You may have heard the age-old adage that “money can’t buy happiness.” It usually follows a lesson about valuing things that you can’t purchase, such as love from your friends and family.
In 2010, Daniel Kahneman, the author of “Thinking, Fast and Slow,” stunned the world by changing that quote with his study.
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He said happiness only increases with income up to $75,000 of annual income. If you earn beyond that, Kahneman claims more money won’t affect your overall happiness.
In 2021, University of Pennsylvania professor Matt Killingsworth challenged that study with his own. His findings say that more money can increase your “satisfaction with life,” even if you earn more than $75,000 annually.
How did he discover that money can buy happiness?
The Guardian shares more details about Matthew Killingsworth’s study. He used his website, trackyourhappiness.org, to sample 33,269 employed US adults aged 18-65 with $10,000 annual household income.
He also used data from the ultra-wealthy, who are people with an average net worth between $3 million and $7.9 million. Here are Killingsworth’s findings:
“The difference in life satisfaction between the wealthy and those with incomes of $70-80,000 [per year] was nearly three times as large as the difference between $70-80,000 [per year] and the average of the two lowest income groups.”
In other words, money can buy happiness as the wealthy were significantly more satisfied with life than those in the lower economic brackets.
In contrast, Forbes says Kahneman’s study was too “coarse” to prove money doesn’t buy happiness beyond $75,000 annual income.
His study only asked people whether they were happy or unhappy, without checking the magnitude of that feeling. As a result, Kahneman’s findings did not reflect how people’s happiness changed with more money.
Killingsworth explained to The Guardian that his findings are “more fundamental and psychologically deeper than simply buying more stuff.”
“A greater feeling of control over life can explain about 75% of the association between money and happiness.”
“So I think a big part of what’s happening is that, when people have more money, they have more control over their lives. More freedom to live the life they want to live.”
Killingsworth said he studied how money buys happiness to understand how to make life better.
“So part of the reason I study happiness is to broaden our horizons beyond things like money,” he stated.
“What would we do differently if we took happiness seriously? As individuals, families, organizations, and societies?”