Is money really the key to happiness? What the data tells us
Mark Tovey is a finance journalist with bylines in The Guardian, The Motley Fool, and more. He digs into data and FOI-based investigations, and makes finance easier to understand.
Last updated 8th May 2026
11 min read
Anyone who's ever listened to Taylor Swift's lyrics – presumably written through tears somewhere above the Atlantic in a private jet – has probably wondered whether money really is the key to happiness.
Our analysis suggests it's... complicated (or was that Avril Lavigne?)
We crunched the numbers, matching wellbeing scores with income data from towns and cities across England to see whether money really does buy happiness.
The result? Let's just say it didn't exactly fit the neat "more money, more joy" story you might expect.
Financial Interest provides guidance, not advice. If you’re unsure about anything, speak with a qualified adviser. When investing, your capital is always at risk. Past performance does not guarantee future results.
Our findings: money vs happiness by area
The correlation between local income and average wellbeing
| Metric | Happiness | Life satisfaction | Worthwhile | Average wellbeing (mean of happiness, satisfaction and worthwhile) |
|---|---|---|---|---|
| Coefficient | -0.020 | 0.060 | -0.052 | -0.004 |
You can see in our table above that there's almost zero statistical relationship between income and overall wellbeing, with the correlations for each individual area all hovering around zero.
What does that mean?
Well, it means happiness doesn't hang out in Mayfair any more than it does in Middlesbrough. It seems joy has range.
And whilst there's a very weak positive correlation between higher earnings and life satisfaction, there's also a very weak negative correlation between higher earnings and feeling like your life is worthwhile.
Moving from a place where income is fifteen grand a head to one raking in more than three-times that amount adds almost nothing to the average wellbeing score.
The income measure (GDHI per head) is an average for everyone in the area – including children and retirees. It's after taxes and benefits but before housing costs, bills, etc.
Take London's glittering borough of Kensington & Chelsea: here, average income per person is a jaw-dropping £110,651 – yet average happiness is a very meh 7.4 out of 10.
The top 10 highest income areas vs wellbeing
| Rank (income) | Local authority | Income per head (£) | Avg wellbeing (0–10) |
|---|---|---|---|
| 1 | Kensington & Chelsea | 110,651 | 7.4 |
| 2 | Westminster | 76,381 | 7.1 |
| 3 | Camden | 61,657 | 7.3 |
| 4 | Hammersmith & Fulham | 51,554 | 7.7 |
| 5 | Richmond upon Thames | 49,666 | 7.4 |
| 6 | Elmbridge | 48,562 | 7.5 |
| 7 | Wandsworth | 47,804 | 7.4 |
| 8 | Islington | 41,955 | 7.3 |
| 9 | Waverley | 39,876 | 7.9 |
| 10 | Mole Valley | 38,465 | 8.1 |
The plushest areas in England – posh London boroughs and commuter-belt enclaves – all hover in the mid-sevens for wellbeing.
Certainly no lip-wobbling going on, but also nothing to pop champagne over.
The highest wellbeing areas vs income
| Local authority | Avg wellbeing (0–10) | Income per head (£) |
|---|---|---|
| Pendle | 8.1 | 18,176 |
| Cannock Chase | 8.1 | 20,117 |
| Mole Valley | 8.1 | 38,465 |
| Mid Sussex | 8.1 | 30,320 |
| South Staffordshire | 8.1 | 25,399 |
| Malvern Hills | 8.1 | 26,860 |
| Welwyn Hatfield | 8.0 | 27,671 |
| East Cambridgeshire | 8.0 | 26,924 |
| Newham | 8.0 | 24,233 |
| Torridge | 8.0 | 22,672 |
| North Kesteven | 8.0 | 22,667 |
| West Oxfordshire | 8.0 | 32,220 |
| Working | 8.0 | 33,289 |
The only rich district nudging past an eight in wellbeing score is Mole Valley in Surrey, a leafy, Range Rover-friendly patch that still fails to outscore some places earning less than half as much – such as Pendle, Lancashire.
Across England, the cheeriest spots tend to be a mix of modest-income areas like Cannock Chase (£20k per head) and Malvern Hills (£27k), with the odd well-heeled outlier such as Mole Valley (£38k).
