The belief that making more money increases happiness is a common misconception that has been widely accepted. However, recent research suggests that this notion is not entirely accurate. While there is a popular belief that happiness only increases with income up to $75,000, studies have shown that higher income does indeed correlate with more happiness.
In a 2010 study led by Nobel Prize winners Daniel Kahneman and Angus Deaton, it was concluded that happiness only increases with income up to $75,000. Beyond that threshold, additional income was believed to have no impact on overall happiness. However, further research has challenged this notion.
A more recent study conducted by University of Pennsylvania professor Matthew Killingsworth in 2021 found that larger incomes were associated with greater happiness and life satisfaction. This study used real-time experience sampling to gather data from over 34,000 volunteers, indicating that there was no observed plateau in happiness or life satisfaction at $75,000 or any other level.
To reconcile the conflicting results of these studies, Kahneman, Killingsworth, and Professor Barbara Mellers published a collaborative paper in 2023. They found that for most people, happiness continues to rise with income past $75,000. However, for an unhappy minority, their unhappiness diminishes as they make more money, but only up to about $100,000.
There are several reasons why money is associated with increased happiness. Not having money is often associated with challenges and difficulties, and having more money can serve as a buffer against life’s negative events. Additionally, as our income increases, we feel closer to having “enough” and are less threatened by scarcity. Money also provides us with more choices, freedom, and a sense of control over our lives.
While money can enhance happiness, it is essential to be cautious about placing too much emphasis on it when seeking happiness. Research has shown that the correlation between money and happiness is slight, and the impact of money on happiness diminishes as income increases. Additionally, happiness and life satisfaction are influenced by various factors beyond money, such as genetics, health, relationships, and purpose in life.
In conclusion, while making more money is associated with more happiness, it is not a guarantee of greater well-being. Happiness is a complex and multifaceted concept that involves various factors, with money being just one of them. Used wisely, money can enhance our sense of well-being and improve our lives, but it is not the sole determinant of happiness.
