There are several studies and lots of literature about the issue of wealth, money, income happiness, and wellbeing. The discussion of “money really buys happiness” comes up several times among academics and the general public. The conclusion is that this topic has been addressed in vast and inconclusive research and literature because there’s no single research or scientific paper that settles this complicated question in a definitive way. Still an open discussion.
For instance, data collected by the Gallup Organization in the Gallup-Health ways Well-Being Index (GHWBI 2009) provide a very rich source of observations. They analyze the responses of more than 450,000 American residents surveyed in 2008 and 2009 to several questions about their perception of well-being. The data suggest a rather complex answer to the question.
As we know, the classical 2010 research from Daniel Kahneman and Angus Deaton, suggests that is the everyday quality of daily life (like joy, stress, sadness, anger, and affection) that makes one’s life pleasant or unpleasant. For the authors, life evaluation (or the thoughts that people have when they think about their lives) is not the same as emotional wellbeing and money seem that doesn’t buy happiness after $75,000.
First, a discussion of subjective well-being should recognize an important distinction between the two concepts that are often confounded, that is, “emotional well-being” (or what some social scientists call hedonic well-being”) which mean the emotional quality of an individual’s everyday experience or the frequency and intensity of experiences of joy, fascination, sadness, anger, and affection that make one’s life pleasant or unpleasant.
Surveys of subjective well-being have traditionally focused on life evaluation with a very common question: “How satisfied are you with your life as a whole?” The researchers found that emotional well-being and life evaluation have different correlations in the circumstances of people’s lives. In particular, some research suggests that there are important differences in the relationship of these aspects of well-being to income.
Another important study called “Money matters to happiness – perhaps more than previously thought” conducted by Wharton’s Senior Fellow Matthew Killingsworth concludes that, contrary to previous influential work, there’s no dollar-value level at which money’s importance lessens and the main reason is that, probably, higher earners feel an increased sense of control over the own life. This research contradicts previous studies that found that “money buys happiness only up to about $75,000 a year, after which day-to-day contentment ceases to increase.”
The fact is that money seems to improve happiness and it doesn’t matter how much do you already have. This seems to be a response to another study from 2010 (Do We Need $75,000 a Year to Be Happy?) that was conducted by Princeton University scientists, suggest that “people’s day-to-day happiness ten to increases with income up to about $75,000, at which point it tops out”. This suggests that if you make $150,000 a year you are not happier on a day-to-day level than someone making $75,000.
Again, the researcher Matthew Killingsworth says that “his experiments revealed that there was no dollar value at which money stopped mattering to an individual’s well-being. His research found that all “possible forms of well-being continued rising with income, not seeing any sort of inflection point where money stops mattering. Instead, it just keeps increasing.”
Now, new data (2020) from Human Progress shows again that happiness continues to rise in line with higher salaries and income.
Diener E, Biswas-Diener R (2002) Will money increase subjective well-being? Soc Indic Res 57:119–169.CrossRefGoogle Scholar; ↵Headey B, Muffels R, Wooden M (2008) Money does not buy happiness: Or does it? A reassessment based on the combined effects of wealth, income, and consumption. Soc Indic Res 87:65–82.CrossRefGoogle Scholar; ↵Clark AE, Frijters P, Shields M (2008) Relative income, happiness, and utility: An explanation for the Easterlin paradox and other puzzles. J Econ Lit 46:95–144.CrossRefGoogle Scholar; ↵Clark AE, Kristensen N, Westergaard-Nielsen N (2009) Economic satisfaction and income rank in small neighborhoods. J Eur Econ Assoc 7:519–527.CrossRefGoogle Scholar; Diener E (1984) Subjective well-being. Psychol Bull 95:542–575.CrossRefPubMed
How Does the Gallup-Sharecare Well-Being Index Work?
Daniel Kahneman and Angus Deaton. Proceedings of the National Academy of Sciences Sep 2010, 107 (38) 16489-16493; DOI: 10.1073/pnas.1011492107
Money matters to happiness—perhaps more than previously thought | Penn Today (upenn.edu)
Matthew Killingsworth came to this conclusion after collecting 1.7 million data via an app he created called Track Your Happiness where people recorded both evaluative and experienced well-being a few times each day, with check-in times randomized per participant points from more than 33,000 participants who provided in-the-moment snapshots of their feelings during daily life.
Important: this does not mean that people should only focus on money because some research also suggests that people who specifically link money or income with happiness are generally less happy.
Maybe money can’t buy emotional wellbeing but the romantic idea “poor but happy” seems more and more that really doesn’t explain the link between income, wealth, and happiness or wellbeing.
Looking to the Human Progress data I will say, “poor but happy, my… you know!