A seven-year study has revealed that happiness does continue to grow with the more money a person has, even beyond a previously believed threshold of US$75,000.
The new study from the University of Pennsylvania’s Wharton School found that people’s happiness and wellbeing increased with the amount of money they make, as it grants more freedom.
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A famous Princeton University study from 2010 found that money only increased happiness up to a U$75,000 year income, after which the happiness attached to money plateaued. However, the new study runs contrary to that research, finding that there’s no point where money’s impact on happiness begins to lessen.
“It’s one of the most studied questions in my field,” said Wharton School senior fellow Matthew Killingsworth.
“I’m very curious about it. Other scientists are curious about it. Laypeople are curious about it. It’s something everyone is navigating all the time.”
Killingsworth studied 33,000 participants who used an app to provide snapshots of their feelings during their daily lives, ultimately collecting 1.7 million data points.
He said he asked participants to repeatedly fill out short surveys at random points of the day, which meant he could see what was happening in their real lives as they worked, socialised, ate and watched TV.
The participants had to select how they were feeling, from “very bad” to “very good” and also to answer how satisfied they felt with their overall life.
Participants also had to share their feelings, including confident, inspired, interested, good and proud, or afraid, bad, angry, bored, sad, stressed and upset.
“This process provided repeated snapshots of people’s lives, which collectively gives us a composite image, a stop-motion movie of their lives,” he said.
Killingsworth said he was interested to see whether increases in happiness did plateau at a certain income, but the study found wellbeing simply continued increasing with money.
“I don’t see any sort of kink in the curve, an inflection point where money stops mattering. Instead, it keeps increasing.”
The study noted that higher earners were happier because they had a greater sense of control over their lives – something that was highlighted during the COVID-19 pandemic.
“People living paycheck to paycheck who lose their job might need to take the first available job to stay afloat, even if it’s one they dislike. People with a financial cushion can wait for one that’s a better fit,” he said.
“Across decisions big and small, having more money gives a person more choices and a greater sense of autonomy.”
But here’s the catch
While happiness increased with cash, those who equated money to success weren’t as happy as those who didn’t.
Additionally, people who earned more felt they didn’t have as much time.
Killingsworth said that the lesson from the research isn’t that people should focus more on money, but that it is an element in the recipe for happiness.
“If anything, people probably overemphasise money when they think about how well their life is going,” he said.
“Yes, this is a factor that might matter in a way that we didn’t fully realize before, but it’s just one of many that people can control and ultimately, it’s not one I’m terribly concerned people are undervaluing.”