After reanalysing earlier studies, Daniel Kahneman and his colleagues have found that happiness continues to increase with incomes higher than $75,000, contradicting the widely reported idea of a happiness plateau

For most people in the US, more money does seem to increase their happiness – even at incomes above $75,000 a year.

This finding contradicts a widely publicised study from 2010 by Nobel prize-winning economists Daniel Kahneman and Angus Deaton at Princeton University. Their research was based on survey data from 1000 people in the US who had been surveyed daily between 2008 and 2009 about their levels of happiness.

It found that the more money someone makes, the happier they are, but the curve flattens between $60,000 and $90,000 a year. With higher incomes than this, more money doesn’t increase happiness any further, according to this study.

In 2021, Matthew Killingsworth at the University of Pennsylvania published research that suggested happiness doesn’t plateau in people with incomes above $75,000, but continues to increase with additional earnings.

Killingsworth, Kahneman and Barbara Mellers at the University of Pennsylvania have now worked together to determine which study was correct.

After reanalysing both sets of data, the team came up with a more nuanced conclusion: happy people continue to get happier with more money, but among those who are most unhappy, happiness stops rising once a certain level of income is reached.

The researchers found that Kahneman and Deaton’s original study was based on a survey that didn’t accurately measure people’s happiness levels. It probably judged people to be far happier than they actually were, says Killingsworth. “Anyone who wasn’t miserable was giving the highest possible answer [in the survey],” he says.

The survey was therefore a better judge of unhappiness than happiness, he says, as those who didn’t achieve high scores on the survey were more likely to be very unhappy.

Killingsworth’s original study was based on 33,391 adults in the US who responded to survey questions on the phone. To make a comparison with Kahneman and Deaton’s original study, the researchers reanalysed the findings of the least happy 20 per cent of participants.

They found that the results mirrored Kahneman’s original study. For the least happy people in Killingsworth’s sample, happiness didn’t continue to rise once their income reached $100,000. However, the rate of rise in this group until $100,000 was the highest of any happiness group surveyed by Killingsworth.

“For very poor people, money clearly helps a lot,” says Killingsworth. “But if you have a decent income and you’re still miserable, the source of your misery probably isn’t something money can fix.”

For people who weren’t in the bottom 20 per cent of happiness scores, the researchers found that, in general, happiness continues to rise with higher incomes, but these gains appear to be modest.

“When you say happiness rises with income, people naturally think of a much larger effect than the one that is actually observed,” says Kahneman.

“Happiness is determined and predicted by many different things,” says Killingsworth. “Income is not the key to happiness.”

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The main reason higher income seems to be linked to happiness is the fact that people feel a greater sense of control of their lives, says Killingsworth – a finding reported in his earlier study. “Money allows people to live the life they want to live,” he says.

But money can only do so much, he says. “If there are six bad things in your life that are making you very unhappy, it might not matter how rich you are,” he says.

“The findings show that money does tend to make you happier unless you suffer from a range of miseries which money cannot alleviate,” says Kahneman.

The study only included people who earn up to about $500,000 a year, says Killingsworth, so it is difficult to say if even higher incomes are is linked to greater happiness.

He also says the study is based on people living in the US and that money may not play such a big role in happiness in other countries.

“It’s totally possible that these relationships could be different based on levels of taxation and social support systems in other countries,” he says.

Journal reference: PNASDOI: 10.1073/pnas.2208661120