Does Money Buy Happiness? How the Research Has Evolved

The most quoted number in the money-and-happiness debate comes from a 2010 paper by the psychologist Daniel Kahneman and the economist Angus Deaton. Analyzing hundreds of thousands of answers to a daily Gallup survey of US residents, they reported that how people felt day to day rose with income only up to about $75,000 a year, while the way they rated their lives kept climbing.¹ The figure spread far beyond the paper. The research kept moving.

Does money buy happiness, then? For most people, a little, and further up the income scale than that plateau suggested. A 2023 joint reanalysis by the researchers behind the two rival findings concluded that the 2010 plateau holds only for the least happy people, and that for most employed US adults, day-to-day happiness keeps rising with income.² The link is real but weak. It is strongest where money relieves hardship, and part of it seems to run through a feeling of control rather than through the things money buys. The practical reading, worked through below, is to judge a raise or a windfall by the worries it would end rather than by its size.

Each study below found a gap in the one before, so the story is told in order. How beliefs about money shape what people do with it is a separate question, taken up in the guide to money mindsets and the beliefs psychologists measure; this page stays with income and how people feel.

1. 2008Stevenson and Wolfers: richer countries are happier, with no satiation point
2. 2010Kahneman and Deaton: day-to-day mood levels off near $75,000
3. 2010Easterlin: over a decade or more, national happiness does not follow growth
4. 2020Swedish lottery study: big winners rate their lives higher for over a decade
5. 2021Killingsworth: no plateau in real-time mood reports
6. 2023Joint reanalysis: the plateau holds only for the least happy

Does money buy happiness? First ask which happiness

Researchers split happiness into two things, and money relates to each differently. Kahneman and Deaton separated emotional well-being, the joy, stress, sadness, anger and affection of ordinary days, from life evaluation, the judgment people make about their life when they stop and think about it. The difference is easy to feel. Ask someone to place their life on a ladder from the worst possible to the best possible, and they weigh up their job, their home and their savings. Ask how yesterday felt, and they think of a tense commute, a good lunch or a child’s fever. In the Gallup data, income and education were more closely tied to the ladder rating, while health, caregiving, loneliness and smoking were relatively stronger predictors of daily emotions.¹

The practical test: when a headline says money does or does not buy happiness, check which kind it measured. A raise can make your life look better on paper without changing how a Tuesday afternoon feels.

The 2010 plateau at $75,000

Kahneman and Deaton found that life evaluation rose steadily with income, while day-to-day emotional well-being stopped improving at around $75,000 a year. Their summary was that high income buys life satisfaction but not happiness, and that low income goes with less of both. The steady rise appears when well-being is plotted against the logarithm of income, a scale that treats each doubling of income as the same step.¹ It is the statistical form of a familiar idea: a few thousand dollars more matters far more to a household scraping by than to a comfortable one.

Their most practical finding was at the bottom of the range. Low income, they reported, went with sharper emotional pain from misfortunes such as divorce, ill health and being alone.¹ A car repair bill lands one way on someone who can pay it from savings and another way on someone who has to choose which bill to skip. In this study, money looked most like a buffer against bad luck.

2021: real-time reports found no plateau

Matthew Killingsworth’s 2021 study found no plateau at all: how people felt in the moment and how satisfied they were with life both rose steadily with income, as steeply for higher earners as for lower ones. Instead of asking about yesterday, he used diary studydiary study: A study in which people record what they do or feel repeatedly, often daily or when prompted at random moments, close to when it happens; the prompted form is called experience sampling. It relies less on memory, but it is still self-report.Full entry in the glossary: a smartphone app asked employed US adults, at random moments, how they felt right then, on a sliding scale from very bad to very good. He traced the gap between the studies to measurement: the 2010 plateau came from yes-or-no questions about yesterday’s feelings, which may miss degrees of happiness.³

His way of reading the logarithm is the useful part. By his account, households earning $20,000 and $60,000 would be expected to differ in well-being by the same amount as households earning $60,000 and $180,000.³ Each extra dollar counts for less as income grows, but tripling an income goes with about the same step up wherever you start. That is why a modest raise barely shows in these curves.

