When Too Much Is Not Enough: Inherited Wealth and the Psychological Meaning of Money
A growing body of research shows that increased wealth makes people happier. Standard economic theory assumes that the key mediator of this effect is consumption: greater wealth allows people to consume more, and greater consumption increases well-being. An alternative view argues that social comparison is the key mediator: the wealthy are happier because they consume more than other people.
The case of those who inherit large amounts of money is particularly illuminating. A key assumption of economic theory is that people are happiest when they maximize benefits and minimize costs. Since money is assumed to be the primary economic benefit and effort (or work) the primary economic cost, inheritors ought to be the happiest members of society. Though research on this group is sparse, anecdotal evidence argues strongly against this being true.
I propose that the underlying reason wealth increases happiness lies primarily in money?s role as a status symbol. In this paper, I integrate research by economists, psychologists, sociologists, and biologists to construct a theory which clarifies the connection between money and happiness and helps to illuminate the deeper meaning of money in our society.
Source: Working paper
Schoenberg, Eric. "When Too Much Is Not Enough: Inherited Wealth and the Psychological Meaning of Money." Working paper, Columbia University, 2006.