Can money buy happiness?

Key takeaways

The 2010 study by Kahneman and Deaton established the idea of a happiness plateau at around $75,000, suggesting that more money does not necessarily lead to increased happiness.
Recent research by Killingsworth indicates that there may not be a plateau in happiness as income rises, suggesting a correlation between higher income and higher overall happiness.
Through collaboration, researchers discovered that defining happiness in different ways can lead to different findings, highlighting the importance of rigorous scientific inquiry.
Ultimately, the quality of spending and how we manage our money can significantly influence our happiness, suggesting that conscious decision-making about finances is crucial.

Summary

The Happiness Plateau and Money

The podcast begins by discussing a pivotal 2010 study by Daniel Kahneman and Angus Deaton, which claimed that an annual income of around $75,000 is the threshold for happiness. This 'happiness plateau' suggests that beyond this income, more money does not contribute to greater happiness. The hosts bring on Bernadette Joy Cruz-Mullion, who shares her personal experience affirming this finding, stating that despite earning more, she found little increase in her happiness and instead ended up deciding to pursue a more fulfilling life.

Revisiting the Relationship Between Money and Happiness

The conversation shifts to recent research by Matt Killingsworth, who challenges the established plateau. His data suggests that higher income is correlated with increased happiness beyond $75,000, emphasizing that happiness can increase with income, countering the earlier findings. This new perspective has gained attention and interest due to its contrasting views on the connection between wealth and personal satisfaction.

Collaboration for Truth in Research

Killingsworth and Kahneman, despite their differing results, come together to explore these findings through an adversarial collaboration approach. Barbara Mellers mediates their discussions, leading to a revelation: both data sets might hold truths depending on how happiness is defined. Together, they find that while the typically 'happy' segment does experience more joy with increased income, the 'unhappiest group' does flatten out at around $100,000, resonating with past research.

Lesson on Spending Money Wisely

As the episode wraps up, the idea emerges that the happiest people often know how to spend their money in a way that maximizes their happiness, which shifts the focus from simply making more money to how we utilize it. This emphasizes the significance of crafting a life that prioritizes emotional well-being, personal connections, and balanced decision-making, rather than purely financial success.

Show notes

People often say that money can't buy you happiness. Sometimes, if you ask them to tell you more about it, they'll mention a famous 2010 study by Nobel Prize winners Daniel Kahneman and Angus Deaton. That study found that higher household income correlates with greater emotional well-being, but only up to around $75,000 a year. After that, more money didn't seem to matter.

This was a famous study by two famous academics. The result stood for over a decade. And it feels good, right? Maybe the rich aren't so much happier than anyone else. But researchers have recently done a complete 180 on this idea. In 2021, psychologist Matt Killingsworth found nearly the opposite: That more money does correlate with more happiness. And that the relationship continues well beyond $75,000 per year.

Today on the show: Does more money mean fewer problems? Two researchers with totally different takes come together to hammer out a better understanding of the relationship between money and happiness.

This episode was hosted by Sally Helm and Nick Fountain. It was produced by Sean Saldana, Sam Yellowhorse Kesler, and Emma Peaslee. It was edited by Meg Cramer and fact-checked by Sierra Juarez. Engineering by Cena Loffredo. Alex Goldmark is Planet Money's executive producer.

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