Study: Money CAN Buy Happiness

Money can’t buy happiness? “Pshaw!” says a new study published by Angus Deaton, the consumer behavior specialist known for formulating what’s called the “Deaton Paradox”, and Daniel Kahneman, the Nobel Prize-winning psychologist and economist who did pioneering work in the field of behavioral economics. According to the article recently published in the Proceedings of the National Academy of Sciences, there is a definite link between income and emotional well-being. Despite the old adage, it seems that money can indeed buy happiness ― to a certain point.

What the study found was that as people made more money, their day-to-day well being increased. However, once they reached about $75,000 a year, their daily moods began to level off as additional money became subject to what appears to be the emotional equivalent of the law of diminishing returns. This is because, according to Deaton, those making less than $75,000 need to deal with so many more financial stresses during their everyday life that it becomes that much more difficult to live one’s life enjoyably. Once this $75,000 mark is reached (the paper does not seem to mention whether this is pre or post-tax income), squaring away these everyday stresses is no longer as much of an issue as it was before. This means that, in general, the day-to-day happiness of someone making a million dollars a year isn’t that much greater than someone making $75,000 a year.

However, just because the $75,000 threshold is reached it does not mean that additional income is completely useless to one’s happiness, according to the study. Money made past this point shifts from fueling day-to-day happiness to overall satisfaction with one’s life, with the study noting that even if their daily moods aren’t necessarily improved by additional income, they do feel better about themselves in general. So, says the study, someone who, say, gets a new job and is making about $100,000 more a year than he or she did before, will still feel more successful and satisfied with where their lives are, even if how they feel when they’re walking the streets every morning isn’t that much different.

Now that it’s been shown that money can buy happiness, the next question to ponder is what ELSE can money buy? Perhaps Deaton and Kahneman can get to work on the next frontier: love.