New Research by Nobel Winning Scientist Shows That Money Can Indeed Buy Happiness – But Not For All

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Research adds new twist to the money-happiness conundrum.

Money doesn’t buy happiness is a platitude that we’ve all heard many times before. Although it’s easy to disregard as an empty warning cry for the money-obsessed, behavioral scientists have spent decades trying to understand the complicated relationship between money and happiness … and it comes with some surprising findings.

A Nobel-winning career

Daniel Kahneman, an economics Nobel prize winner, has spent a considerable amount of his career trying to understand the extent of how time and money impact happiness. In some of his early work, he found that personal income increased with wealth – but to a point.

He found that above $90,000 a year, increases in income did not translate to increases in happiness (what he called a ceiling effect). In other words, if your salary increased from $50,000 to $60,000, you would experience a significant increase in happiness. However, if your salary increased from $90,000 to $120,000, you would expect no difference in your overall levels of happiness.

This finding puzzled scientists for more than a decade. In 2021, a group of researchers decided to run a similar study to investigate the veracity of this relationship. To their surprise, they found different results-increases in income, at any level, were related to increases in happiness. How do you reconcile the opposing findings?

In a recently published adversarial collaboration-a type of academic partnership in which scientists with different and often opposite opinions on a subject collaborate together for the sake of science-Killingsworth, Kahneman, and Mellers found that neither of them had been right. In fact, the relationship between wealth and happiness was more puzzling than expected.

Chronically unhappy or just happy?

The authors found that there are two different types of people, a happy majority and an unhappy minority, and that the relationship between wealth and happiness depends on what type of person you are. For the unhappy minority (the 15% unhappiest people), the ceiling effects described by Daniel Kahneman were true: regardless of the amount, they did not become happier when their income increased above $90,000. However, for the happy majority, happiness continued to increase as their level of income increased.

What do these findings mean for us, mere non-Nobel-prize-winning mortals? It means that, for most of us, working hard to earn more money will probably pay off. It means that even if we’re earning $100,000 a year, earning more money might still make us happier. However, if you are part of the chronically unhappy minority-the kind of people who feel sad even when they’re vacationing on a stress-free paradise island-then maybe putting all the hard work into earning more money will not be worth it. Maybe you’re really better off just doing the bare minimum to earn (a maximum) of $90,000 a year.