Killingsworth also looked at why income and well-being travel together. People’s sense of control over their lives accounted for most of the link, and trouble paying regular bills for a smaller part of it. People who most strongly equated money with success were less happy on average, and at no income level did equating the two go with greater well-being.³ These are statistical associations, not proof of what money does.

So if you are weighing a better-paid job, ask what it would change about control, such as fewer money worries or more say over your time, rather than looking only at the salary.

Further reading

• 

  Happy Money: The Science of Happier Spending

  by Elizabeth Dunn and Michael Norton

  Two authors of the spending replication this article cites explain how the way you spend relates to happiness.

As an Amazon Associate WiserHours earns from qualifying purchases.

2023: the plateau is real, but only for the least happy

The 2023 adversarial collaboration between Killingsworth and Kahneman, with the psychologist Barbara Mellers as facilitator, concluded that both earlier studies were partly right: the plateau exists, but only among the least happy people, while for everyone else happiness keeps rising with income.²

The study

Moderate evidence

One dataset, two former rivals: the 2023 PNAS reanalysis

The rivals reanalyzed Killingsworth’s data, looking at the least happy, the middle and the happiest people at each income rather than only the average. For the least happy 15 to 20 percent, happiness rose with income up to about $100,000 and then flattened. In the middle it kept rising, and for the happiest 30 percent it rose faster above $100,000. The overall link was weak: median happiness at household incomes of $15,000 and $250,000 differed by about five points on a 100-point scale.²

The authors stress that their data are cross-sectionalcross-sectional: Describes a study that measures everyone in its sample at a single point in time. Because the possible cause and the outcome are recorded together, it can show that two things occur together but not which of them came first.Full entry in the glossary, describing associations rather than effects. As a possible reason the unhappiest level off, they point to miseries such as heartbreak, bereavement and clinical depression.²

This income threshold may represent the point beyond which the miseries that remain are not alleviated by high income.

The truce has drawn criticism. In a 2024 letter, the researchers Julia Rohrer and Sebastian Wenz argued that the reanalysis did not adjust for other factors that could explain the link, and that its “least happy” line describes the spread of scores at each income, not a fixed group of people.⁴ For a reader, that makes the flattening a pattern in the data rather than a rule about any one person. A separate 2024 paper by Mikkel Bennedsen in Economics Letters let the data choose where a plateau might fall and found emotional well-being flat above about $200,000 a year, while cautioning that more research is needed before firm conclusions.⁵

The lesson is about what money can reach. It can pay for a repair, a cushion or a shorter commute. On this evidence, it is unlikely to undo grief or depression by itself.

When money arrives by chance: lottery winners and cash transfers

Lottery prizes offer a cleaner test than income surveys, because luck, not a person’s job, health or effort, decides who gets the money, which makes a big win close to a quasi-experimentalquasi-experimental: Describes a study that compares a group that got something with a group that did not, where the researcher did not do the assigning: a policy, a rollout or people's own choices did. Because the groups were not formed at random, they may have differed before it started.Full entry in the glossary. In a study published in 2020, Erik Lindqvist, Robert Östling and David Cesarini surveyed Swedish lottery players 5 to 22 years after a major lottery event and compared large-prize winners with matched controls, following preregistrationpreregistration: Filing a study's hypotheses and analysis plan publicly before the data are collected or examined. It stops a planned test from being rewritten once the results are in, so a reader can tell a real confirmation from a hunt through the data.Full entry in the glossary procedures. Winners reported higher life satisfaction for more than a decade, with no sign of the gain fading. The effects on happiness and mental health were significantly smaller, and satisfaction with their finances stood out as an important route to the long-run gain.⁶

That loosely echoes the 2010 split: the gain showed up most in how winners judged their lives, especially their finances, and less in how happy they said they were.

Myth

Big lottery winners end up no happier, or even worse off.

Fact

In a preregistered Swedish study, large-prize winners reported higher life satisfaction than matched players for over a decade; effects on happiness and mental health were smaller.

