult life event using psychological therapy. Similarly for unemployment, which has deep psychological consequences, it would be more cost effective to provide individuals with psychological therapy (around £100-£200 pro-rata [or $154.63-$309.26]) to overcome their loss of purpose in life and help them back to work rather than solely offering financial compensation.

 [The next paragraph gets pretty dicey once you start talking about standard deviations, but for those of you who are statistics fans I include it, because the numbers are so terribly intriguing:

To compare the costs in another way; psychological therapy alleviates psychological distress by one and a half standard deviations at a cost of £800 [$1237.05]  over 4 months. To achieve a one and a half standard deviation reduction in psychological distress using money alone would require (based on estimates in Oswald and Powdthavee  and dependant on the statistical technique) somewhere in the region of £179,000-£292,000 [$276,789.86-$451,523.12] of extra income every year. This illustrates that the alleviation of severe psychological distress could be worth at least £179,000  [currently $276,789.86] of extra income each year and suggests that financial compensation is an inefficient way of helping individuals overcome distress. ]

Whew–glad I got that off my chest.

Then comes the piece-de-resistance: The number researchers put (as of course they would, seeing as putting money numbers on things is what they do) on the value of therapy as opposed to monetary compensation. The opening line of this conclusion deserves to stand on its own, since it’s revelatory–and, in my mind, controversial:

The wide disparity between the effects of psychological therapy and income arises out of the poor ability of income to improve mental health.

Maybe, but let’s accept that premise for now, or accept that income alone does not improve mental health.

So if it’s not money that returns people who have suffered a loss to their former well-being and happiness–what is it?

Truthfully, those of us in the field already know, don’t we? It’s the much-maligned ‘Therapy.’

And  here’s where I’m back with the program. I agree that throwing money at a person who’s suffered a devastating loss likely doesn’t help them recover their sense of well-being as much as assisting them in processing and coping with the situation.

It’s right here here all these computations about therapy and financial windfalls and their relationship to well-being get even better, and perhaps almost humorous:

Computing that  it would take a pay rise of over £25,000 to achieve the same increase in well-being as an £800 course of therapy, research demonstrates that. . .

psychological therapy is still calculated to be at least 32 times more cost effective than financial compensation.

QED, right?

Well, the press ran with this statistic, and I quit counting the number of times I saw ‘Therapy 32X More Effective at Buying Happiness’ or some such permutation. And I admit, there is a humorous element to the ’32’ factor, no?

But, really, isn’t the belief that therapy will contribute to well-being after a loss more than a lump sum of money somewhat more common sensical than the sometimes-riotous reaction to the study indicates?

Honestly, can giving an individual who has suffered psychological distress a lump financial payment in any way be expected to heal him?

Not at all, or not completely–my guess is most of us would agree.

Look, there are things money can do to help us ‘buy’ happiness.

As the researchers themselves point out, the purpose of the money is to alleviate psychological distress–perhaps by assisting the suffers in finding enjoyment elsewhere.

I can think of cases I’ve seen in my own practice:

If a woman has been widowed, the loss of the life partner is devastating. But extra money can make more trips to visit children and grandchildren possible, or even the purchase of an apartment nearby that daughter who insisted on moving to Rome and having 6 (count ’em! has she lost her mind?) adorable grandchildren that she can never see.

 An elderly husband bereft of his wife can afford to move into that top-notch assisted living place and meet new people (95% female) while getting good care–something unthinkable before the greenbacks showed up.

A middle-aged man laid low by his loss of career can spend some time traveling with his family and doing things he could never do when on the fast track–and can do them in high style that even his teenagers will take kindly to.

Perhaps–perhaps–money alleviates psychological distress that way.

But the study’s premise is that therapy can achieve the goals of helping the patient find joy again through a process of self-exploration, and by adjusting maladaptive, destructive, or obsessive thoughts that may have occurred as result of the loss. This will bring about happiness and well-being–faster and cheaper than the lump of cold hard cash the bereaved will have to figure out how to utilize to her benefit.

Fixing thinking? That’s something even money can’t buy.

I particularly appreciate how Boyce ends his doctoral thesis, “Subjective Well-Being:  An Intersection between Economics and Psychology,” which was the forerunner to the main Boyce/Wood paper. For he draws the logical conclusion from his assertions about the financial value of therapy–it’s worth more than its weight in gold; it’s worth the health of nations–and as such, it’s worth society investing in.

Writes Boyce,

We extend our argument . . . .[to]suggest that money’s low importance in achieving mental health has important implications for public health. National happiness levels have remained flat in developed countries in spite of large economic gains. Mental health, on the other hand, appears to have been deteriorating across the world for some time and is estimated to deteriorate still further (Michaud et al., 2001). *

The comprehensiveness and accessibility of mental health services, in particular the provision of psychological therapies in publicly funded services, have regularly been questioned. Increasing the investment in mental health and generally broadening access therefore might be a more efficient way to increase the health and happiness of our nations than pure income growth.

“Money has never made man happy,” asserted Ben Franklin–but mental health treatments have, and as such are  worth society’s investing in to increase them, improve them, and make them more accessible.

Bargain hunters take note: Therapy may be one of the best bargains you’ll find in an entire shopping year, or decade-or longer. And instead of walking away with a stylish pair of jeans, a spanking red convertible, or even a new home, here you walk away with the best that money can’t buy–happiness.


Blanchflower DG, Oswald AD. Well-being over time in Britain and the USA.  Journal of Public Economics 2004; 88( 7-8):1359-1386.

Boyce CJ. Subjective Well-Being:  An Intersection between Economics and Psychology. Thesis submitted in fulfillment of requirements for degree of Doctor of Philosophy in Psychology, University of Warwick, Department of Psychology, September 2009.

Boyce CJ, Wood AM. Money or mental health: the cost of alleviating psychological distress with monetary compensation versus psychological therapy. Health Economics Policy and Law 2010; 5(4):509-516.

Brickman P, Coates D, Janoff-Bulman R. Lottery winners and accident victims: Is happiness relative? Journal of Personality and Social Psychology 1978, 36(8):917- 927.

Easterlin R, et al. “he Happiness-Income Paradox Revisited. Proceedings of the National Academy of Sciences 2010; 107(2):22463-22468.

Ferrer-i-Carbonell, A., Praag, BMS van. The subjective costs of health losses due to chronic disease.:An alternative model for monetary appraisal. Journal of Health Economics 2002; 11(8):709-722.

Lazar SG. The Cost-Effectiveness of Psychotherapy in the Treatment of Depression. Integrating Science and Practice 2010; 1(2):26-31.

Oswald AJ, Powdthavee N. A New Approach to Awarding Compensation in Courts, October 30, 2007.

University of Warwick. “Psychological therapy 32 times more cost effective at increasing happiness than money.” ScienceDaily, 20 Nov. 2009. Web. 9 Jun. 2012.


I help adults and adolescents through the particular struggles of our time: tension between couples, parenting frustration, blending new families, separation and divorce, (un)employment, cancer, and loss. When relationships come to an impasse, I use mediation techniques to try to ensure that each party will have his/her needs heard and accounted for in a dignified way. In addition to talking, listening, and reframing, I utilizes the tools of metaphor, active teaching, role-playing, visualization, and hypnotherapy.for families and businesses, as well as in cases of divorce.

Leave a Reply