The age-old question of whether money can buy happiness has been hotly debated by philosophers, economists, and social scientists for decades.
However, a recent study published in the Proceedings of the National Academy of Sciences suggests that, for most people in the United States, the answer is yes.
Daniel Kahneman, a Nobel Prize-winning economist and psychologist, initially suggested that people are generally happier as they earn more, but their joy levels out when their income hits $75,000.
This threshold was challenged by happiness researcher Matthew Killingsworth, who found that happiness does not plateau after $75,000 and can continue to rise with income well beyond $200,000.
Kahneman and Killingsworth collaborated on a new study, which surveyed over 33,000 employed adults in the United States aged between 18 and 65 with a household income of at least $10,000 a year.
The participants were asked to report on their feelings at random intervals in the day via a smartphone app developed by Killingsworth called Track Your Happiness.
The study found that, for the majority of people, happiness continues to rise with income even in the high range of incomes.
However, about 20% of participants were deemed the "unhappy minority" whose unhappiness diminishes with rising income up to a threshold, then shows no further progress.
These individuals tend to experience negative "miseries," such as heartbreak, bereavement, or clinical depression, which cannot be alleviated by earning more money.
Note: The study also found that money can affect happiness differently depending on income. Among lower earners, unhappy people gain more from increased income than happier people do.
This suggests that the bottom of the happiness distribution rises much faster than the top in that range of income.
But there’s more…
In addition to the study by Kahneman and Killingsworth, there are several other pieces of research that suggest a link between money and happiness.
A study conducted by the University of Warwick found that happiness increases as income rises, up to a point where an annual income of around $100,000 is reached.
Beyond that level, the effect on happiness is less pronounced.
Another study, conducted by economists Betsey Stevenson and Justin Wolfers, found that people in richer countries tend to be happier than those in poorer countries.
This is likely due to the fact that richer countries tend to have better healthcare systems, more educational opportunities, and higher levels of social trust.
There is also evidence to suggest that money can buy happiness in specific circumstances.
For example, a study by researchers at the University of British Columbia found that people who spend money on experiences, such as vacations or concerts, tend to be happier than those who spend money on material possessions.
Similarly, a study published in the journal Social Psychological and Personality Science found that spending money on others can increase happiness.
Participants who spent money on gifts for others reported greater happiness than those who spent money on themselves.
Note: It is worth noting, however, that the relationship between money and happiness is complex, and is influenced by a variety of factors, including social and cultural norms, personal values, and life circumstances.
While money may be one factor that contributes to happiness, it is by no means the only one.
Other factors, such as social connections, a sense of purpose, and good health, are also important contributors to overall well-being.
I’ve often said that money is important in areas where it is important and not at all important in areas where it is not important.
But as these studies suggest, for most people having more money can make them increasingly happier.
However, there is a limit to how much money can bring happiness, and it is not a one-size-fits-all solution.
-
Photo by Syda Productions on Canva.
