In the study done 10 years ago, it was found that after one reaches an annual earning of about $75,000, money stops making a difference in their life. The new study proves it wrong.
Editor's note: This article was originally published on January 29, 2021. It has since been updated.
Whoever said money can't buy you happiness might want to rethink, because researchers are here to prove that money, in fact, can buy you happiness. As per a study done in 2010, the amount is about $75,000 annually. It also said that money would make a difference to a certain point and then stop.
If this study is to be believed then we can assume that multi-billionaires like Jeff Bezos and Elon Musk cannot be happier than us. Can you believe that? Can't really, right? That's exactly what this new study, published in 2020, is trying to prove. Published in Proceedings of the National Academy of Sciences, the study says that feelings of well-being might continue to rise as there is an increase in income.
Titled Experienced well-being rises with income, even above $75,000 per year, this study is done by Matt Killingsworth, a senior fellow at Wharton School for Business at the University of Pennsylvania, on 1,725,994 samples pulled from 33,391 employed adults in the United States. According to Bloomberg, Killingsworth collected his data with the help of an iPhone app he created from scratch called Track Your Happiness, which pings users at random times about their activities and feelings using sliding scales for answers.
Talking to Vice, Killingsworth also revealed that he collected data about the income of the individuals using his app. “I was really interested in understanding what was the relationship between people’s level of income and their level of what we might call ‘experienced well-being.’”
So, what is "experienced well-being"? It is the measure of happiness that is taken in the moment, and is subjective to the time and place of when the question was asked. It is different from evaluative well-being which is the evaluation of a person's whole life.
While in the 2010 study, after testing both experienced and evaluative well-being, it was found that experienced well-being plateaued at $75,000, and evaluative well-being increased as income increased. Even though Killingsworth’s study is focused on experienced well-being and the data is not much different from the previous study, as per the results, it was concluded that experienced well-being rose linearly with the income of a person with no limit.
Killingsworth explained in the study, "This finding has been the focus of substantial attention from researchers and the general public, yet is based on a dataset with a measure of experienced well-being that may or may not be indicative of actual emotional experience."
"Here, over one million real-time reports of experienced well-being from a large US sample show evidence that experienced well-being rises linearly with log income, with an equally steep slope above $80,000 as below it. This suggests that higher incomes may still have potential to improve people's day-to-day well-being, rather than having already reached a plateau for many people in wealthy countries."
According to The Daily Mail, Killingsworth's study comes after researchers from Purdue University found that the ideal amount for emotional well-being is between $60,000 and $75,000. The finding was based on data from the Gallup World Poll, where the subjects were over 1.7 million people from 164 countries. It was also found that $95,000 was the amount where subjects felt that they were successful in life.
Even though Killingsworth's research is based on the role money plays in one's life, he stressed that wealth should not be considered the sole source of happiness because it's just a "small variance" of real happiness. "There are plenty of other things that are equally, if not more important...I also asked people how important money is to them. And if I look at people who say money isn’t very important to them, it barely predicts their happiness. It’s possible to earn not that much and still be quite happy...we just don’t understand all these things.”
He added that there are people who are not financially stable but they're as happy as anyone can be. “What does life look like for someone who doesn’t earn a lot, but says money isn’t important? I don’t have a great answer to that, I don’t know. But I know that they’re there and I know they’re enjoying life just about as much as similar people who earn a lot more,” he told Vice.
Killingsworth found one thing common among all his subjects, the ones who measured their success to the amount they earned weren't happy at all. “It’s especially bad if you don’t earn much money,” he said. “But there doesn’t seem to be any point where conflating personal success with your financial outcome is a good thing...having more [money] is good, but being fixated on it and using it to define your self worth is probably not such a great idea.”