More money means more happiness? Science says 'yes'

For decades, economists and psychologists have debated whether rising income actually makes people happier. Classic research suggested that beyond a certain point, extra money no longer improves well-being. But newer studies are challenging that assumption, showing that happiness continues to rise with income, even for the very wealthy.

In 2010, Nobel laureate Daniel Kahneman and economist Angus Deaton published a widely cited study that shaped much of the discussion. Their research, based on Gallup survey data, concluded that while “life evaluation” a person’s overall sense of satisfaction, rises steadily with income, emotional well-being plateaus once annual earnings reach about $75,000. For many, this figure became the benchmark for the idea that “money can’t buy happiness” after a point.

In 2021, Matthew Killingsworth, a senior fellow at the University of Pennsylvania, presented evidence that contradicted the plateau theory. His study, published in the Proceedings of the National Academy of Sciences (PNAS), tracked real-time reports of happiness through a smartphone app. The results suggested that happiness continues to rise well beyond $75,000, up to at least $500,000.

The debate came full circle in 2023, when Kahneman, Killingsworth and Barbara Mellers undertook an “adversarial collaboration” to settle the issue. Their joint paper, also published in PNAS, concluded that both perspectives were partly right. For the majority of people, happiness increases with higher income. However, a smaller group, described as the “unhappy minority,” shows little improvement in emotional well-being beyond $100,000 a year.

Other researchers have extended the discussion further. Some studies indicate there is still no clear point of satiation, with happiness rising steadily even at very high income levels. One recent econometric analysis, however, suggested that emotional well-being may flatten closer to $200,000, though the author noted that more evidence is needed to confirm this potential ceiling.

Experts caution that while money clearly plays a role, it is not the only factor in long-term happiness. Social connections, physical and mental health, and a sense of purpose remain equally important. Still, the growing body of evidence suggests that, contrary to earlier beliefs, more money generally does mean more happiness, at least for majority people.