A new study published in Personality and Individual Differences suggests that positive emotions can promote better money management practices that can lead to increased net wealth.
"Existing research tends to show that money leads to happiness," says the lead author of the paper, Sarah Asebedo of Texas Tech University. "Despite this favored interpretation, there is robust evidence that positive emotions actually support and create the behaviors necessary for people to succeed in their financial life (e.g., earn money, exercise control, stay out of debt, save, etc.). Our research builds on this work by generating evidence that positive emotions also have a causal relationship with wealth creation."
To find evidence for the 'happiness leads to money' hypothesis, Asebedo and her team examined data from three waves (2008, 2012, and 2016) of the Health and Retirement Study conducted by the University of Michigan with the final sample containing over 10,000 observations.
The researchers tracked people's emotional state (e.g., determined, enthusiastic, active, attentive, inspired, hopeful, etc.), and wealth to see whether positive emotions promoted a higher level of wealth creation.
They found the answer to be a resounding yes.
"This finding expands our view of the relationship between happiness and money to include the idea that cultivating a happy, full, and meaningful life results in a greater capacity to earn and save money, manage spending, and grow wealth," explains Asebedo.
While the researchers did not test whether certain personality traits were more important than others in amassing wealth, past research has found that conscientiousness and extroversion are generally associated with higher levels of financial success. (And, keep in mind that personality traits are more malleable than many people realize. For example, one study found that keeping a structured daily routine increased people's levels of conscientiousness.)
You can apply the findings of this study, along with the idea that money can buy happiness, in your own life to develop and refine positive financial behaviors.
"Consumers can shape their current thought patterns, emotional states, and behaviors through awareness and intervention to create meaningful financial behavior change," says Asebedo.
The research also highlights the importance of maintaining a positive outlook during challenging economic times. The authors suggest that psychological interventions , such as psychotherapy, can help protect your emotional state during economic crises or general market fluctuations.
Asebedo has this to say about her future plans for research:
"We would like to see longitudinal research investigating the effects of social capital, psychological capital, and financial capital on the relationship between human well-being and wealth creation."
A full interview with Dr. Sarah Asebedo discussing her new research can be found here: Why positive emotions could be the key to creating wealth
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