Money Actually Can Buy Happiness, Study Says

More than 10 years ago, researchers suggested that money can buy happiness, and that it costs about $75,000 a year. A complicated and nuanced study by Nobel Prize winning economists explained that money increased happiness, but that things tended to plateau around $75,000. Any less and sadness increased, but earning more didn’t add to a sense of wellbeing. The research worked its way into opinion pages and launched a thousand blogs. 

The obvious appeal of the idea is that money can buy happiness in the sense that it can provide for basic necessities and stability, but not much beyond that, meaning that multi billionaires like Elon Musk and Jeff Bezos are much richer but not all that happier than the rest of us. The only problem with this idea is that it's wrong, and that we'd all obviously be much happier if we had millions of dollars. A new study published in Proceedings of the National Academy of Sciences says that the $75,000 figure is bullshit and that happiness continues to increase past that threshold.

The study, titled Experienced well-being rises with income, even above $75,000 per year, doesn’t mince words. “There was … no evidence of an income threshold at which experienced and evaluative well-being diverged, suggesting that higher incomes are associated with both feeling better day-to-day and being more satisfied with life overall.”

The new study is the work of Matt Killingsworth, a senior fellow at Wharton School for Business at the University of Pennsylvania. His study is based on 1,725,994 samples pulled from 33,391 employed adults in the United States. He collected the samples using an app he designed called Track Your Happiness. “The way it works is that people get pinged at random moments as they go about their daily lives,” Killingsworth told Motherboard over Zoom. “And then I ask them some questions about their experience, just before that moment, how they feel, what they’re doing, and a variety of other things.”

Killingsworth also collected basic data about his subject’s income and life in general. “I was really interested in understanding what was the relationship between people’s level of income and their level of what we might call ‘experienced well-being.’”

Experienced well-being is a measure of happiness taken in the moment, and is completely subjective and rooted in the time and place when a subject is asked about it. It’s also distinct from evaluative well-being which is an overall evaluation of a person’s life divorced from a particular moment.

The 2010 study tested from both experienced and evaluative well-being. And though it found that experienced well-being plateaued at $75,000, it also showed that evaluative well-being increased as income increased, even beyond that $75,000 mark.

Killingsworth’s study is focused on experienced well-being, and his data mostly matches that of the previous study. 

“We’re finding similar patterns for evaluative well-being and similar patterns in a variety of other ways in the data,” he said. “There’s actually a lot of consistency." But Killingsworth’s findings show that happiness doesn’t plateau at the $75,000 mark. Experiencing well-being just keeps increasing along the same trendlines.

He believes the difference in results is down to a difference in sample size and data collection method. “Arguably, I have some of the best data that exists on how people are really feeling in daily life,” he said.

Killingsworth said he thinks the original study is more nuanced than it’s gotten credit for and he also understands why it’s become a rooted part of pop-psychology. “The nice way to look at it is the appealing notion that, ‘If I can just get to some level of income, I can stop worrying about money,’” he said. “I think that’s kind of attractive. And even if what I’ve found is true, that $75,000 isn’t a key threshold, there probably is some value in bringing as many people as possible up to some basic level of financial security.”

He also stressed that money isn’t everything, and that the pursuit of wealth itself isn’t a means to happiness. “Wealth explains a small variance,” he said. There are plenty of other things that are equally, if not more important...I also asked people how important money is to them. And if I look at people who say money isn’t very important to them, it barely predicts their happiness. It’s possible to earn not that much and still be quite happy...we just don’t understand all these things.”

How a person views money determined a lot about the role money played in their happiness. “What does life look like for someone who doesn’t earn a lot, but says money isn’t important?” He said. “I don’t have a great answer to that, I don’t know. But I know that they’re there and I know they’re enjoying life just about as much as similar people who earn a lot more,” Killingsworth said.

One thing was universally true across all his subjects. Anyone who conflated money with personal success was miserable. “It’s especially bad if you don’t earn much money,” he said. “But there doesn’t seem to be any point where conflating personal success with your financial outcome is a good thing...having more [money] is good, but being fixated on it and using it to define your self worth is probably not such a great idea.”