Does happiness correlate with income?
According to a 2021 study out of University of Pennsylvania’s The Wharton School, people’s well-being rises with the amount of money they make, even beyond the previously accepted standard of $75,000.
Matthew Killingsworth, a senior fellow at Penn’s Wharton School, studies human happiness. He states that happiness is “something everyone is navigating all the time”. He collected 1.7 million data points on human happiness and calculated the average level of well-being for each person, analyzing its relationship to people’s income. In part, he was trying to confirm the findings of a 2010 paper that suggested that as people earn more money their well-being increases, but experienced well-being plateaus once annual household income hits $75,000.
Four correlations emerged between money and happiness:
1. All forms of well-being continue to rise with income.
“It’s a compelling possibility, the idea that money stops mattering above that [$75,000] point, at least for how people actually feel moment to moment,” he says. “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.”
Beyond that, Killingsworth’s work also provides a deeper understanding of the link between income and happiness:
2. What creates a perception of happiness must be fully understood.
Earners are happier, in part, because of an increased sense of control over life, he says. “When you have more money, you have more choices about how to live your life. You can likely see this in the pandemic. People living paycheck to paycheck who lose their job might need to take the first available job to stay afloat, even if it’s one they dislike. People with a financial cushion can wait for one that’s a better fit. Across decisions big and small, having more money gives a person more choices and a greater sense of autonomy.”
3. However, something is missed if we only define success monetarily.
Yet it might be best not to define success in monetary terms, he says. “Although money might be good for happiness, I found that people who equated money and success were less happy than those who didn’t. I also found that people who earned more money worked longer hours and felt more pressed for time.”
Though the study does show that income matters beyond a previously believed threshold, Killingsworth also doesn’t want the takeaway to enforce an idea that people should focus more on money. In fact, he found that, in actuality, income is only a modest determinant of happiness.
4. Happiness as a concept is actually the sum of several factors.
“If anything, people probably overemphasize money when they think about how well their life is going,” says Killingsworth. “Yes, this is a factor that might matter in a way that we didn’t fully realize before, but it’s just one of many that people can control and ultimately, it’s not one I’m terribly concerned people are undervaluing.” Rather, he says he hopes this research can help move forward the conversation in an attempt to find what he calls the “equation for human happiness.”
In other words, money is only one element to consider in the individual quest for success and happiness. According to Martin Seligman, universally considered the founder of Positive Psychology, states that one’s genetic makeup, life circumstances, and factors that are controllable are just a few considerations that will affect our contentment in life.
In his book Flourish, 2011, Seligman wrote on “Well-Being Theory”, and said, with respect to how it is measured:
Each element of well-being must itself have three properties to count as an element:
- It contributes to well-being.
- Many people pursue it for its own sake, not merely to get any of the other elements.
- It is defined and measured independently of the other elements.
Thus, he concluded there are five elements to PERMA, or “well-being”
- Positive emotion—Can only be assessed subjectively
- Engagement—Like positive emotion, can only be measured through subjective means. It is presence of a flow state
- Relationships—The presence of friends, family, intimacy, or social connection
- Meaning—Belonging to and serving something bigger than one’s self
- Achievement—Accomplishment that is pursued even when it brings no positive emotion, no meaning, and nothing in the way of positive relationships.
Final thoughts and forward thinking
Ultimately, we all have to make our own decisions as to how we value our work and its rewards, monetary and otherwise.
How do you correlate cash and contentment?
Laura Milo DeAngelis | Owner and Founder | Bergen Concierge Service LLC