If you want to know the secret to achieving happiness, the answer may be found in your bank account — as long as you have enough money.
The relationship between happiness and money is being given a fresh look by economists and scientists, and new research suggests that billionaires are far happier than people who are simply wealthy. In other words, new research by Matthew Killingsworth, a senior scholar at the Wharton School of the University of Pennsylvania, suggests that the more money you have, the more happiness you’ll have, and there may be no upper limit.
Killingsworth’s latest research: 2023 Survey The study overturned a commonly cited 2010 analysis that found people’s happiness peaks at an annual income of about $75,000, or about $110,000 in today’s inflation-adjusted dollars. The 2023 study found that happiness increases with income, but the researchers didn’t have data on people earning more than $500,000, so it was unclear whether happiness peaks at that income.
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Killingworth has now found that the ultra-rich — those with assets between $3 million and $7.9 million — are even happier, with life satisfaction rates far exceeding those of people earning just six figures, suggesting that happiness continues to rise along with the size of one’s bank account, with no apparent upper limit.
“The money-happiness curve continues to rise well above $500,000 per year,” Killingworth told CBS MoneyWatch in an email. “I think a big factor is that when people have a lot of money, they feel like they have more control over their lives.”
“I think this is a much more fundamental and deeper psychological issue than just buying things,” he added.
Measures of Happiness
The new study is based on surveys that asked people to rate their life satisfaction on a scale of 1 to 7, with lower numbers representing “not at all satisfied” and higher numbers representing “very satisfied.” Low-income earners — those making less than $30,000 a year — gave their life an average rating of 4, while those making around $500,000 a year gave it a rating of 5 or higher.
But millionaires rated their life satisfaction closer to an average of 6.
One question raised by the new research is whether wealth has a different effect on happiness than income: For example, wealth might allow people to invest in themselves and their families, such as funding their children’s college education or buying a bigger home in a better school district.
While a high income can certainly help with these goals, research shows that even high earners can feel financial stress. For example, an April survey by the Federal Reserve Bank of Philadelphia found that one-third of people making $150,000 or more a year worry about making ends meet, a higher percentage than those making between $40,000 and $149,999 a year.
“It remains to be seen whether the combination of wealth and income explains why the wealthy are so happy,” Killingsworth said. “I suspect having wealth helps, but I can’t say for sure.”
Whether happiness eventually plateaus at some level of wealth or income is “hard to say,” but the company is working on further analysis to explore that question, he added.
Happiness and the 99%
But whether billionaires are happier than millionaires, for example, is not the key conclusion to take from his study, Killingworth said, noting that the percentage of Americans with wealth beyond what was found in his analysis is “fairly small.”
“At some point, whether 0.1 percent or 0.3 percent of people cross some threshold is only going to be relevant to a very small number of people, so I think showing the patterns we find here gives us a pretty good idea of what we should be worried about,” he noted.
Given that the median annual income in the United States is about $75,000, most Americans have salaries that are associated with low life satisfaction. To be in the top 1% of earners in the United States, Must have annual income That’s 10 times that amount, about $788,000.
“For example, it doesn’t appear that half the population has already reached the point where more money doesn’t mean anything,” Killingworth said. This could be an important issue for policymakers who want to improve public happiness, he noted, because research suggests that helping low-income people improve their economic situations could have a “huge return on investment.”
“People who don’t have much money to begin with seem to be much happier if they have a certain amount of money,” Killingworth said. “Economic trends in the United States seem to be moving in the opposite direction, with the poorest people benefiting the least and the richest people benefiting the most over the last few decades.”
Do you need money to be happy?
Absolutely not, Killingworth said.
“One important thing that’s not clear from this paper alone is that money is just one important factor in happiness,” he said. “So I think it’s important for everyone — policymakers, business leaders, and the general public — to keep in mind that there are many other important factors besides money.”
And focusing solely on making money while ignoring other issues could do more harm than good, he added. For example, Pew Research Center found that connections with friends and family may be more important to happiness, with Americans saying they are more meaningful to them than material wealth.
“It’s entirely possible to be rich and miserable, and to be poor and happy,” Killingsworth says, “mainly because there’s a lot more to happiness than just money.”
“But all else being equal, people with more money tend to be happier,” he added.
