The study revealed that people who make more money have a greater sense of control, freedom, and security that is missing for those who make less money. This directly correlates to feeling more satisfied in life and being happier overall.
“When you have more money, you have more choices about how to live your life,” said researcher Matthew Killingsworth. “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.”
Autonomy yields more happiness
To get a clear picture of how money can impact happiness, Killingsworth assessed two key components: how participants feel in-the-moment and how they feel about life overall. At the start of the study, the participants completed surveys that gauged their general well-being in life.
Then, participants downloaded an app that Killingsworth created that logs in-the-moment well-being; the participants received several prompts at different times each day, and they reported on how they were feeling. The researchers compared the results from both of these assessments with the participants’ annual income to determine how money affects happiness.
“This process provided repeated snapshots of people’s lives, which collectively gives us a composite image, a stop-motion movie of their lives,” said Killingsworth.
Well-being rises with income
Ultimately, the researchers learned that participants who made the most money were happier both in the moment and collectively. However, the biggest takeaway from this study might be that these findings disprove an old belief that once someone hits the $75,000 a year mark, happiness levels out. This study actually found that there is no benchmark; the more money consumers make, the happier they’re likely to be.
“It’s a compelling possibility, the idea that money stops mattering above that point, at least for how people actually feel moment to moment,” Killingsworth said. “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.”
Money is just one factor
Though money was found to be a source of happiness for the participants, especially the more they earned, the researchers warned against placing all measures of success and happiness in income. They learned that participants who focused solely on money as their source of happiness were actually unhappier.
The researchers hope that consumers understand that money is just one piece of the puzzle, and that happiness can come from just about anywhere.
“If anything, people probably overemphasize money when they think about how well their life is going,” Killingsworth said. “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.”