Does Money Buy Happiness? What the Research Actually Found

It’s one of the oldest questions there is: can money buy happiness? For a long time, the research seemed to offer a tidy answer, up to a point.

In 2010, Nobel laureate Daniel Kahneman and economist Angus Deaton analyzed more than 450,000 daily surveys of Americans.

Writing in the Proceedings of the National Academy, they drew a sharp line between two things. ‘Emotional well-being’ is the moment-to-moment texture of joy, stress and sadness in everyday life, rose with income but flattened out around $75,000 a year. ‘Life evaluation,’ how people rate their lives overall, keeps climbing with every added dollar.

More money bought a better-sounding life, but not better days.

The $75,000 ceiling became famous. Then it cracked. In 2021, Matthew Killingsworth gathered more than 1.7 million real-time mood reports through a smartphone app. His follow-up PNAS study found no plateau at all: day-to-day happiness kept rising with income well past $75,000, with no ceiling in sight. It was a direct challenge to one of behavioral science’s most-cited figures.

Two respected studies have opposite conclusions. Rather than feud, the researchers teamed up. In a 2023 ‘adversarial collaboration’, where rivals jointly hunt for the truth, Kahneman, Killingsworth and psychologist Barbara Mellers reconciled the numbers.

As reported by Penn Today, for the happy majority, well-being keeps rising with income. But for an unhappy minority, roughly the least content 20 percent, the gains stall near $100,000, beyond which more money changes little. The famous plateau, in other words, was not debunked so much as narrowed; it described the unhappy few, not everyone.

So does money buy happiness? Broadly yes, but with steadily diminishing returns, and it is far from the whole story. A decades-long Harvard Gazette feature on adult development found that close relationships, not income, best predict who lives a long and happy life.