Past research has suggested that earning more money makes people happier until about $75,000 a year, at which point higher salaries are no longer associated with greater well-being. But recent findings published in the Proceedings of the National Academy of Sciences suggest that well-being increases steadily with income and does not plateau.
Whether earning more money leads to greater happiness is a long-debated question in social science research. Study author Matthew A. Killingsworth wanted to revisit the topic with new methodology. The researcher hoped to dissect how income impacts day-to-day well-being and not just overall life satisfaction — a tricky undertaking that few studies have attempted.
Killingsworth analyzed real-time reports of well-being from 33,391 employees in the United States, collected via the Track Your Happiness app. The app prompted participants to respond to short surveys at random moments throughout the day, using their smartphones. During an intake survey, the participants indicated their household income.
Moment-to-moment well-being was measured with the question, “How do you feel right now?”, with options ranging on a scale from “Very good” to “Very bad.” This repeated sampling method meant that there were multiple well-being reports per person that could then be averaged into an overall indicator of that person’s day-to-day well-being. A subset of 17,026 respondents additionally answered a question assessing evaluative well-being. The question, “Overall, how satisfied are you with your life?”, included options ranging from “Not at all” to “Extremely.”
An analysis comparing reported income to reported well-being revealed a strong, positive relationship between the measures. People who earned more money reported greater day-to-day well-being and better overall life satisfaction. In contrast to previous studies, the relationship was linear and did not plateau at $75,000. Further, the slope of the relationship was almost identical at income brackets above $80,000 as it was below $80,000.
The study author says the plateau observed in previous studies may have been the result of dichotomous measures of well-being, which left no room to detect improvements beyond the higher level. To illustrate, for both of the studies that found a happiness peak at $75,000, the majority of respondents with the lowest income were already reporting positive feelings that met the response ceiling.
According to the current findings, the link between money and happiness may have to do with feelings of control. Answers to the question, “To what extent do you feel in control of your life?” explained 74% of the relationship between income and day-to-day well-being. Interestingly, the findings also suggest that money does not necessarily make everyone happier, but that a person’s mindset around money matters. Participants were asked to rate how important money is to them, and the relationship between income and day-to-day well-being was stronger among those with higher than average money importance compared to those with lower than average money importance.
“The importance of money on its own was virtually unrelated to experienced well-being (r = 0.02, P = 0.06),” Killingsworth reports, “so it was not better or worse overall to think money was important; instead, low earners were happier if they thought money was unimportant and high earners were happier if they thought money was important.”
Moreover, equating money with success actually seemed to make a person less happy. “The more people equated money and success, the lower their experienced well-being was on average (P <0.00001), and there did not appear to be any income level at which equating money and success was associated with greater experienced well-being,” the study author writes.
Killingsworth says his results revealed no threshold beyond which money is no longer associated with well-being, although “the factors linking well-being to income are likely numerous, complex, and interrelated.”
The study, “Experienced well-being rises with income, even above $75,000 per year”, was authored by Matthew A. Killingsworth.