Most people believe that having a huge pile of money will solve all of their problems. It surely would solve some, but then you hear the Beatles and other tell you that money can’t buy you love, and the like. So which is true? Money can’t buy happiness? Or can it?
One study looked at more than 450,000 responses to Gallup surveys between 2008 and 2009. First, the researchers distinguished between two types of happiness: emotional happiness and life evaluation. Emotional happiness is the net of positive emotion minus negative emotion experienced day-to-day. The surveys asked questions about the presence of emotions like enjoyment, happiness stress and sadness. Emotion was further broken down into positive affect (the average of happiness, smiling and enjoyment), blue affect (the average of worry and sadness) and stress. Meanwhile, life evaluation is how a person subjectively evaluates their own life. In the surveys participants were asked “Please imagine a ladder with steps numbered from 0 at the bottom to 10 at the top. The top of the ladder represents the best possible life for you, and the bottom of the ladder represents the worst possible life for you. On which step of the ladder would you say you personally feel you stand at this time?”
The researchers found that as income increased so did life evaluation (ladder in the chart below), with no sign of it leveling off. They found that emotional happiness also increased with additional income, but completely leveled off at about $75,000 of household income a year for all 3 measures.
So, your evaluation of your life will likely increase as you make more money, but your day-to-day happiness appears to level off at $75,000. This happens because at incomes below $75,000 you’re more likely to experience stress and other negative emotions while trying to meet your needs. You’re also less likely to be able to fully savor positive experiences. The researchers described the process as follows:
$75,000 is a threshold beyond which further increases in income no longer improve individuals’ ability to do what matters most to their emotional well-being, such as spending time with people they like, avoiding pain and disease, and enjoying leisure.
If you’re bringing in less than $75,000, making more money is likely to increase your happiness. Beyond that point though, money probably isn’t going to make you any happier, despite what you might think. So, you certainly shouldn’t neglect money, but obsessing over it probably won’t do you many favors either.
Kahneman, Daniel, and Angus Deaton. “High income improves evaluation of life but not emotional well-being.” Proceedings of the National Academy of Sciences 107.38 (2010): 16489-16493.