Evidence from poorer countries points the same way. A 2022 systematic review and meta-analysis of cash-transfer studies in low- and middle-income countries found small but statistically significant gains in recipients’ self-reported well-being and mental health after an average follow-up of about two years, and larger transfers went with larger effects.⁷ Small here means noticeable across a population and modest for any one household.

Putting the research to work on your own money

The research does not hand you an income to aim for, but it shows when money is most likely to help. Each point below describes averages from the studies above, not promises.

1. Count worries, not dollars. In Killingsworth’s data, a sense of control and fewer problems paying bills accounted for much of the income link.³ When comparing two offers, list what each would change: an overdraft you could clear, a commute you could shorten, more say over your hours. If bills are the pressure point, building a budget around your fixed costs comes first.
2. Expect a better life rating more than a happier mood. Lottery winners gained more in life satisfaction than in reported happiness.⁶
3. How you spend may matter too. In a 2003 set of surveys and experiments, people said purchases made for an experience made them happier than material ones.⁸ Large registered replications published in 2020 supported the idea that spending on others promotes happiness, but found the effect small or absent depending on how it was tested.⁹ Later articles in this series look at each.
4. Keep income off the scorecard. People who most equated money with success were less happy on average, whatever they earned.³

Why richer countries may not get happier: the Easterlin paradox

Whether economic growth makes whole countries happier is still disputed. Richard Easterlin’s paradox holds that at a point in time richer people and richer countries are happier, but over ten years or more a country’s happiness does not rise as its income grows. In a 2010 paper he led, which extended the pattern to developing and former socialist countries, he agreed that happiness falls in recessions and rises in recoveries, and attributed the long-run standstill to material aspirations that rise with income, through social comparison and adaptation.¹⁰

Betsey Stevenson and Justin Wolfers argued the opposite in 2008. Across many datasets, they found a clear link between national income and average well-being, no satiation point, and economic growth associated with rising happiness over time.¹¹ Easterlin replied that their analysis mistook the short-term relationship for the long-term one.¹⁰

The personal version of the argument is familiar, though what follows is an illustration, not a finding. A salary that felt generous five years ago can feel ordinary once rent, habits and friends’ lifestyles have caught up with it. Whether comparing your pay with other people’s matters more than the amount itself gets its own article later in this series. Meanwhile, notice when it is the comparison, not your money, that has changed.

When unhappiness is not about money

Some unhappiness has causes that income does little to ease, as the 2023 reanalysis suggested, and needs help rather than a raise. The routes below are listed by urgency.

• Now: anyone with thoughts of suicide or self-harm should reach out immediately. For US readers, the National Institute of Mental Health lists the 988 Suicide and Crisis Lifeline, reachable by call or text, and 911 for life-threatening emergencies.¹² NHS advice in the UK is to phone 999 or head to A&E when there is a risk to life; in England, urgent mental health support comes through NHS 111, online or over the phone (its mental health option), and Samaritans can be reached on 116 123.¹³ Anywhere else, dial the local emergency number.
• Soon, for low mood: NHS guidance in the UK is to see a GP when low mood has lasted more than 2 weeks, or when you are finding it hard to cope.¹⁴ In other countries, a family doctor or primary care clinic is a sensible first stop.
• Soon, for money worries: according to the US Consumer Financial Protection Bureau, credit counseling organizations are usually non-profit, and working with a counselor can be a way to get free or low-cost advice.¹⁵ UK readers can get free, impartial debt advice from the government-sponsored Money and Pensions Service.¹⁶ Elsewhere, look for a free debt-advice service from a government agency or a charity.
• Routine, for money decisions: a choice that depends on your own circumstances, such as a job change or what to do with a large sum, is one to talk through with a regulated or fee-only financial adviser.

The bottom line

Money and happiness are linked, but weakly, and the link has proved more durable than the 2010 plateau suggested: for most people, feeling better goes with earning more well past $75,000, while the least happy gain little beyond a comfortable income. The gains are largest where money removes hardship and adds control, and they show up more in how people judge their lives than in how their days feel. On this evidence, extra money seems to help most when it ends a worry; the unhappiness income cannot reach calls for other kinds of help.