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Weekend Reads | Income and Emotional Well-Being

by Kevin Schofield

There’s an old adage: “Money can’t buy happiness.” Unlike most sayings, this is one researchers can try to verify — and they have, though with conflicting results. This weekend’s read is an attempt to resolve that conflict.

One notable study found that people with more money tend to be happier, and the percentage of them who experience happiness increases with the logarithm of their annual income; meaning there were more happy people making $60,000 than $30,000, and the increase in happiness was about the same jumping from $60,000 to $120,000, and again between $120,000 and $240,000. A second study found the same logarithmic increase, but only up to a point: At an income of around $75,000, it flattened out, and having a higher income didn’t increase the number of happy people.

Often, in the research community, this kind of conflicting result leads to a string of passive-aggressive diatribes posing as academic communication in which the lead researchers cast aspersions on each other in an attempt to discredit the other’s work and uphold their own. But in this case, a wonderful thing happened: The researchers got together and formed an “adversarial collaboration” in which they worked side by side to find out why they came up with different results from studying the same phenomenon. Their conclusion: Both were right, and both were wrong — in different ways, of course.

First, they were using different measures of happiness: One was using an answer to the question “how do you feel right now?” while the other was “experience sampling” — asking whether an individual was experiencing specific feelings associated with happiness or sadness. Both were accurately portraying the data they had gathered, but they provided different windows into the complexity of someone’s happiness level. 

But their more important insight was that both of them had made one key assumption that had turned out to be wrong: They both assumed the effect of having more income on your happiness would be independent of how happy you already were. At every income level, there are people across the entire spectrum of happiness levels, because income is far from the only thing that determines happiness (though, admittedly, there are fewer unhappy rich people). There are people suffering from illness, chronic pain, or clinical depression. Some have good or bad relationships dominating their lives or are dealing with heartbreak, bereavement, or loneliness. War, economic recessions, and pandemics can weigh heavily on people, as can their hope for the future (or lack thereof). Both researchers had assumed increased income would have the same effect on both happy and unhappy people — and that turned out to be very wrong and the essence of why their original results were conflicting.

Once they went back and delved deeper into their data sets, they discovered a complicated and nuanced view of the relationship between income and happiness. At incomes less than $100,000, unhappier people gain more happiness from an increase in income than happier people do. But strangely, at incomes above $100,000, the reverse is true: Happier people gain more happiness from an increase in income than unhappier people. This explains the researchers’ original conflicting findings: If you average across all levels of happiness, it looks like a continuous increase in happiness at all income levels, but if your sample includes more unhappy people, then the curve flattens out at higher incomes. Neither is truly a correct view of what is going on, however.

“Fig. 2. Emotional well-being of the 15th, 30th, 50th, 70th, and 85th percentiles of the person-level happiness distribution in MK, calculated within each income category. Slopes were calculated below and above 100k, using quantile regression.” Killingsworth, M. A., Kahneman, D., & Mellers, B. (2023). “Income and emotional well-being: A conflict resolved,” Proceedings of the National Academy of Sciences of the United States of America, 120(10), e2208661120.; used via a Creative Commons license.

So can money buy happiness? Yes, but not very much of it; the researchers note that the effect is actually very small, and money won’t turn an unhappy person into a happy one, because all the other factors that affect one’s overall happiness have a much larger impact. To put it into perspective, the researchers note that quadrupling someone’s income has the same effect on their happiness as being a caregiver or having a good weekend; twice the effect of being married; and one-third the impact of a headache.

Like any good research study, this one leaves many interesting questions unanswered and as prompts for future research. Why is an income of around $100,000 the magic inflection point, below which unhappy people gain more happiness and above which happy people gain more happiness? Also, what are the differences between people at the same income level that have the most impact on their happiness? For example, do race and ethnicity as well as health and disability issues have an impact on level of happiness, and on how much happiness might be gained from increased income?

But let’s not forget that the study is also an opportunity to celebrate the success of an “adversarial collaboration,” representing the best of what a community of researchers can produce: Different people investigate the same issue, come up with conflicting results, then work together to find the truth — one more complex than either of them had seen individually.

Income and emotional well-being: A conflict resolved

Kevin Schofield is a freelance writer and publishes Seattle Paper Trail. Previously he worked for Microsoft, published Seattle City Council Insight, co-hosted the “Seattle News, Views and Brews” podcast, and raised two daughters as a single dad. He serves on the Board of Directors of Woodland Park Zoo, where he also volunteers.

📸 Featured image by boonchoke/Shutterstock.com.

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