Do you think money brings happiness? It’s one of the existential questions we’ve all asked ourselves at some point in our lives. And if you think this is nothing more than a mere philosophical question, you couldn’t be more wrong. The idea of whether or not money provides happiness became a research topic for Nobel Prize winners in economics. We are talking about the American economist Angus Deaton and the Israeli psychologist Daniel Kahneman.
The latter is considered a pioneer in behavioral economics, a branch of psychology that seeks to understand the factors that influence people’s financial decisions. In fact, in 2002, Kahneman received the prize of the Royal Swedish Academy of Sciences for integrating knowledge from psychology into the field of economics.
On the other hand, Angus Deaton won the Nobel Prize in Economics in 2015 for research focused on consumption, poverty and social welfare that sought to determine whether money gives happiness.
Does money bring happiness? Up to a point.
In 2010, the pair began collaborating on a study that correlated the degree of personal satisfaction and emotional well-being of 1,000 Americans with their average income level. All the information came from a data survey conducted between 2008 and 2009.
Broadly speaking, they concluded that the more money a person earns, the higher the level of happiness and satisfaction in their life. However, they found that the correlation is starting to disperse among people earning between $60,000 and $90,000 a year. In addition, among those individuals who received amounts above that range, more money no longer translated into greater happiness.
Refuting the conclusions.
At the time, the study received considerable media coverage. Thanks to this, a researcher at the University of Pennsylvania named Matthew Killingsworth, who collects various data on human happiness, sought to refute the conclusion. In 2021, he published research concluding that average happiness is directly proportional to an individual’s income. So who’s right?
To put an end to this dilemma, Kahneman began collaborating with Killingsworth and Barbara Mellers, also of the University of Pennsylvania. “We engaged in a contradictory collaboration to arrive at a coherent interpretation of both studies,” they explained in the latest study published in PNAS.
Money brings happiness, but it’s not everything.
To understand the flaws in previous approaches, the researchers reanalyzed data collected in the United States in 2010 and 2021. So, they came to a more neutral conclusion: that happy people experience even more satisfaction the more money they make. Meanwhile, for unhappy people, the sense of well-being stops increasing when they reach a certain level of income.
“Kahneman and Deaton could have concluded the same if they had chosen to describe the results in terms of unhappiness rather than happiness,” the researchers explain. “For their measures were not able to discern between levels of happiness [an essential aspect for answering the question of whether money gives happiness].”
The more money a person makes, it makes sense that they will experience more control over their life, but that doesn’t solve everything. “For people who are very poor, obviously money is very helpful,” Killingsworth explains. “But if you have a good income and you’re still miserable, the source of that sadness is probably not something that money can fix.”