Studies have shown that wealthy people generally tend to be happier than non-wealthy people: wealth gives one access to pleasurable activities, eliminates financial stress, and can shield one from some pain and suffering. For those who have earned their wealth, it can build self-esteem and a sense of accomplishment that drive well-being. HNW people who plan well can pass their assets down to future generations, but can they pass down their happiness too?
While there have been many studies on wealth and happiness, and on other aspects of inherited wealth, the first key study of happiness and inherited wealth was done in 2018 at Harvard by Donnelly, Zheng and Norton. They discovered that “controlling for total wealth, millionaires who have earned their wealth are moderately more satisfied with their lives than those who inherited it.” While they could not prove causality, this provided the first evidence of a happiness gap in adulthood between those who built wealth and those who inherited it.
Children and the wealth impact
There has been significant research involving the children of the wealthy, which identifies s much clearer well-being gap between the generations. Frank S Pittman’s 1985 journal article, Children of the Rich, concludes that “great wealth” is not good for children as “It distorts their functional relationship with the world, it belittles their own accomplishments, and it grotesquely amplifies their sense of what is good enough.”
Suniya Luthar’s studies in the early 2000s found that wealthy suburban teens engaged in more substance misuse, self-injury and rule breaking than average and low-income teens. Affluent teens also experience twice the levels of anxiety and depression due to feelings of parental isolation and pressure to succeed. This pressure also comes from coaches, teachers and peers who adopt the view: “to whom much is given, much will be required.”
Inheritance can sometimes erode the sense that one matters beyond their wealth or family name, so it’s important to find places that value you for you.
Jen Lawrence
In Farah Khushabi’s 2025 thesis on significant wealth in emerging adulthood, she found the “key themes narrated were feelings of shame, relational difficulties, and unique pressure they connected to their inherited privilege” The same wealth that gave those who earned it a sense of well-being can create harm for later generations. As Khushabi points out in her thesis title: “The money, it’s a blessing and a curse.”
Since the 1890s, many people have embraced Andrew Carnegie’s idea that “The parent who leaves his son enormous wealth generally deadens the talents and energies of the son, and tempts him to lead a less useful and less worthy life than he otherwise would.”
Bad rich or good rich?
Even though studies have shown that those who inherit wealth still actively engage in the labour market, there is a sense that heirs are not as productive as previous generations. In their 2014 study of perceptions of wealth, Sussman, Dubovsky and Levitan discovered that people classify those who have inherited their wealth as “bad rich,” and those who create wealth through corporate success or entrepreneurship as “good rich.”
This view has been amplified through the mainstream use of “nepo baby,” a term coined in 2020. The timing is not random: 2020’s pandemic highlighted global income inequality and, as a 2017 study by Zonghuo and Fei showed, when income inequality reaches a certain point, people resent their wealthier peers. This can create a sense of loneliness and isolation.
How can we bridge the gap? There are many steps a HNW person or their advisors can take to help bridge this happiness gap.
Creating opportunities to find deep satisfaction
Daniel Pink identified that life satisfaction was tied to mastery, autonomy and purpose. Mastery involves having a deep understanding and command of a subject matter or skill, whether it be cooking, accounting, or 12th century history. It’s important to encourage deep learning rather than jumping from subject to subject. Autonomy is the ability to act independently, and many parents and advisors undermine this by attaching rigid conditions to an inheritance.
Wealth stewardship is important, but each generation should be allowed their freedom. Another key component of happiness is having a sense of purpose, but children sometimes feel pressured to follow in a parent’s career footsteps or join the family business. It’s important that every family member discover their unique purpose.
Focusing wealth on lasting pursuits
Wealth allows one to engage in hedonic pursuits, maximising pleasure, comfort and positive feelings (think luxury travel, comfortable homes, and outsourcing boring tasks.) Humans adapt quite quickly to hedonic pleasures, which tend to have short-lived results and leave one craving more. Eudaimonic endeavours create opportunities for meaning, self-realization and fulfilling human potential.
Often these pursuits involve hard work and struggle such as earning an advanced degree, mastering a sport or doing grass roots volunteer work. The friction that wealth often eliminates is needed to build a sense of real satisfaction. Wealth is best utilized when it pushes one to grow.
Find opportunities to matter
Jennifer Breheny Wallace’s Mattering: The Secret to a Life of Deep Connection and Purpose lays out a roadmap for well-being, which recognizes the importance of mattering to others. She identifies the core components as Recognition (your actions feel valued), Reliance (others depend on you), Importance (you feel significant and prioritized), Ego extension (others invest in your well-being) and Attunement (you feel deeply understood.)
Inheritance can sometimes erode the sense that one matters beyond their wealth or family name, so it’s important to find places that value you for you. Multi-family advisors can look for opportunities to connect their clients through conferences or retreats. If you are a HNW individual, look for groups where your family name and bank account don’t matter. We know of one G3 individual who left the social scene to become a volunteer in the mountains. A G2 individual living in the shadow of his father became an expert mountain climber and used his skills to teach others.
Skilled advisors can help families pass down their wealth to many generations. With an awareness of the happiness gap, they can help them pass down a sense of well-being too.
Jen Lawrence, MBA teaches The Art & Science of Success at the University of Toronto and helps people find a life with purpose. She’s a Trauma of Money facilitator who works with HNW individuals. She can be reached at jen@processdesignconsultants.com.
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