When it comes to money and happiness, economists make two points. First, that more money or wealth leads to greater happiness (as a general rule). And second, that additional dollars are always used to satisfy additional but lower priority wants than previous dollars, everything else equal.

Why do we make these assertions? Consider what you would do with a windfall of money. Would you take a cruise? A trip to Europe? Buy a new car? Whatever your choice, it’s unimaginable that you couldn’t think of a single plan for the extra money. You always have an implicit ranking of your wants, at very least. This is important when you are faced with new choices.

When we become more prosperous, wealth and income rise and our market choices expand. The ‘importance’ of each dollar we spend at any time depends upon the importance of the item to us as consumers. The more important the item, the sooner we will attempt to ‘purchase’ it (this includes saving, investment, philanthropy, and other uses as well). If we are driven by attempts to make our condition better (happier), then happiness is enhanced by greater wealth. No one believes that money is the only thing that makes people happy, however.

Here’s how markets play a role in this happiness business. Economists believe that people don’t behave randomly. Implicitly or explicitly, everyone ranks their wants in importance, acting on the highest priority items within their means before moving on to less important ones. The first dollars we have to spend go toward our highest priority goal at that time. That use could be cigarettes, or saving; the fact that you have a priority doesn’t mean that you make the decision that is ‘best’ for you in a more universal sense. Higher priority wants (if only at the moment) are always fulfilled before lower priority wants, everything else equal.

Long-term plans and impulse or frivolous purchases both fit this scenario. Saving for a home over time doesn’t mean that you never go to the movies; it may mean that you don’t hop on a flight for a trip to Europe on a sudden whim, however.

Clearly, individuals rank and re-rank their goals repeatedly. Some priority shifting is unavoidable. If my roof leaks or I total my car, my budget shifts from new furniture to dry ceilings, or to transportation. I won’t get that furniture until I have enough extra money to spend on (now) less urgent decor. What we have to assume is that people are making the choices that reflect their priorities at the moment they choose. They may not abandon other wants entirely, but those wants have become temporally less urgent.

What do spending priorities have to do with happiness? When you are able to reach down into your list of unfulfilled wants, and accomplish them, you are achieving lower and lower priority goals. That is only possible because you have achieved the more urgent goals already. Fulfilling previously unfulfilled goals is a source of additional happiness, or satisfaction.

Some recent discussions suggest that there is a ‘paradox of prosperity,’ that greater wealth brings greater dissatisfaction and unhappiness to individuals. But money is rarely an end in itself; wealth is a command over goods and services, whether we exercise it or not. If more wealth makes us unhappy, impoverishment should bring us joy, which is nonsense. And money, like other goods, is subject to diminishing marginal utility.

We take it as a given that our wants always exceed our ability to fulfill them at any point in time. There is always some want or goal waiting for an opportunity to be fulfilled. Everything else equal, having more of a good—be it money, education, investments, or plastic surgery—makes us happier overall. It doesn’t mean that our choices are wise, but we anticipate that greater happiness will result from our decision—otherwise we wouldn’t make it. If achieving lower ranked wants (because we’ve taken care of the ones that are more urgent) isn’t equivalent to greater happiness, it’s the closest proxy we can use in a market.

The idea that there is a paradox of prosperity is simply false. We are happier overall eating wholesome food than we would be scavenging from trash cans, true. But if every meal is a gourmet experience, we may not be much impressed by yet another gourmet meal this week. It’s not much of a marginal difference.

Still, greater prosperity in the form of money income and wealth undoubtedly expand the choices, and the happiness, that consumers can achieve through markets.

Perhaps money can’t buy you love–but we can say with some confidence that it does ‘buy’ you added happiness, at least indirectly.