In other words, joy seems equally at home regardless of whether you've got a Fiat or a Ferrari in the garage.
At first glance, the chart above looks like someone tried to throw a javelin through a swarm of bees. But what it actually shows is the near-total lack of correlation between income and wellbeing.
If there was a significant correlation one way or another, we'd see the dots gradually trending upwards or downwards as salary increases.
Caveats and context
First, these wellbeing scores come from the Annual Population Survey, which means they're based on people's self-reported answers to survey questions.
Surveys have margins of error and quirks. For example, some areas had smaller samples, so their scores are a tad shaky.
We shouldn't read the above tables as exact league rankings of happiest places (the ONS warns not to rank councils by wellbeing too literally). The data are best for seeing broad patterns or comparing similar areas over time.
Second, the income measure (GDHI per head) is an average for everyone in the area – including children and retirees – and it's after taxes/benefits but before housing costs, bills, etc.
Because of this, some wealthy areas might still have pockets of poverty or high living costs eating into that income. Or there might be areas with large percentages of retirees that are happier with lower incomes because they no longer slave away in a 9-5.
All that said, these factors would have to systematically hide a huge money-happiness link for this study to be wrong.
By and large, the overall pattern holds: there's no obvious bliss dividend for living in a richer locale.
The problem with measuring feelings
There's an even more troubling critique worth keeping in mind. It comes from Austrian-school economist Murray Rothbard, who in his 1962 book Man, Economy, and State wrote:
"Value scales of each individual are purely ordinal, and there is no way whatever of measuring the distance between the rankings; indeed, any concept of such distance is a fallacious one."
What does that mean?
Essentially, while it's meaningful for you to say you feel happier today than you did last week – because you can directly recall both states – it's conceptually impossible to compare happiness between people.
You can't experience anyone else's emotions, so your "six out of 10" might be another person's "eight."
And since happiness isn't a physical quantity with units of measurement, attempts to assign it numbers can start to look like calculating the square root of a dragon's wingspan: mathematically elegant, but totally meaningless.
In practice, we still try.
In healthcare, for example, patients rate their pain on a scale of one to 10. No one assumes that everyone's "seven" feels identical, but the scale still helps doctors make treatment decisions.
Wellbeing surveys probably work the same way: crude, subjective, philosophically indefensible – but still the best tool we've got for spotting trends.
What really drives wellbeing?
If money doesn't matter much for happiness, what does?
To answer that, let's drop the local-authority level data and zoom in on people and the factors that define their daily lives.
The ONS did a deep-dive regression analysis on individual wellbeing to untangle what really makes a difference.
For anyone wondering, a regression is a statistical tool that tests multiple factors at once to see which ones independently affect something like life satisfaction.
It's more robust than simple correlations because life is messy: lots of things (health, age, income, relationships) are tangled up together.
Regression tries to isolate each factor's impact while holding the others constant. Crucially, though, despite being much more sophisticated than a simple correlation, regressions can still only tell us about links – they cannot prove cause and effect.
So, with that disclaimer out of the way, what did the ONS find?
Health
The biggest factor in wellbeing is how healthy you feel.
No surprises there – if you've got your health, you've got half the battle won. People who rated their health as "good" or better scored dramatically higher on life satisfaction than those in poor health.
In fact, someone who says they're in good health scores about 30% higher on life satisfaction than someone in very bad health, on average.
Self-reported health had the largest influence on all measures of wellbeing: happiness, life satisfaction, feeling life is worthwhile – you name it.
The flip side is obvious: ill health is a serious happiness killer. Long-term sickness or disability was associated with significantly lower life satisfaction in the ONS analysis (over a 5% drop compared to otherwise similar individuals).
Relationships
Being in a married or civil-partnered state was linked to notably higher wellbeing.
Love conquers all? Well, we're not sure about that, but we do know that married people rated their life satisfaction about 7 to 8% higher than those who are single or widowed, on average.
They also scored about 5% higher than people who are separated or divorced.
