Does money bring happiness?
Neuroscience experts, psychologists and economists who investigate the link between money and the level of perceived well-being have been asking this for years.
The psychologist Daniel Kahneman, known as the founder of behavioral economics, and the economist Angus Deaton, both awarded the Nobel Prize for Economics, published a study on this topic in 2010.
According to the results obtained, money brings happiness, but only up to a certain point.
In fact, above a certain threshold an increase in income would no longer be associated with a proportional increase in happiness.
In fact, the participants’ sense of well-being increased as their annual income increased, but reached a plateau when they reached 100,000 dollars a year: beyond this threshold, happiness no longer seemed linked to a better economic condition.
Kahneman and Deaton’s study was later refuted by a 2021 publication by Matthew Killingsworth, a psychologist and researcher at the Wharton School of the University of Pennsylvania.
According to Killingsworth, there is no income threshold beyond which happiness stops increasing in relation to the improvement of one’s financial status.
Indeed, the more we earn, the happier we are.
Is it really that simple?
Not really.
Recently, Kahneman and Killingsworth, together with Barbara Mellers, professor of psychology and marketing at the University of Pennsylvania, carried out a new study that would seem to resolve the issue.
It emerged that the conclusion drawn in 2010 by Kahneman and Deaton was not entirely wrong: it simply could not be applied to the entire population, but only to those who, basically, are less happy. In this specific case, this group would correspond to 15-20% of the people involved in the new research.
The researchers underline how some common clinical characteristics emerge among these people: depression, anxiety, failure to overcome bereavement or health problems. In their case, the emotional situation may improve with the improvement of the economic situation, but not substantially.
In short, for study participants who live a more negative emotional experience, the positive impact of money does not influence beyond a certain level.
However, this does not apply to those who generally record a good level of happiness, who continue to see their level of well-being grow as their income increases, without threshold limits.
The relationship between money and happiness
The results of the study by Kahneman, Killingsworth and Mellers allow us to better understand the link between happiness and money.
Except for those who are unhappy for other reasons, in most cases, a higher income corresponds to a greater level of happiness.
The study also shows that for people with lower incomes, as their financial situation improves, perceived happiness increases much more than for those who start from higher economic well-being conditions.
Basically, happiness increases much more rapidly for those in the lower income brackets than for those who are already in a higher income bracket.
Information of this type provides a valuable contribution to the analysis of issues that concern the community, from tax rates to employee remuneration methods.
They also offer us useful information on the relationship between GDP and perceived quality of life.
On a more strictly personal level, the conclusions of this study can inspire those who have to choose between a career and the possibility of greater earnings or other life priorities.
If you want to know more about the link between emotions, money and the economy you can read our in-depth analysis on the Museum of Saving blog and listen to episode 7 of the podcast “ Mica solo parole”, with the economist Luciano Canova.