Actually, Money Does Buy Happiness

By: James Flippin · March 22, 2023 · Reading Time: 3 minutes

Higher Incomes Delight

Apparently money does buy happiness after all.

A new study appears to debunk previous findings that money’s impact on wellbeing was limited. For most people, money does indeed buy happiness — and the more, the better. The study found there was no income ceiling at which happiness levels began to plateau.

Notably, this joint study was co-designed by the Nobel-prize winning author of the original research it now seems to disprove.

Conflicting Conclusions

In 2010, Princeton’s Daniel Kahneman partnered with fellow Nobel laureate Angus Deaton in analyzing data from a Gallup poll with 450,000 respondents. Their conclusion: happiness plateaus at an income level of $75,000.

In contrast, University of Pennsylvania’s Matthew Killingsworth came to the opposite conclusion. He found higher income levels led to a better sense of wellbeing, with no income ceiling.

The vastly different Kahneman and Killingsworth results prompted the two researchers to partner and settle the issue by analyzing each other’s data. The results published in March revealed a nuance that shed light on what drove the disparity in data interpretation.

The Catch

The recent study looked at income levels up to $500,000 and found that, as earnings increased, happiness rose ever higher.

What differentiated the new research was the identification of groups of people who were already unhappy, due to grief, heartbreak, or clinical depression. For these respondents, an additional $100,000 in earnings didn’t do much to move the needle on their emotional wellbeing. 20% fell into this category.

On the opposite extreme, for those who considered themselves to have a happy temperament, the study found having more money tended to spark an amplified sense of joy.

An important caveat is that this study utilized self-reporting, meaning its findings rely on the assumption that people can accurately say when they are happy and when they aren’t. At the very least though, it suggests correlation. Maybe money can’t buy happiness. But it sure doesn’t seem to hurt it.

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