Once you hit an annual household income of $75,000 (£62,000), earning more money didn't make you any happier. In 2021, the happiness researcher Matthew Killingsworth released a dissenting study, showing that happiness increased with income and there wasn't evidence of a plateau.
The research between salary and happiness suggests similar insights. Even those on the Forbes 100 wealthiest were only slightly happier than the average Americans, according to a study by Ed Diener of the University of Illinois.
And, interestingly, income may not have as much bearing on that at all. Money, it seems, can't buy everything. In fact, new research shows that richer and poorer people are generally as happy as each other. Where they differ is in their level of sadness: higher-income individuals are markedly less sad on a daily basis.
Economist Richard Easterlin conducted studies on income and happiness in the 1970s and found that richer people are usually happier than poor, but only to a certain income level. At some point, the amount of money people made compared to their peers became more important in determining their happiness, Easterlin found.
Their research confirmed what we have discussed above: people with extreme wealth were happier than those with moderately high wealth. Specifically, they showed that people with a net worth of more than $10 million are happier than people with a net worth of $1 million or $2 million.
One study said happiness peaked at $75,000 in income.
Although the mass media has convinced many Americans that wealth leads to happiness, that’s not always the case. Money can certainly help you achieve your goals, provide for your future, and make life more enjoyable, but merely having the stuff doesn’t guarantee fulfillment.
You can have depression regardless of how much money you have or make. Although money makes some aspects of life easier, there are other factors that play into mental health and well-being. The wealthy can get depressed the same way people living in poverty can experience depression.
While wealthier people do give more in absolute terms, it is not necessarily the case that the types of people who are wealthy are inherently more generous - households donate more as their own income and wealth increase.
A growing literature has studied empirically whether the rich are more selfish than the poor, both in behavior and in underlying preferences. The evidence is mixed: Some studies report more selfishness among the rich (5–7), others that the rich are not different from the rest of society or even less selfish (8–11).
In addition to those well-documented costs, it turns out that the poor not only experience more stress than the rich on a daily basis, but it is also more likely to be “bad” stress, which can have long-term effects on the ability to plan for and invest in the future.
The average millionaire is 57 years old. As of 2013, 42% of millionaires are baby boomers (between 57 and 75 years of age), the majority of any age group. As of 2013, 19% of millionaires are millennials (between 18 and 31 years of age).
In fact, his research reveals that in modern Western society there is little difference in the numbers of children born to rich and poor. Lawson says that in developed countries we are all on the same side of the demographic transition (see graph), and family size tends to be small for all income levels.
Regardless of other living conditions, a higher income was consistently linked to a reduced self-rated level of loneliness. From this study, it's dangerously simple to conclude that more is always better.
People born into higher social classes are more overconfident and have "an exaggerated belief" that they will perform better at certain tasks than others, a perception not shared by their lower-class counterparts, a new study published Monday in the prestigious Journal of Personality and Social Psychology found.
We've been finding across dozens of studies and thousands of participants across this country that as a person's level of wealth increases, their feelings of compassion and empathy go down.
Sudden Wealth Syndrome (SDS) refers to a psychological condition or an identity crisis in individuals who have become suddenly wealthy. Sudden Wealth Syndrome is characterized by isolation from former friends, guilt over their change in circumstances, and extreme fear of losing their money.
When it comes to being wealthy, research has found that if you're rich you're likely to live longer, too. Now this isn't because wealthier people have better or healthier genes. Also read: Why do the rich want more money?
The impact of wealth on mental health
Behind many wealthy lifestyles lies suffering, pain, childhood trauma, addiction, and depressive states. Riches may provide for a privileged education and upbringing, but children in vastly wealthy families often grow up feeling isolated and unloved.
After controlling for age, gender and individual socioeconomic status, researchers found residents of wealthier neighborhoods were likelier to be materialistic, spend compulsively and manage their money poorly than those living in less well-off areas.
Several studies have shown that wealth may be at odds with empathy and compassion. Research published in the journal Psychological Science found that people of lower economic status were better at reading others' facial expressions—an important marker of empathy—than wealthier people.
In conclusion, wealth and health are both important and interrelated. While wealth can provide security and opportunities, good health is essential for enjoying those opportunities and living a fulfilling life.
“In the simplest terms, this suggests that for most people larger incomes are associated with greater happiness,” says Killingsworth, a senior fellow at Penn's Wharton School and lead paper author. “The exception is people who are financially well-off but unhappy.
Not really. While money may not buy happiness, it's still an important part of life. Financial security allows people to worry less over possible emergencies and provides more opportunities. But at the same time, it's not the amount of money you have that counts, but rather how you perceive it and what you do with it.