FA
When it comes to money buying happiness, more is better. That’s according to new research from a senior fellow at the Wharton School who has argued that the correlation between wealth and well-being does not plateau once incomes reach a certain point.
Matthew Killingsworth, who studies the causes of human happiness, said both millionaires and billionaires are significantly happier than people earning more than $500,000 a year in an update to a study published last year that argued against the notion of a so-called “happiness plateau.”
“The results suggest that the positive association between money and well-being continues far up the economic ladder,” Killingsworth said.
Last year, Killingsworth was part of team of scientists including the late psychologist Daniel Kahneman, who published a study challenging a famous 2010 paper by Kahneman and economist Angus Deaton that said happiness tends to go up with incomes until about $60,000 to $90,000 a year, at which point it flattens.
Kahneman and Killingworth reanalyzed that work and found the correlation between money and happiness extended to people with salaries up to at least $500,000 a year.
Higher Satisfaction
The new research, which is being self-published by Killingsworth, found people with a net worth in the millions or billions reported an average life satisfaction rating between 5.5 and 6 out of 7, compared to a rating of about 4.6 for those earning around $100,000 a year and just above 4 for those earning about $15,000 to $30,000 a year.
That makes the difference in happiness between the richest and middle-income groups almost three times larger than the difference between middle- and low-income groups, Killingsworth said.
“The magnitude of the difference between the low and high end of incomes is gigantic,” he said. “Within the bounds of what money can explain, a huge amount of that difference occurs above the median income.”
The findings were made combining data used in Killingsworth’s earlier research with that from a 2018 study of 4,000 people with a median wealth of $3 million to $8 million from 17 countries, and a 1985 survey of the Forbes list of wealthiest Americans. The earlier studies asked “virtually identical” questions as Killingsworth, with individuals asked to rate the degree to which they are “satisfied” with life.
