Somewhere along the way someone probably told you that money can't buy happiness. And, at least since 2010, they'd have had prestigious research from a couple of Nobel laureates to back them up. The much chattered about study out of Princeton showed that above $75,000, more money doesn't seem to have much impact on emotional well-being.
But according to new research that old study is wrong. The new research, published in Proceedings of the National Academy of Sciences, carefully examined more than one million data points on tens of thousands of Americans and concluded that happiness rises steadily with income, with no noticeable cut off point at $75,000. Media outlets summed up the findings with headlines such as "Money Actually Can Buy Happiness, Study Says."
Does that mean your mom (or Bill Gates) was wrong when they implied chasing wealth was a lousy way to chase happiness? Not according to Wharton researcher and study author Matthew Killingsworth, who claimed in a Penn Today interview that the true takeaway from his work is a lot more complex than just "money can buy happiness."
First, Killingsworth points out that, for the purposes of the study, increases in wealth were measured on a logarithmic scale. If, like me, you struggle to remember what that means from high school math class, Killingsworth helpfully explains: "We would expect two people earning $25,000 and $50,000, respectively, to have the same difference in well-being as two people earning $100,000 and $200,000, respectively. In other words, proportional differences in income matter the same to everyone."
That means each additional dollar doesn't matter the same to everyone. Another $10,000 will have a far greater impact on someone bringing home $25,000 a year than on someone who makes $100,000. The poorer you are to start with the happier each extra dollar will make you. (Elon Musk greeted gaining several billion in net worth with a shrug.)
Second, while more money gives you more control over your life and therefore leads to greater happiness, obsessively chasing money itself as a goal isn't good for anyone's psychology. "Although money might be good for happiness, I found that people who equated money and success were less happy than those who didn't," Killingsworth notes.
He also found evidence of tradeoffs at the upper end of the income scale. High earners may have claimed to be happier both moment to moment and with their lives in general, but they also reported feeling far more stressed about time.
Taking all this evidence together, Killingsworth hardly comes to the conclusion that, if your goal is a happy life, you should keep chasing more money indefinitely.
"If anything, people probably overemphasize money when they think about how well their life is going," he concludes. "Yes, this is a factor that might matter in a way that we didn't fully realize before, but it's just one of many that people can control, and ultimately, it's not one I'm terribly concerned people are undervaluing."
So the next time someone quotes that outdated $75,000 figure to you, feel free to point them to this new research. But don't throw the baby out with the bath water. The same amount of money buys a lot more happiness for someone on a modest income than for a top earner, and while money gives you options, it's hardly a silver bullet for happiness at any income level.