- There is a strong positive correlation between money and happiness.
- However, it is not clear that the correlation is causal. It could be, for example, that healthy people living meaningful lives are both happier and wealthier than others. These "other factors" could be causing the correlation.
- If the correlation is causal (from money to happiness), then money has diminishing marginal returns to happiness. This has a clear implication for giving:
Giving money to someone living on $1,000 per year in the developing world will do far more to improve their lives than giving $1,000 to someone earning $25,000. The correlations above suggest that it’s about 25 times more valuable. If you want to help people, this is a major reason to focus on international poverty rather than helping the relatively poor in richer countries.