Happiness Doesn’t Top Out at $75,000, Study Says

Does happiness peak once your salary hits $75,000? That was the conclusion many drew from a decade-old study by Angus Deaton, the 2015 Nobel laureate in economics, who found that the correlation between emotional wellbeing and income tops out once a person earns $75,000. In other words, any dollar above that amount won’t make you any happier. 

Now, new research from the University of Pennsylvania is turning that frequently cited finding on its head. The study, which looked at data on more than 33,000 adults in the U.S., has found that people’s life satisfaction and experienced wellbeing continues to rise with income—even above that $75,000 mark.

So does that mean money can buy happiness after all? Not necessarily. Here’s what mental health experts say about measuring our moods in dollars and cents.

New Findings on Money and Happiness

For a new study published this month by the Proceedings of the National Academy of Science, author Matthew Killingsworth, senior fellow at the University of Pennsylvania’s Wharton School, evaluated data on 33,391 employed people across the country. 

Each participant used an app Killingsworth created called Track Your Happiness, which asked users questions about their current mood and their life satisfaction at random points throughout the day. The app also asked participants about their annual household income before taxes.

Killingsworth collected more than 1.7 million reports about people’s experienced wellbeing from the app. After crunching the data to find the average level of wellbeing for each participant, he found that larger incomes were “robustly associated” with more positive feelings in day-to-day moments (also called experienced wellbeing), as well as life satisfaction (or evaluative wellbeing). The finding held true even in incomes well above $75,000 per year, refuting earlier research.

This study is strong, not only because of the large sample size, but also because of its design. The app prompts allowed the researcher to capture “snapshots” of people’s feelings of wellbeing in the moment, says Andrea Dindinger, a licensed marriage and family therapist based in San Francisco. That helped reduce the bias that can come when a person tries to remember how they felt a few hours or a few days ago. 

“The way the app’s questions are presented to participants—encouraging them to share their feelings—seems like it allows them to be more present with their feelings, hence giving them greater levels of internal ease,” she says.

Why Money Correlates With Emotional Wellbeing

While the data in the study showed a connection between money and emotional wellbeing, it could not explain the reasons behind those trends. One possibility is that wealth helps people avoid some causes of suffering, according to Killingsworth.

“The correlation might well be explained that wealth, up to a point, allows one to meet the basic needs of survival,” says Jeffrey Ditzell, DO, a general adult psychiatrist working in private practice in New York City. “It is hard to experience happiness with consistency if one’s family is starving, in danger of losing their home, or unable to obtain medical care when needed. A certain amount of wealth establishes consistency of access and this can allay fear.”

On a similar note, financial security can also offer someone a higher degree of stability and control over their lives. The study found that people’s sense of control over their lives accounted for a whopping 74% of the connection between income and experienced wellbeing. To see this in action, Dindinger points to an example of a young adult who can only afford an unreliable used car to get to work.

“When you start the car, you may have feelings of insecurity not knowing if it will start or how long it will run. Fast forward to when you’re older and have a newer car that’s more reliable—that will bring you less stress. Less stress in our lives equates to greater happiness,” she explains.

A person’s perception of the role of money in their lives may also explain some of the correlation between money and happiness. The research showed a much stronger correlation between income and experienced wellbeing for participants who felt that money was very important to them, regardless of how many dollars those individuals earned per year. 

Likewise, participants who felt strongly that money was indicative of success in life tended to have a steeper link between income and wellbeing.

“Some tie money to self-worth, and those who feel that they are not earning enough or being adequately compensated may sometimes feel undervalued, leading to a sense of dissatisfaction,” says Mary Rorro, DO, a psychiatrist who works with veterans in New Jersey, who also leads the music and medicine committee for the American Medical Women’s Association. 

Do You Have to Earn a Lot to Be Happy?

Whenever a study finds a correlation between money and wellbeing, it raises the question of whether people from low-income households are bound to be less happy.

“I don’t feel that low-income people are bound to be less happy, but rather they may have greater levels of uncertainty or stress,” says Dindinger.

And achieving high levels of wealth doesn’t guarantee that you’ll be any happier, says Dr. Ditzell.

“From Donald Trump to Johnny Depp, those who have acquired vast wealth are not necessarily happy,” he says.

Happiness and emotional wellbeing are multifaceted experiences. That means there are many ways people can find greater satisfaction with their lives—regardless of the size of their paycheck.

“The search for happiness is often found beyond ourselves,” explains Dr. Rorro. “Happiness can be cultivated by improving the lives of others. When we think of another’s happiness above our own and regard them with empathy and compassion, we derive fulfillment in our shared human connection.”

It comes down to having a deep understanding of what you want to achieve in life and going after it with a sense of purpose. 

“Happiness is best achieved by perpetual pursuit of the things that you truly wish to create in your world, such as an increasingly passionate romantic relationship, a loving relationship with your children, friendships that you trust and value,” says Dr. Ditzell.

He recommends adopting an “alchemist mindset,” which involves taking the ordinary and mundane tasks of life and imbuing them with personal meaning. That transforms these tasks from “work, grinding you down and bleeding you out emotionally and energetically” into “joyful effort,” he says.

“This allows you to engage the things that must eventually get done in the day to day in a manner that allows you to consistently and efficiently achieve and [continue working toward], in a purpose-driven fashion, the life one truly desire—happiness,” says Dr. Ditzell.