CAN money buy you happiness? The answer, it appears, depends on what you mean by “happiness”. High earners are generally more satisfied with their lives, it seems, but a person’s day-to-day emotional wellbeing is only influenced by money up to a certain point.
Daniel Kahneman and Angus Deaton of Princeton University sifted through two years’ worth of Gallup poll data in which more than 450,000 US residents were asked about household income and happiness. The poll tried to measure happiness in two different ways. It measured people’s immediate emotional experience by asking questions like “Did you smile a lot yesterday?” Overall quality of life was assessed on a 10-point scale.
“People can say their life is going well even though they’re unhappy right now, and vice versa,” says Deaton.
Comparing people’s happiness against income, the researchers found that the more money people earned, the higher their overall life satisfaction. But people’s day-to-day emotional state rose with average annual income only until about $75,000, after which additional income made no further difference (Proceedings of the National Academy of Sciences, DOI: 10.1073/pnas.1011492107).
People’s emotional state may stabilise above $75,000 because they no longer have to worry about meeting basic necessities, Deaton says. This allows them to settle into whatever innate level of moment-to-moment happiness their personality permits, he says.
Economic policy-makers need to be aware of the difference between these two forms of happiness, says Deaton. “Should public policy concern itself with emotional wellbeing, or with people’s evaluation of their life?” Most likely, the answer will be some combination of the two. “The good life contains several things, and feelings are just one part of it,” says Marc Fleurbaey, an economist at the University of Paris-Descartes.