Money really does buy happiness for most people

• A new study seems to contradict the theory that happiness eventually plateaus as wealth rises.
• It found that for the vast majority of people, money does buy you happiness.
• For a small group of people, their happiness levels off “abruptly” when their income hits $100,000.

For the vast majority of people, money does buy you happiness – according to a new study at least.

However, not everyone gets happier as their income increases, according to the paper authored by senior psychology fellow Matthew Killingsworth at the University of Pennsylvania’s Wharton School, Nobel Prize-winning psychologist Daniel Kahneman, and Barbara Mellers.

The unhappiest group of people reach a plateau when they start earning about $100,000, the research found.

The paper, published in the journal the Proceedings of the National Academy of Sciences on March 1, was an attempt to reconcile two pieces of previous research with different findings by Killingsworth and Kahneman. Meller, also from the Wharton School, served as an arbiter.

Kahneman and Angus Deaton had found in an influential 2010 study that happiness increased steadily with income up to a certain income, but then plateaued.

The researchers concluded that average emotional wellbeing generally rose until people earned between $60,000 and $90,000, after which it flattened off. Their findings were based on a daily Gallup survey of 1,000 Americans from 2008 to 2009.

Killingsworth, in contrast, found in a 2021 paper that average happiness rose consistently with income. In other words, he found no happiness plateau, contradicting Kahneman’s research. Killingsworth based his results on happiness rankings recorded by more than 33,000 Americans on a smartphone app.

In a reanalysis of the data from the two previous studies, Killingsworth, Kahneman, and Mellers wrote that they found the plateau existed only among the roughly 15% to 20% of people who were least happy.

Their happiness “rises quickly” in the lower range of income before “leveling off abruptly at $100,000 to a near-zero, statistically nonsignificant slope in the higher range of incomes,” the researchers wrote.

At this point, “the miseries that remain” – which the researchers said could include heartbreak, bereavement, and clinical depression – “are not alleviated by high income.”

Meanwhile, happiness “increases steadily” along with income among the rest of the population, Killingsworth, Kahneman, and Mellers found. For the happiest 30% of people, happiness rises at an accelerated rate beyond $100,000.

“In the low range of incomes, unhappy people gain more from increased income than happier people do,” the researchers wrote. “In other words, the bottom of the happiness distribution rises much faster than the top in that range of incomes. The trend is reversed for higher incomes, where very happy people gain much more from increased income than unhappy people do.”

Killingsworth, Kahneman, and Mellers noted, however, that the correlation between income and well-being was “weak, even if statistically robust.”

In their 2010 paper, Kahneman and Deaton had found that an approximately fourfold difference in income had roughly the same effect on happiness as being a caregiver or having a weekend, twice the effect of being married, and less than a third as large as the effect of a headache.

Source: I N S I D E R