Can money buy happiness? Nobel prize-winning economist says 'yes'

The question - “Can we buy happiness with money?” - has remained unanswered even though many social scientists and economists have been tempted to solve the puzzle.

Recently, a fresh answer has come out in a new study according to which happiness increases with growth in earnings and income, as per a report published in The Washington Post.

The study is based on research conducted by Nobel Prize-winning economist Daniel Kahneman along with Princeton University's Matthew Killingsworth who performed number crunching to reach this conclusion, the outlet further stated.

The result of the study contradicts research conducted in 2010 which stated that money can only boost happiness to a certain point, which was estimated to be about $75,000 in annual earnings.

Kahneman was among the two authors who had conducted the earlier study. The study became so popular that the founder of a credit card company raised his employees' minimum salaries to $70,000 by taking a cut in his own salary to do so.

The recent study was published this month in the Proceedings of the National Academy of Sciences, according to the Washington Post report.

Around 33,391 people, living in the US and between the age of 18 and 65, were surveyed by the two researchers. The people surveyed had a household income of a minimum of $10,000 a year.

As per the outlet, the responses about people's feelings at various intervals were recorded through a smartphone application by the researchers. The responses of people ranged from "very bad" to "very good".

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CBS News stated that the study reached two major conclusions. One conclusion was that happiness does increase with growth in earnings up to $500,000 a year and the other conclusion was that a group of people exist for whom higher incomes do not create much of a difference.

This "unhappy group" comprised around 15 per cent of people, said the outlet further citing the study.

However, Killingsworth, in a statement, cautioned that money isn't everything. "Just one of the many determinants of happiness. Money is not the secret to happiness, but it can probably help a bit,” he stated.

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