Does that mean you should dash to the altar for the sake of happiness? First off, that's not a question you should be looking to answer on a website like this one. But also, it's important to consider that it could be a case of reverse causation: happier people are more likely to get (and stay) married in the first place.
On the other hand, it does line up with a lot of research: supportive relationships are strongly associated with physical health and wellbeing.
In less romantic news, separation turned out to be one of the worst things for wellbeing, correlated with significantly lower happiness... understandable – breakups are tough.
Work and economic status
Work and economic status also play a role – although perhaps not as much as you might think.
It's not so much about income level as about having a job and good work-life circumstances.
Unemployment tends to hurt wellbeing, but being unable to work due to illness is devastating for happiness. People who were out of the workforce because of long-term sickness or disability were 5% more likely to report low life satisfaction compared to those employed (even adjusting for other factors).
Those temporarily sick had it even worse, with nearly a 9% higher likelihood of low wellbeing.
On the brighter side, retirement appears to give a little happiness bump: retirees were about 4.4% more likely to report higher life satisfaction than those still working. Perhaps having more free time (and a pension) does wonders for the soul.
Income revisited: the conclusion
By now, the picture is clear: day-to-day quality of life factors that are heavy hitters for well-being are things that don't (usually) come with an exorbitant price tag: your health, your relationships, your sense of security.
When it comes to the effect of Income at the individual level (not zoomed out to the local authority level, as in the first section), we have to leave behind the ONS's regression analysis, which didn't consider this factor.
A wide array of studies, both nationally and internationally, have found that richer people do tend to report being happier – although it's not a clear-cut effect.
For example, research from the University of Warwick found that a £50,000 windfall corresponds to a small but statistically significant improvement in mental wellbeing.
That would seem to suggest that more money equals contentment, right?
Much of that, however, is because money goes hand in hand with other advantages: better healthcare, fewer financial worries, a safer environment. Once you hold those factors constant, the direct effect of income on happiness looks small.
Of course, an obvious critique springs to mind: money may not buy happiness, but it buys the things that do.
Denying that seems as sophistical as saying a car doesn't make you happier once you control for mobility – well, durr, it's not the machine itself but the ends it lets you reach.
That objection carries weight. Still, the things money can buy need to be conceptually separated from money itself, because being rich alone isn't enough to make the average person happy unless they use that wealth to secure what matters – health, connection, and peace of mind.
Why aren't richer communities happier?
Still, there remains a mystery: at the community level, our own analysis showed there was no correlation between average wellbeing and local income.
Why might that be?
One hypothesis that could square the circle is the so-called "rank-income hypothesis." This says that it is not the absolute amount of money that matters in determining happiness but rather the relative level compared to your peers.
Boyce, Brown and Moore (2010) summarised it like this: "increasing an individual's income will increase his or her utility only if ranked position also increases and will necessarily reduce the utility of others who will lose rank."
In other words, a pay rise that lifts you above your neighbour will make you happier than one that still leaves you struggling to keep up with the Joneses.
That might explain why people in richer regions aren't happier – their point of reference is skewed by the fact everyone around them is also doing well.
Most depressingly of all, the moment you overtake the Jones family next door, your happiness comes at the expense of theirs. In this view, happiness is a zero-sum game: your gain is someone else's loss.
But the data we’ve explored suggests it doesn’t have to be that way.
The biggest boosts to wellbeing – health, relationships, and a sense of security – aren’t limited resources. They’re things we can all try to cultivate, regardless of postcode or payslip.
If anything, the numbers are a reminder that happiness might depend less on climbing the ladder and more on noticing the ground we’re already standing on.
Methodology
We matched ONS self-reported personal wellbeing stats (a 0–10 score, last measured in 2022–23) to ONS gross disposable household income per head (2023) at English local authority level, excluding any rows lacking either a wellbeing score or a 2023 GDHI per-head figure.
We then computed Pearson correlation coefficient (
) for 308 local authorities – a measure of how strongly two variables move together on a straight-line (linear) scale.
Our raw data is available here.
Financial Interest provides guidance, not advice. If you’re unsure about anything, speak with a qualified adviser. When investing, your capital is always at risk. Past performance does not guarantee future results.
