Money Can Buy People Happiness, But Only Up to $75,000, Study Finds

Money Can Buy People Happiness, But Only Up to $75,000, Study Finds
Randolph Schmid | September 07, 2010


Washington. They say money can’t buy happiness. They are wrong. To a point, at least.

A study in the latest edition of Proceedings of the National Academy of Sciences reveals that people’s emotional well-being increases along with their income up to about $75,000.

For people earning less than that, it’s harder to be happy, according to Angus Deaton, an economist at Princeton University’s Center for Health and Wellbeing. “Things are so in your face. It interferes with your enjoyment,” he said.

Deaton, with Nobel Prize-winning psychologist Daniel Kahneman, reviewed surveys of 450,000 Americans conducted in 2008 and 2009 for the Gallup-Healthways Well-Being Index, which included questions on people’s overall life satisfaction.

Happiness got better as income rose but the effect leveled out at $75,000, Deaton said. Their sense of success or well-being continued to rise as their earnings grew beyond that point.

“Giving people more income beyond $75,000 is not going to do much for their daily mood but it is going to make them feel they have a better life,” Deaton said.

Not surprisingly, someone who moves from a job that pays $100,000 a year to another one that pays $200,000 has an improved sense of success. But it does not mean more happiness.

Deaton said the results were similar for other measures. For example, people were happier on weekends, but their deeper sense of well-being did not change.

Kahneman and Deaton undertook the study to learn more about economic growth and policy. Some have questioned the value of economic growth to individuals, and Deaton said they were far from definitively resolving that question.

“Working on this paper has brought me a lot of emotional well-being. As an economist I tend to think money is good for you, and am pleased to find some evidence for that,” he said.

In the study, the researchers found that overall, “most people were quite happy and satisfied with their lives.”

Comparing American life-satisfaction results with those of other countries, they said the United States ranked ninth after the Scandinavian countries, Canada, the Netherlands, Switzerland and New Zealand.

The research was supported by the Gallup Organization and the National Institute on Aging.

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