Money and Happiness: Not So Simple

We've commented before on the 2010 study that asserted that more money does lead to happiness, but only up to a relatively modest level of income, i.e., $75,000 per year:

In 2010 Daniel Kahneman and Angus Deaton analyzed data from over 450,000 responses to a daily survey of 1,000 U.S. residents by the Gallup Organization. They found that money does influence happiness at low to moderate levels of income. Real lack of money leads to more worry and sadness, higher levels of stress, less positive affect (happiness, enjoyment, and reports of smiling and laughter) and less favorable evaluations of one’s own life. Yet most of these effects only hold for people who earn $75,000 a year or less. Above about $75,000, higher income is not the simple ticket to happiness that we think it is.

(WSJ illustration)

Since that 2010 study more research has been performed on the relationship between money and subjective well-being. Now it seems that more money in absolute terms does make higher-income people happier. [bold added]

A big raise provides significant boosts in happiness even at household incomes of $500,000, according to a new research report...according to a paper by Matt Killingsworth, a senior fellow at the University of Pennsylvania’s Wharton School, the bonuses and leaps in income high earners reap are so large that they keep adding to well-being in the same way that smaller pay bumps do at lower tiers of earnings.

“I think of this as a ladder across society. The rungs are separated by more and more dollars, but exactly the same amount of happiness,” said Killingsworth, who published his report on his Happiness Science website.

An academic paper in 2010 popularized $75,000 as the salary threshold beyond which earning more money didn’t make people any happier. More recent research indicates that there is no such plateau.

Killingsworth and other researchers stress that many things influence human happiness, including your relationships, your job and the country you live in.

“No single factor, including money, dominates the equation,” Killingsworth said.

Previous studies on money and happiness have consistently demonstrated two things: that richer people are happier, and that it takes progressively more money to keep generating a well-being boost of a given size.

It makes sense that more money always makes people happier, ceteris paribus.

However, as people age money's importance diminishes (caveat: as long as one has enough to provide for retirement and health care) and no longer is the measuring stick of one's life; family, legacy, and discernment of life's meaning become foremost.

I wonder if there's research being performed on that.