The Wealth-to-Happiness Spending Ladder
- Difficulty
- Easy
- Time to result
- ~weeks to results
- Steps
- 7
- Confidence
- —
Patrick Campbell funded a research study on wealth and happiness after his $200M exit, gathering data up to roughly $3 million in annual income and $50 million in net worth. The qualitative results sorted spending into a ladder, where each rung reliably produced more happiness than the one below it: generic things, then things inside a hobby or identity you genuinely care about, then experiences shared with other people, then targeted giving you personally chose, and at the top, purchases that buy freedom — a private jet, a personal assistant, a cleaner. The mechanism is not the object itself but what it removes: obligation and friction. The ladder scales down, so a cleaner for someone earning $10,000 a month works the same way a jet does at $50 million.
Origin
Extracted from Deep Dive with Ali Abdaal
How to run it
- 1
Secure the baseline before optimising the ladder
Below the point where bills are covered, more money straightforwardly reduces stress and raises happiness. Get expenses covered and a basic financial plan in place before worrying about which category of spending is optimal.
Pro tip Matt's rule of thumb: once your annual expenses are around 4% of what you have saved and thoughtfully invested, you are in a sustainable place.
- 2
Audit where your discretionary money currently goes
List the last few months of non-essential spending and tag each item as a generic thing, a hobby-aligned thing, an experience, targeted giving, or a freedom purchase. Most people find they are clustered at the bottom rung.
Watch out Include obligation spending as its own tag — it is the one category the data showed actively reduces happiness.
- 3
Move purchases from generic things to identity-aligned things
Buying things does raise happiness above baseline, but not durably. Buying inside a segment you genuinely care about — the Birkin collector, the amateur racer who buys a track car — produced a much larger and stickier lift.
Pro tip The test is whether the category is part of your identity or hobby, not whether it is impressive to others.
- 4
Shift budget toward shared experiences
Experiences with other people ranked above both generic and hobby-aligned things. Deliberately reallocate a fixed share of discretionary spend to trips, gatherings and time with people rather than to objects.
- 5
Give, but only to causes you actively chose
Giving outranked experiences — with a crucial qualifier. Indiscriminate giving to whoever calls you did not move the needle. Choosing a specific cause you care about (laptops for your district's school, the local dog park) did.
Pro tip Pick one or two causes you can name a reason for, and give repeatedly rather than reactively.
Watch out Giving out of social obligation — the gala you feel you have to attend, the donation you feel you have to make — falls into the obligation category and reduces happiness.
- 6
Prioritise freedom-inducing purchases at the top
The highest rung was anything that buys agency: a private jet not for the jet but for the ability to go anywhere on a whim, a personal assistant, a cleaner. Ask of each purchase: does this remove an obligation or unlock optionality?
Pro tip This rung scales down. On $10,000 a month, a cleaner beats another bag on the happiness data.
- 7
Cut obligation-driven spending and activity
Anything bought or attended out of obligation or keeping up with peers reduced happiness — and hit wealthier people harder, because they were acutely aware they had the freedom to decline.
Watch out Patrick's own tell was catching himself thinking he should buy a Lamborghini despite having no passion for cars.
In the wild
In the study data, a wealthy person who genuinely loved Formula 1 and bought their own small race car to take to the track on weekends showed a much larger happiness lift than someone buying generic luxury items. The purchase sat inside an existing identity and hobby, so it produced repeated engagement rather than a one-off hit. Patrick contrasts this with the caricature of the wealthy person who simply buys more things when the last purchase stops working, which produces a real but non-durable lift that has to be constantly topped up.
→ Hobby-aligned spending produced a bigger and more durable happiness gain than equivalent generic spending.
Patrick's top-ranked category, freedom-inducing purchases, sounds inaccessible when the example is a private jet. He deliberately translates it down: a personal assistant scored higher than buying things, and for someone earning around $10,000 a month, paying a cleaner to clean the home is the same mechanism. You do not have to do it, you probably do not want to do it, and removing it buys back time and agency. On the data, that beats buying an additional item you do not need, even though the item still delivers some joy.
→ The freedom mechanism works at any income level, not just at high net worth.
Common mistakes
Reactive giving instead of chosen giving
Donating to whichever charity phones you does not produce the happiness gain. The lift came from actively selecting a cause you care about — school laptops in your district, a local dog park — and directing money there deliberately.
Buying status items you have no passion for
Patrick caught himself asking whether he was supposed to buy a Lamborghini despite having no interest in cars. Purchases made to keep up with peers or to look the part of a wealthy person are obligation spending, which the data associated with lower happiness.
Assuming happiness scales with spend
Most very wealthy people in Patrick's sample were not spending more than about $50,000 a month, a small fraction of their wealth. Spending millions a month is a choice, not the norm, and the ladder shows the category matters far more than the amount.
From the transcript
“the first layer was spending money on things if you spend money on things you will be happier than if you don't”
“that targeted giving increased happiness over things targeted things and even experiences but the top one was really really interesting”
“so even if you're making you know the $10,000 a month having a cleaner clean your home that's Freedom inducing”
From the episode
Does Money Buy Happiness? A Conversation with Deca-Millionaires
Deca-Millionaires