Does Wealth Make Us Happier?

A 2023 study helps answer whether getting rich can make you a happier.

by Lawrence R. Samuel Ph.D.

Key points

Americans would like to be wealthy; and it’s assumed that wealth will lead to greater personal happiness.
Research into the relationship between wealth and happiness has not been clear.
A 2023 study showed that wealth generally leads to greater happiness but not for chronically unhappy people.

It’s fair to say that American society is heavily, if not primarily, based on the making and spending of money. A major reason we work is to generate financial assets to purchase things and experiences for ourselves and our families. Earning more money allows us to buy more and better things and experiences, which is why many of us are incentivized to work harder and smarter. This model of consumer capitalism shapes our psychological mindset and is the foundation for much of our everyday behavior.

Wealth is also perceived as freedom from the stress of financial insecurity and the means to greater opportunities in life. People feel more in control when they have some money in the bank, knowing that a nest egg will come in handy should they lose a job or experience a major health issue. Not having to worry about paying the bills also allows one to pursue personal passions; this is why we are so invested in the chase for money.

Against such a backdrop, it’s not surprising that many of us aspire to become wealthy. With wealth, we gain a certain peace of mind, have access to both quantity and quality as consumers, and, if we choose, to work less. The central assumption, however, is that achieving wealth will ultimately make us happier people; if not, why pursue it, especially since making a lot of money often requires considerable time and effort?

The underlying question is whether wealth truly does lead to greater happiness. There has been no shortage of research studies addressing this question; yet a definitive answer has remained elusive because many variables are involved. Since many of us strive to become wealthy, sometimes to the point of making it our primary life goal, getting a better sense of the dynamics between money and happiness may help.

A paper published in Proceedings of the National Academy of Sciences in March 2023 offers perhaps the greatest insight into those dynamics. The study was an “adversarial collaboration,” meaning it brought together researchers who had arrived at different conclusions in their respective previous research. A University of Pennsylvania professor, Barbara Mellers, served as an arbiter between Matthew Killingsworth of that university and Daniel Kahneman and Angus Deaton of Princeton University in this new study.

In 2010, Daniel Kahneman and Angus Deaton found that daily happiness rose as annual income increased, but above $75,000 it leveled off. In 2021, however, Killingsworth found in his own research that happiness rose steadily with income well beyond $75,000, with no such plateau. Which study was more accurate? Given the weight we assign to wealth in America, it was worth finding out in this new collaborative study.

Expectedly, perhaps, the answer to the question of whether wealth makes one happier was more complex than what we might wish. In general, higher incomes were found to be associated with continually increasing levels of happiness. Upon digging deeper into the data, however, the relationship became more complicated. Within that overall tendency, a not-happy group at each income level experienced a big jump in happiness up to $100,000 annually, which then leveled out.

“In the simplest terms, this suggests that for most people, larger incomes are associated with greater happiness,” explained Killingsworth. The exception is those people who were financially well-off but habitually unhappy. No amount of money will help woefully glum people; in other words, this itself is a key learning. “Money is not the secret to happiness,” he concluded, “but it can probably help a bit.”

While wealth is simply not in the cards for most of us, other research studies have, fortunately, shown quite a few alternative avenues to happiness that even billionaires cannot buy. These include: