There's no $75,000 earnings cap on happiness, Wharton study finds: More money means more happiness no matter how much you make

"There's a pretty strong relation between income and happiness," a second study finds.


The relationship between happiness and income plateaus once you earn $75,000, according to an oft-cited 2010 study published in the National Academy of Sciences journal by Nobel Prize winners Daniel Kahneman and Angus Deaton, indicating that earning more doesn't make a person more fulfilled or satisfied. However, new research suggests this isn't true.

Happiness continues to increase along with income well past the point of making $75,000 a year, according to a 2021 study published in the same journal.

"In popular discussions, even among scientists, that plateau at $75,000 has become part of the lore of what we accept is true," says study author Matthew A. Killingsworth, a happiness researcher and senior fellow at the University of Pennsylvania's Wharton School of Business. "I started the research by expecting what had been found before, but the results were strikingly different to prior literature."

Happiness continues to increase for high-income earners, too, according to a 2020 study by Jean Twenge, a psychology professor at San Diego State University and author of "iGen."

"At every step of the income ladder, more money meant more happiness, and that included above $100,000 a year," Twenge says. "More money meant more happiness no matter how high up the income scale you went."

The study showing happiness plateaus at $75,000 was misunderstood

Neither Kahneman nor Deaton was available for comment. But why their findings vary from Killingsworth's could be due to a few factors. One is that the duo's conclusion is actually more nuanced than it is often cited to be, Killingsworth says: "The original study, which found that more money didn't make people happier past $75,000, was for a specific kind of happiness."

In the 2010 study, happiness was measured in two ways: life evaluation, which refers to how positively or negatively people thought about their life, and emotional well-being, which refers to day-to-day experiences and feelings. Kahneman and Deaton found that life evaluation did continue to increase with income, but emotional well-being didn't.

Still, Killingsworth's findings differ. In his study, both emotional well-being and life evaluation increased. This difference might be due to how the first study was conducted.

To measure emotional well-being, respondents were given yes or no questions like, "Did you smile or laugh a lot yesterday?" Most answers for those making $75,000 were "yes," and those making more than $75,000 also answered "yes." This advanced the perception that happiness does not increase after a certain point. However, the findings might reflect the fact that respondents were not given more choices beyond a simple "yes" or "no." There was no scale to denote how happy you were.

The original study, which found that more money didn't make people happier past $75,000, was for a specific kind of happiness.
Matthew A. Killingsworth
senior fellow at the University of Pennsylvania

In Killingsworth's study, "people can register improvements" in mood, he says, as opposed to answering a yes or no question. Questions about emotional well-being could be answered on a sliding scale that started with "not at all" and went to "extremely." People also used an app to register their feelings in real time. That change that could have helped generate more precise results.

"Not only were people satisfied with their life, they enjoyed their life moment-to-moment, day-to-day, as well," he says. "The pattern of that relationship was incredibly smooth from very poor to very rich."

Black and White Americans are affected by income differently

Twenge's study also measured happiness of Americans from 1972 to 2016 and found that correlation between money and happiness is even stronger now than it was in the past. "Money does buy more happiness than it used to," she says. "There's a pretty strong relation between income and happiness. Plus, that relation is a lot stronger now than it was for our grandparents' and parents' generation."

Black Americans are generally happier with income now than they were in the '70s, she says, especially compared to White Americans. "For White Americans, those who have higher income, their happiness has been steady," since the 1970s, Twenge says. "Those who are lower income, their happiness has gone down.

"For Black Americans, those who have higher income, their happiness has increased, and the happiness of those with lower income has stayed very steady."

For Black Americans, those who have higher income, their happiness has increased, and the happiness of those with lower income has stayed very steady.
Jean Twenge
author of "iGen"

This may be because Black Americans have experienced increased high school and college graduation rates, lower mortality rates, and "declines in explicit prejudice," compared to in the 1970s, she says. In some key areas, though, there haven't been improvements: The racial wealth gap remains as large as it was in 1968, for example.

Largely, though, "if you look across this time period, there's been progress for Black Americans," she says. "Not enough, but there has been progress."

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