Money can actually make you happier, says top economist

A Nobel prize-winning economist and psychologist, famous for his work claiming that money doesn’t make you happier, has changed his mind.

Daniel Kahneman’s new study, undertaken with two other prominent researchers, surveyed 33,391 adults who live in the US, are employed and have a household income of least $10,000 a year.

It found that “happiness continues to rise with income even in the high range of incomes” for the majority of people, “showing that for many of us, on average having more money can make us increasingly happier”, reported The Washington Post.

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This finding “contradicts a widely publicised study from 2010” by Kahneman and Angus Deaton, said New Scientist. That research was based on data from 1,000 people in the US who had been surveyed daily between 2008 and 2009 about their levels of happiness.

It found that “the more money someone makes, the happier they are, but the curve flattens between $60,000 and $90,000 a year”, added the magazine. According to the initial study, incomes higher than this don’t increase happiness any further.

But now Kahneman, Matthew Killingsworth – who in a 2021 study found no “happiness plateau” at all when researching the same topic – and Barbara Mellers have found that Kahneman and Deaton’s original study was based on a survey that “didn’t accurately measure people’s happiness levels”, reported New Scientist. It probably judged people to be far happier than they actually were, according to Killingsworth. “Anyone who wasn’t miserable was giving the highest possible answer [in the survey],” he told the magazine.

The new paper, which the economists describe as an “adversarial collaboration”, did find a plateau, but only among the unhappiest 20% of people, and only then when they start earning over $100,000.

“In the simplest terms, this suggests that for most people larger incomes are associated with greater happiness,” Killingsworth said in a statement about the study.

“The exception is people who are financially well-off but unhappy. For instance, if you’re rich and miserable, more money won’t help. For everyone else, more money was associated with higher happiness to somewhat varying degrees.”

According to Killingsworth, the main reason higher income seems to be linked to happiness is the fact that people feel a greater sense of control over their lives. “Money allows people to live the life they want to live,” he told New Scientist.