Psychology › Emotion, motivation & happiness › Happiness and well-being
Money and happiness research
2010; revised 2023· Finding or experiment
Mixed evidenceSome support; effects smaller or less consistent than once thought.
Studies of whether, and how much, more income buys greater happiness, revised as bigger data sets arrived.
See it on the Psychology map →What it says
A 2010 analysis of 450,000 US survey responses by Daniel Kahneman and Angus Deaton found life satisfaction kept rising with income, but daily mood leveled off around $75,000 a year. In 2021 Matthew Killingsworth, using 1.7 million phone-app mood reports, found no plateau. In 2023 the rivals jointly reanalyzed the data: for most people happiness keeps rising with income, by roughly the same amount for each doubling; only the least happy fifth plateau, near $100,000.
Why it matters
Money helps in proportion: $10,000 means far more at $40,000 than at $400,000. Research suggests spending on time-saving help, experiences and other people often lifts happiness more than buying things.
The evidence
Status: mixed evidence. Large surveys agree on the overall pattern, but thresholds have shifted with each data set; lottery studies suggest money causes some of the gain rather than merely accompanying it.
Open questions
How wealth, as opposed to income, affects well-being; savings and financial security appear to reduce stress, but data on the very rich are thin.
Connections (3)
▸Money and happiness research finds income modestly raises Happiness and well-beingMixed evidence
The connection
Higher income goes with higher life satisfaction within and across countries, roughly by percentage: each doubling adds about the same boost. The 2023 joint study found everyday happiness keeps rising past $100,000 for most people. But income explains only a small share of differences in happiness; health, relationships and control over one's time matter as much or more.
Who showed it and when
Kahneman and Deaton at Princeton, 2010; Matthew Killingsworth at the University of Pennsylvania, 2021; Killingsworth, Kahneman and Barbara Mellers's 2023 adversarial collaboration in PNAS.
How solid is it?
Very large surveys agree on the percentage pattern; a 2020 Swedish lottery study found winnings raised life satisfaction for years, suggesting money causes some of the gain.
Open questions
How much relative income, keeping up with peers, matters versus absolute dollars; and why national happiness often stalls as countries grow richer (the Easterlin paradox).
▸Money and happiness research finds money's boost is dulled by Hedonic adaptation (the hedonic treadmill)Mixed evidence
The connection
People get used to higher income and new possessions, and their comparison group rises with them, so raises lift happiness less than expected and the lift fades. German panel data suggest much of a raise's effect wears off within a few years. Yet big Swedish lottery wins kept life satisfaction higher for over a decade: adaptation to money is partial.
Who showed it and when
Brickman's 1978 Illinois lottery study; Rafael Di Tella and colleagues' German panel study, 2010; Erik Lindqvist, Robert Östling and David Cesarini's Swedish lottery study, 2020.
How solid is it?
Panel and lottery studies track people before and after income changes, though they disagree on how complete adaptation is.
Open questions
Why adaptation seems stronger for day-to-day mood than for overall life evaluation, and whether spending on experiences resists adaptation better than buying things.
▸Money and happiness research overlaps with Behavioral economicsWell replicated
The connection
Behavioral economists study well-being directly, asking people how they feel, rather than assuming more money always means more satisfaction. Income-and-happiness research, from Richard Easterlin's 1974 paradox to Kahneman and Angus Deaton's 2010 analysis of 450,000 US survey responses, became shared ground for economists and psychologists.
Who showed it and when
Easterlin, 1974; Kahneman and Deaton at Princeton, 2010; Matthew Killingsworth's 2021 study and his 2023 joint revision with Kahneman and Barbara Mellers.
The evidence
The studies appear in leading economics and psychology journals, and 'happiness economics' is an established subfield with its own large survey data sets.
Open questions
Whether happiness levels off above some income, about $75,000 in the 2010 study, or keeps rising for most people is still being refined after 2023.