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Study Finds Strong Relation Between Income and Happiness, Does Not Max Out at $75k

By:
Chris Gaetano
Published Date:
Feb 2, 2021
A recent study by a senior fellow at the Wharton Business School contradicts previous research that found that money buys happiness only up to about $75,000 a year, after which day-to-day contentment ceases to increase. The new study says that money improves happiness no matter how much someone already has.

The original 2010 study, conducted by Princeton University researchers, found that people's day-to-day happiness increases with income up to about $75,000 at which point it tops out. So according to this study, someone who makes $100,000 a year is not happier on a day-to-day level than someone making $75,000. The 2010 study said this is largely because people at this income point don't have financial stresses such as whether they'll have enough to pay rent each month. However, while the 2010 study found that day-to-day happiness eventually tops out, it also found that general life satisfaction does not and, indeed, continues growing alongside income.

But Matthew Killingsworth, the senior fellow behind the most recent study, says that his experiments revealed that there was no dollar value at which money stopped mattering to an individual’s well-being. He came to this conclusion after collecting 1.7 million data points from more than 33,000 participants who provided in-the-moment snapshots of their feelings during daily life. He collected these snapshots via an app he created called Track Your Happiness: People recorded both evaluative and experienced well-being a few times each day, with check-in times randomized per participant. Evaluative well-being encompasses overall satisfaction with life, and experienced well-being indicates how people feel in the moment. Once he was done, he then calculated the average level of well-being for each person and analyzed its relationship to that person's income.

He found that all forms of well-being continued rising with income, not seeing any sort of inflection point where money stops mattering. Instead, it just keeps increasing.

However, he does not think this means that people should focus only on money. His research also found that people who specifically equate money with happiness are generally less happy people. Further, people who earned more money worked longer hours and felt more pressed for time. The main takeaway he had from his data was that income is only a modest determinant of happiness.