So in the end, having more money makes you happier?
Does having money make us happy?, or does having more money make us happier and more content? It’s likely that every one of us has an opinion and assesses the response to this issue uniquely, even when influenced by various life experiences. But what response does science offer to this query?
In the past, having more money didn’t always translate into happiness.
In a 2010 study, Daniel Kahneman and Angus Deaton concluded that happiness is only elevated by wealth to a limited extent.
The study’s key statistic is the gross yearly pay of $75,000. Our luck grows up to this point and then stops (properly, for the US players at the moment). In the study, participants were questioned about their frequency of smiling and laughing, and happiness was defined as the combination of these three traits.
The aforementioned amount, which, accounting for inflation, translates to around 90,000 USD or 85,000 euros today, has subsequently been often cited in the media.
After ten years: Isn’t happiness correlated with money?
But in 2021, Kahneman and Deaton’s thesis was disproved. University of Pennsylvania researcher Matthew Killingsworth concluded that there was no proof that our “perceived well-being,” as he put it, stopped growing at a salary of $75,000 annually.
However, he demonstrated that our happiness and level of well-being rise in tandem with money, with the group under study appearing more content or happy the greater their income.
However, what led him to reach a different conclusion? They were not questioned on memories of emotions from a previous period, in contrast to Kahneman and Deaton.
Rather, he recorded users’ emotions in real-time using a developed software named “Track Your Happiness”. Several times a day, over 30,000 participants received random pings asking them to respond to a series of well-being-related questions.
They were asked, for instance, to rate their current feelings on a scale of “very good” to “very bad.”
What is relevant right now? Do you feel happier when you have more money?
Two studies with contradicting findings were conducted nearly ten years apart. Does happiness increase with wealth, or does it plateau at a specific income level?
In 2022, Kahneman, Killingsworth, and Barara Mellers worked together to overcome the discrepancy between their findings within the paradigm of “adversarial or mutual cooperation” (adversary or cooperation).
Mellers became a “mediator” (adversarial collaboration) in the scientific sense to reach a consensus over the two research.
The concept of this type of cooperation dates back to Kahneman, who had on several occasions asked his detractors to take part in research projects to create a standard study design and methodology while also incorporating the critical opinions of the scientific community.
What was the result this time?
To put it simply, it was possible to validate both outcomes. On the one hand, it was established that contentment does not level off at a particular income and does, on average, increase with increasing earnings.
However, this is only the case for some. A minority has a dramatic increase in happiness up to an income of about USD 100,000, after which it levels out.
And how do the two groups vary from one another?
The new idea put up by the three researchers states that while the majority of people are already happy, there is a minority that is not so pleased.
According to the researchers’ hypothesis, the happier majority’s happiness rises as their money rises, but the unluckier minority’s happiness rises only as much as a particular income level and then their well-being stagnates.
In the end, what can we learn from this, and what seems to be true given the current situation?
First off, emotional well-being improves significantly but reaches a plateau for those who are now relatively “unhappy” (this group only makes up around 15–20 percent of the research participants). People with this salary level are thought to be “unhappy” right now.
Second, you will also experience rising happiness beyond that $100,000 limit, but it does not apply to you if you are already content or have reached a particular degree of happiness.
Furthermore, increased money can lead to even greater well-being and pleasure for individuals who are already exceptionally pleased.
Put otherwise, the 2010 reference to a 75,000 USD ceiling at which we “no longer become happier” does not apply to most people.
Notably, the findings are relevant to American homes. In Germany, comparable research that queries real-time well-being data and compares it with income has not yet been released.
No limit or plateau was found in other studies that evaluate the life satisfaction of specific wealth groups (rather than income groups), such as those conducted in Germany and Switzerland, where individuals with higher wealth levels reported even higher levels of pleasure.
I think Killingsworth’s conclusion — that money is merely one of many aspects of luck — sums it up quite nicely. Not having money is the key to our happiness. However, it can most likely make a little contribution.
Sources:
https://doi.org/10.1073/pnas.1011492107