The Beatles famously sang about how money can’t buy love and ever since a 2010 paper, people have been assuaged somewhat by research which showed that above a certain income, people’s happiness plateaued, regardless of what they earned.
New research, however, refutes that fact, and offers a view that happiness continues to rise in line with higher salaries. Maybe money can’t buy love then, but it might continue to keep buying happiness for the well-off.
2010 study: money doesn’t buy happiness after $75,000
In 2010, psychologist Daniel Kahneman and economist Angus Deaton (who both won the Nobel prize in Economics) undertook research to ascertain if money played a part in two aspects of people’s emotional lives. Firstly, the everyday quality of daily life, the joy, stress, sadness, anger, and affection that make one’s life pleasant or unpleasant. And secondly, life evaluation–the thoughts that people have when they think about their lives.
The study found that money did have an impact for how people evaluate their lives when they think about it; that people with more money feel better about their lives. However, emotional well-being rose with income, as expected too, but only to an annual salary of $75,000 ($90,000 in today’s money). Beyond that, people were no happier with higher salaries. The seminal study concluded that whilst “low income is associated both with low life evaluation and low emotional well-being”, ironically, “high income buys life satisfaction but not happiness.”
2021 study: money improves well-being, even after $80,000
Matthew Killingsworth is now a senior fellow at the University of Pennsylvania’s Wharton School and has a history of tracking happiness–he even created a tool for it. Track Your Happiness is an application that investigates what makes life worth living. Killingsworth was developing the app, according to Bloomberg, around the same time as Kahneman and Deaton were doing the research for the 2010 study.
The idea is you tell the app what you are feeling at several points throughout the month, thereby contributing to Killingsworth’s scientific experiment but also helping the user find out what factors are associated with their greater happiness. As the app says, the world’s greatest thinkers have always agreed that happiness is a core life goal but “enormous improvements in human life–bigger houses, more powerful technology, better medical care–have achieved only modest improvements in happiness.”
The conclusion to Killingsworth’s research has just been published in Proceedings of the National Academy of Sciences. By tracking reported happiness in relation to reported income, the study found that–like the 2010 research–both life satisfaction and experienced well-being increased with income. However, unlike the 2010 research, well-being continued to increase as steeply past an annual income of $80,000 as it did below it. The conclusion therefore, is “that higher incomes may still have potential to improve people’s day-to-day well-being, rather than having already reached a plateau for many people in wealthy countries.”
Killingsworth’s research sampled 1,725,994 experiences from 33,391 employed U.S. adults using his application. In 2019, the U.S. median household income was $68,703 and among the participants in Killingsworth’s survey, it was $85,000.
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