Recent research from Wharton senior fellow Matthew Killingsworth suggests that happiness increases with money up to and including a half-million dollar threshold. This contradicts the adage that money cannot buy happiness, which has not been proven for those at the upper end of the economic range, such as those making over $500,000 annually. Killingsworth suggests that if there is a threshold at which money no longer matters, it is likely much greater than previously believed.
Killingsworth suggests that while happiness may seem to decrease once money is sufficient, it continues to rise, contradicting theories that suggest we are not pursuing true happiness or that the economy is not meeting our basic needs.
Even for millionaires, income increases happiness.
Research on the relationship between money and happiness has mostly focused on high earners, leaving experts questioning if happiness is no longer influenced by money. By contrasting the satisfaction levels of wealthy people with a sizable U.S. population with a range of incomes, Killingsworth’s study, “Money and Happiness: Extended Evidence Against Satiation,” establishes a new benchmark, claiming it is the most comprehensive examination of wealth and happiness at the top end of the economic spectrum.
Research indicates that richer individuals tend to be happier, but it’s challenging to determine if happiness plateaus beyond a moderate amount of wealth or income, as few studies involve high-income individuals and few include truly rich individuals. This could impact financial planning, taxation, and salary considerations.
Killingsworth’s study analyzed over 33,000 American working adults’ income and life satisfaction ratings, comparing their responses to those of global millionaires and the richest Americans, as well as the Forbes 400 list from earlier research.
Wealthier individuals are significantly happier than those with the highest average incomes, according to a study. This highlights the strong relationship between money and happiness, although it does not prove that money causes happiness. The study suggests that the relationship between money and happiness continues to grow, even beyond large annual incomes, and the difference is significant enough to matter.
The Disparity in Happiness
The happiness gap between the wealthiest and poorest individuals is significant, with low-income individuals reporting an average life satisfaction of just above 4, while those with high incomes score nearly 6 out of 7, with over half of the difference in life satisfaction being attributed to wealth and income.
The survey revealed that the happiness gap between middle-class and low-income workers is significantly smaller than between rich and middle-class individuals. People earning between $70,000 and $80,000 a year are happier than those in the wealthy class. However, the gap between middle-class and lower-class groups is nearly three times as great as the happiness gap between wealthy and middle-class earnings.
The life satisfaction questionnaires used by different groups were comparable, allowing comparison. Although wealthier groups were not questioned about their sentiments, the findings could represent daily feelings, as Killingsworth’s research showed a strong correlation between life satisfaction and real-time emotions. To verify this, more research is required.
Money Is Just One Part of the Puzzle of Happiness
Killingsworth emphasizes that money alone is unlikely to significantly impact happiness due to the significant financial disparity between the rich and poor. He also warns that focusing solely on money can harm wellbeing by neglecting other essential aspects like meaningful relationships and a fulfilling life.
This research challenges the belief that money has minimal impact on happiness or ceases to matter after a certain income level, highlighting that money can significantly influence happiness in significant monetary disparities.
