Mar 7, 2023
It Turns Out Money Does Buy Happiness, At Least Up to $500,000
(Bloomberg) -- Money really does buy happiness, and the correlation extends well beyond the $75,000-a-year salary threshold that had been seen as the upper limit for making an impact, according to a team of scientists including the Nobel Prize-winning psychologist who introduced the idea of a happiness plateau more than a decade ago.
Contentedness does increase steadily in line with incomes and even accelerates as pay rises beyond $100,000 a year — as long as the person enjoys a certain baseline level of happiness to begin with. That’s according to the authors’ study of 33,391 people living in the US, published March 1 in the Proceedings of the National Academy of Sciences journal. They say the effect can be observed in salaries up to $500,000, though they lack conclusive data beyond that level.
The results contradict a famous 2010 paper by the psychologist Daniel Kahneman and economist Angus Deaton, which reported that happiness goes up with income until the relationship starts to “flatten” at between $60,000 and $90,000 a year.
Now Kahneman has re-analyzed his work in collaboration with Harvard University psychology doctoral student and former software product manager Matthew Killingsworth, who found no happiness plateau at all in a 2021 study researching the same topic.
Their new paper, which they describe as an “adversarial collaboration,” did find a plateau, but only among the unhappiest 20% of people, and only then when they start earning over $100,000. But even members of this unhappy group became happier as their income increased up to six figures. It’s only at this point where for the happiness effect of more money stops working and “the miseries that remain are not alleviated by high income.”
“For very poor people, money clearly helps a lot,” Killingsworth told New Scientist. “But if you have a decent income and you’re still miserable, the source of your misery probably isn’t something money can fix.”
For all other Americans outside of this group, more money means more happiness, at least to some extent. And for the happiest 30% of the population, the rate that happiness increases even accelerates as incomes go beyond $100,000.
That said, the researchers found that the overall emotional effect of more money on a person is small compared with other circumstances, even something as simple as two days off at the end of a week.
“An approximately four-fold difference in income is about equal to the effect of a weekend,” it said.
The people surveyed were employed adults between 18 and 65 living in the US, with a median age of 33 and median household income of $85,000 a year. The participants were surveyed about their happiness several times a day using an app developed by Killingsworth.
Although the survey included participants with incomes above $500,000, the researchers said it was impossible to say definitely that the effect was present for people earning more than this.
“The trend rises steadily up through the top income group [$500,000] in my data, but how much farther it extends is an open question," he said in an email to Bloomberg News. “I am engaged in some work to solve this, but it's not done just yet.”
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