Does Money Buy Happiness?

As much as we’d like to think that money doesn’t buy happiness, research finds that money does in fact buy happiness– but only up to a certain point.

As shown in the figure below, people’s level of day-to-day “happiness” (as denoted by the “Stress free” line) rises with annual income, but beyond $75,000 USD more money does not add to one’s happiness.


The results are interesting and confirm what many of us have suspected all along. We keep telling ourselves that money doesn’t matter even though we really don’t believe that. What’s revealing about the findings is that the level of happiness plateaus at an annual income of just $75,000. We might think that we need to make at least $150,000 a year to make us happy, but it turns out the level needed for day-to-day satiation is much more attainable than that.

A higher income does, however, boost a person’s overall life assessment, as indicated by the “Ladder” curve, which continues to rise with income well past $75,000. People who earned $150,000 a year, for example, reported higher overall satisfaction than one earning $75,000 a year.

I think it’s a rather silly proposition to try to quantify something as subjective as happiness. No one really knows what happiness is. The only way one could measure “happiness” is through a set of arbitrary criteria, which in this case were respondents’ answers to Gallup surveys of 450,000 Americans in 2008 and 2009.

The science of happiness is an intensely subjective and personal one that takes a lifetime to figure out. Many people spend their entire lives thinking that having a lot of money will solve all their problems, until they find out that it doesn’t. Ultimately, our sense of financial security and material wealth is a mental construct based on our unique personality traits, lifestyles, social and cultural conditioning.

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