Happiness isn’t capped at a $75k salary

You may have heard of that widely-cited study from 2010 which theorized that happiness caps at US$75,000 (US$102,500 today), with each dollar earned past that mark making little impact on the earner's well-being—well, turns out that may not be true, after all.

Driving the news: Newer research is challenging the idea that there’s an inflection point where money stops making an impact on life satisfaction. 

  • Researcher Matthew A. Killingsworth collected real-time data from over 33,000 working-aged Americans. They were tasked with evaluating their "experienced well-being" or how they felt at that moment. 

  • They also tracked their "evaluative well-being" or how satisfied they felt about their life generally. 

Killingsworth found that more money does make life better—in some ways. 

  • Higher earners reported feeling more autonomy—they felt more control of their lives and had more choices, which led to greater life satisfaction 

  • But as people earn more money, each extra dollar “buys less happiness.”

  • For example, someone who earns $20,000 a year feels the effects of a 10% raise more than someone who makes $200,000 getting a 10% raise.

Why it matters: The study shows that more money doesn’t necessarily make people happier because they can buy more things, but because it gives them more choice and control over their life. 

  • For example, someone living paycheque to paycheque doesn't have the luxury of enjoying a brief "funemployment" stint. If they lose their job, they must take the first available job, which might be a bad one. 

Yes, but: Killingsworth's research also showed that people who related success with money scored lowest on the "happiness" scale regardless of income. 

  • And high earners felt more stress working longer hours and feeling pressed for time.

Bottom line: The trick to being happy? Don't overemphasize money's role in your life—according to Killingsworth, that's a great way to become unhappy. To quote 90’s rapper Jelleestone: Money can’t buy me happiness, but I’m happiest when I can buy what I want.