9th March 2023 – (New York) Money can indeed buy happiness, and the relationship between income and contentment extends beyond the widely accepted threshold of $75,000 per year, according to a group of scientists, including a Nobel Prize-winning psychologist who coined the idea of a happiness plateau over a decade ago. The researchers discovered that contentedness steadily increases with income, and even accelerates as pay rises beyond $100,000 per year, as long as the individual has a certain level of baseline happiness to start with. Their study, published on 1st March in the Proceedings of the National Academy of Sciences, surveyed 33,391 US residents and found that the effect of increased income on happiness is observable up to salaries of $500,000, although the researchers lack conclusive data beyond that level.
The findings contradict a famous 2010 paper by psychologist Daniel Kahneman and economist Angus Deaton, which reported that the relationship between happiness and income flattens out at between $60,000 and $90,000 per year. However, Kahneman has now collaborated with Harvard University psychology doctoral student Matthew Killingsworth to re-analyse his previous work, and they discovered that there is a plateau, but only among the unhappiest 20% of people and only when they start earning over $100,000. Even members of this unhappy group became happier as their income increased up to six figures. Beyond this point, the effect of more money on happiness stops working and “the miseries that remain are not alleviated by high income.”
According to Killingsworth, “For very poor people, money clearly helps a lot. 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, more money does lead to greater happiness, to some extent. For the happiest 30% of the population, the rate that happiness increases even accelerates as incomes go beyond $100,000.
However, the researchers found that the overall emotional effect of more money on a person is small compared with other circumstances, such as having 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,” they said. The survey included employed adults between the ages of 18 and 65 living in the US, with a median age of 33 and a median household income of $85,000 per 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 definitively that the effect was present for people earning more than this. Kahneman noted that “the trend rises steadily up through the top income group in my data, but how much farther it extends is an open question.”