A new study settles the dispute: Does more money make you happier?

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For most people, happiness increases with income, a new study says.

Money doesn’t make you happy, they say. But is that true at all? Two researchers recently came to different conclusions. Now they are joining forces: And find that more money makes you happier. But apparently, that doesn’t apply to everyone.

Whether Money can buy happiness is perhaps as old as Money itself. And it has always been controversial. New research now provides a possible answer. A study published earlier this month in the journal Proceedings of the National Academy of Sciences concludes that more Money increases happiness more and more – though that doesn’t apply to everyone, it says.

The study also settles a scholarly dispute. Because the finding that more Money makes people happier contradicts earlier studies by co-author and Nobel laureate Daniel Kahneman. In 2010, Kahneman and Angus Deaton published an influential study that concluded that Money could only increase happiness up to a certain point. At that time, they determined the limit at an annual income of 75,000 U.S. dollars – after that, money could no longer increase satisfaction, the researchers concluded.

Unhappy minority discovered
In 2021, however, Matthew Killingsworth, a happiness researcher at the University of Pennsylvania, came to a different conclusion in a new study. According to the study, happiness levels do not end after $75,000 but can rise with income well beyond $200,000. The two researchers now teamed up in a “controversial collaboration” with psychology professor Barbara Mellers as referee to resolve the apparent contradiction between the studies.

The research trio finds that higher income is indeed associated with increasingly higher levels of happiness on average. However, the picture is more complex than in earlier studies. The team also identified an unhappy minority in which happiness levels rise to an annual income of $100,000 but level off after that. The researcher and researchers write this group comprises about 15 to 20 percent of all people. They suspect hardships plague these people and that more Money can’t further alleviate them. They cite heartbreak, grief and clinical depression as examples.

For most people, it works.
“Put simply, this suggests that for most people, higher income is associated with greater happiness,” Killingsworth summarizes, according to a release. “The exception, however, is people who are financially well-off but unhappy. For example, if you’re rich and unhappy, more Money doesn’t help.” For everyone else, however, more Money is associated with higher happiness to varying degrees, he said.

According to psychologist and co-author Mellers, Money also appears to have different effects on happiness for people “with different levels of emotional well-being.” While the unhappy minority stops at $100,000, happiness increases linearly with income for people in the middle range of emotional well-being. And for the happiest group, the correlation accelerates beyond $100,000 (about 94,000 euros) in annual income.

The researchers reached their conclusion through a new analysis of data Killingsworth had already collected for his study. Thirty-three thousand three hundred ninety-one employed U.S. citizens with a household income of at least $10,000 per year participated. A specially developed smartphone app, Track Your Happiness, asked the subjects several times a day about their emotional state, among other things.

According to the researchers, the new study’s results do not prove either right but confirm previous research. “The two findings, which seemed to be completely contradictory, emerge from data that are remarkably consistent,” Killingsworth said.

But what follows from the finding that more Money makes most people happier? According to Killingsworth, it could be significant for individuals when they have to decide on a career path or weigh a higher income against other priorities in life. But the researcher also stresses, “Money is just one of the many factors of happiness. Money is not the secret to happiness. But it can probably contribute a little to it.”