The Beatles told us that “money can’t buy you love.” And recent academic studies have suggested that while modest wealth might increase our happiness, riches beyond a certain point don’t matter.
However, new research is taking aim at that notion. A study out of the University of Pennsylvania’s Wharton School finds that wealth has a more potent impact on well-being than previously imagined.
In the study, Matthew Killingsworth, a senior fellow at the Wharton School, collected more than 1.7 million data points from more than 33,000 participants who offered moment-to-moment reports of how they felt at various times during the day.
All participants were aged 18 to 65, employed and living in the U.S. They also had annual household incomes of at least $10,000 before taxes, with a small share of participants (1.2%) having incomes of more than $500,000.
Killingsworth found that money influences happiness far beyond the plateau of $75,000 that other studies have suggested as the high point for the intersection of money and increased well-being.
The surprising findings, published in the Proceedings of the National Academy of Sciences, are a result of how the new study was conducted.
Many previous studies have focused on what is known as “evaluative well-being.” This boils down to a study participant’s reported overall satisfaction with life.
While Killingsworth looked at evaluative well-being, he also focused on “experienced well-being” — how happy people actually felt from moment to moment.
Using an app created for the study, participants were asked at multiple random times each day, “How do you feel right now?” They answered on a scale ranging from “very bad” to “very good.”
At least once during the process, participants also were asked, “Overall, how satisfied are you with your life?” They answered this question on a scale of “not at all” to “extremely.”
Additionally, Killingsworth examined secondary measures of evaluative and experienced well-being.
In a Penn Today article, he says an examination of the responses offered an eye-opening corrective about the notion that happiness stops rising once you achieve an income of $75,000 per year:
“It’s a compelling possibility, the idea that money stops mattering above that point, at least for how people actually feel moment to moment. But when I looked across a wide range of income levels, I found that all forms of well-being continued to rise with income. I don’t see any sort of kink in the curve, an inflection point where money stops mattering. Instead, it keeps increasing.”
Why does money make you happier?
Killingsworth says higher levels of wealth give you an increased sense of control over life. The coronavirus pandemic provides a good illustration of this principle at work, he says. People living paycheck to paycheck who were laid off in the past year probably felt compelled to take any new job just to pay the bills.
By contrast, people with more money could afford to wait for a more attractive job. That is one example of how, when making all kinds of decisions, “having more money gives a person more choices and a greater sense of autonomy,” Killingsworth says.
How to increase your wealth
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