Can Money Actually Buy Happiness? What Zero1 by Zerodha Found in the Data

"Money can't buy happiness" is a line the host of this Zero1 by Zerodha episode admits he used to hate — mostly because it came from people who already had money. When he was younger, money looked like the solution to everything. Older now, with a bit more financial security, he feels differently. So he set out to answer three existential questions with actual research: can money buy happiness, what happened to lottery winners, and how a framework he calls ECV can help you decide for yourself.

This post condenses the episode. The studies, numbers, and stories are as presented by the host.

The Study Everyone Quotes — and Its Limit

The starting point is a well-known study by two Nobel Prize winners, built on 4.5 lakh respondents. Its conclusion is the one you've probably heard: money does equal happiness — but only up to a point. After a certain income, the returns on happiness start to diminish. In the US, that saturation point landed around $75,000 a year, which the host converts to roughly ₹1–1.5 lakh per month in India on a purchasing-power basis. Earn beyond that, and each additional rupee buys less additional joy.

But Zero1's instinct, he says, is to try to disprove its own conclusions. And here the picture gets murkier. India's GDP has climbed sharply in recent decades — the country is measurably richer — yet, by that same report, not measurably happier. Digging further, the team found another paper arguing there's no saturation point at all. Across India, the US, Europe, and Australia, he concludes, there's simply no black-and-white answer. The data stays gray.

When Quantitative Fails, Look at Real Lives

Unable to settle it with numbers, the host turns to one of the most striking studies in happiness research, from 1978. It compared two groups at the extremes of fortune: people who had suddenly won the lottery, and people who had been paralyzed in accidents and lost nearly everything.

The results are humbling. The accident victims were, unsurprisingly, sadder than a normal control group in the immediate aftermath — but when asked about their expected future happiness, they rated it about the same as anyone else. They had returned to baseline. The lottery winners, meanwhile, were riding high at first. Yet after roughly 18 months, their happiness had also drifted back to normal. Whatever the extreme — a windfall or a tragedy — people tended to return to where they started.

The Hedonic Treadmill

Why does this happen? Because, the host explains, the brain is wired to normalize its environment — a phenomenon psychologists call the hedonic treadmill. It runs on aspiration: I want this; if I get it, I'll be happy. And you genuinely do feel happy when you acquire the thing. But scientifically, the pleasure from any material purchase fades back to baseline after a while.

He offers a sharper image than a treadmill: weird stairs. Picture your current happiness as a baseline. You want a 20% raise; you get it, you feel good — and then that becomes your new, higher baseline. Now you want the next raise, and the cycle repeats. Every step up resets the floor beneath you. This is what drives lifestyle creep: your salary rises 20%, so your spending rises 20% too. The happiness is real but short-lived, and there's no enduring joy at the end of it, because good times and bad times keep arriving no matter how high you climb.

The ECV Framework: Do, Don't Have

So how do you actually stay happy longer? The host's answer is a framework he calls ECV, built on a researcher's paper framed around a simple question — "to do or to have?" — and, he admits with a grin, on a Maroon 5 concert.

In December 2024, he and his wife Swati discovered Maroon 5 — the band they'd bonded over when they first met — was playing in Mumbai. Celebrating 15 years together, they splurged on the most expensive platinum-lounge tickets: unlimited food, unlimited drinks. There was just one problem. The lounge was far from the stage. Standing in the empty ground hours before showtime, he realized he hadn't come all the way to Mumbai to watch from a distance. So they walked down to a lower tier close to the stage — no free food, no drinks, none of which he cared about — just to be near the music.

What followed became the whole point. They stood at the front, made friends nearby who held their spot while he ferried free drinks from his platinum tickets, and then, out of nowhere, a woman walked out from the pit, pointed at Swati, handed her a band, and pulled her in to dance right against the stage beside the pop stars. It was, he says, completely worth it — and it maps exactly onto the research: the pleasure of owning something drops over time, but experiences last far longer in memory. A five-day vacation stays with you longer than owning a phone for five years. Money, in other words, can buy happiness — if you spend it on doing rather than having.

Life Is Events — and Focus Is the Choice

The host closes with a wider point. Your life, he says, is made of events, most of them outside your control. He shows a good one — a trip to Finland with Swati that he'll never forget — and gestures at bad ones he'd rather not discuss. Good, bad, and neutral events, opportunities and threats, all happen at the same time.

Given that, what decides the quality of your life comes down to focus. There are two kinds of people: those who fixate on the "reds," the bad events, and spend their lives complaining; and those who focus on the "greens," the good things and opportunities, even while real problems surround them. The second kind, he observes, tends to have higher energy and to be, simply, happier. Which leaves the question he ends on: is happiness a choice? His answer, and his parting advice, is quiet but firm — be grateful.

---

Originally published on Zero1 by Zerodha. Watch the full episode: https://www.youtube.com/watch?v=jA_NHI2GVJY