Affluent Savvy
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What makes people happy?

Besides close relationships, there are two other things that predict happiness in people: having a job or hobby that they love and that challenges them and helping others through volunteer work, random acts of kindness or another type of prosocial behavior. All three of these things make sense.

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Video Transcript

What Makes People Happy?

Think about a time when you felt particularly happy. What was it that made you happy? Was it because you had loved ones near? Because you were surrounded by a beautiful landscape? Because you had just accomplished something important? Or were you happy because you had lots of money?

'What makes you happy?' That seems like a simple question, but the truth is that many people don't know. Or, as psychologists have discovered, they think they know the answer, but really don't. Psychological research on happiness has identified several things people have in common: the types of things that make them happy, the things they think will make them happy, and the differences between the two. Let's start by looking at what actually makes people happy. As you might expect, research shows that the best indicator of a person's happiness is the quality of his or her close relationships. Whether you're talking about romantic relationships, family dynamics, or simply close friendships, the happier you are in your social engagements, the happier you are in general.

Quality relationships are the factor most likely to lead to happiness.

Besides close relationships, there are two other things that predict happiness in people: having a job or hobby that they love and that challenges them and helping others through volunteer work, random acts of kindness or another type of prosocial behavior. All three of these things make sense. I'll bet you weren't very surprised that solid relationships, engaging ways to spend your time and prosocial behavior all contribute to happiness.

Materialism and Happiness

But what about money? After all, if you don't have any money, it's very easy to believe that lots of money will make you happy. But that's not what psychologists have found. Once your basic necessities are met, research has shown that additional money does not have a lot to do with happiness. So, while billionaires may fly on private jets to luxurious spas all over the world, it doesn't mean that they are any happier than people who drive 10-year-old cars and fly coach. However, focusing on money and material things can make you profoundly unhappy. Research has shown that people who put a lot of emphasis on money and things are not as happy as non-materialistic people.

Affective Forecasting

The things that make people happy and unhappy seem pretty intuitive. But do people really understand what makes them happy?

Affective forecasting is the process of guessing how you will feel under specific future circumstances. Affect is just another word for emotion or mood. If I said that tomorrow you were going to lose your job, break up with your partner and fail a test, I'll bet you could pretty accurately predict what your emotional state would be. But how effective are people at affective forecasting when it comes to happiness? Not very; research has shown that most people make consistent errors when guessing what will make them happy in the future.

Think about this: if you could either be a powerful CEO of a large company, making tons of money, or work part-time at a small company, barely making enough to cover your bills, which would you choose? Which do you think would make you happier?

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