Money actually can buy you happiness — if you make enough of it annually.
That’s according to Matthew Killingsworth, a senior psychology fellow at The Wharton School of the University of Pennsylvania, whose research finds that people with high salaries often report higher levels of day-to-day and overall life fulfillment. That may seem unsurprising, but previous research found that the positive correlation between annual salary and everyday happiness tapered off around $75,000 per year.
Killingsworth says that old finding is wrong: Instead, he asserted in a paper last year, the correlation doesn’t appear to ever plateau.
“What I find is that [the correlation] basically rises steadily in a slightly complicated way … proportional changes have an equal effect,” Killingsworth tells CNBC Make It. “It doesn’t mean that $1 matters just as much to Jeff Bezos as it does to someone earning minimum wage. It means 10% more money might have the same effect for everybody.”
In his research, Killingsworth set out to investigate that $75,000 per year figure. It comes from a 2010 Princeton University study, which came to the conclusion — taught in Psychology 101 classrooms around the country — that higher incomes don’t necessarily make people any tangibly happier in their everyday lives.
Killingsworth’s newer research shows that personal fulfilment can continually increase alongside annual income, perhaps indefinitely. Money and happiness are “probably not mutually exclusive,” he says, but people with higher incomes often feel they have more control over their lives.
“When you have money, you have options, and that can manifest in different ways,” he says. “Do you buy organic raspberries at the grocery store? Can you quit the job you don’t enjoy, or do you hang on because you can’t afford to be unemployed? … Do you end a relationship with someone that you’re financially entangled with?”
Much like the 2010 study, Killingsworth asked his 33,000-plus research participants to gauge their happiness levels on two factors: evaluative wellbeing and experienced wellbeing, or in other words, how you feel your life is going versus how you feel from moment to moment.
But while the Princeton researchers asked people to report their emotions from memory, Killingsworth used a custom app that randomly asked participants each day to record how they were feeling at that exact moment.
“People’s memories are imperfect,” Killingsworth says. “One of the advantages by design of this study is I’m getting as close as possible to pure measurement, which is, ‘How do you feel right now?’ People can answer that pretty easily, whereas if you say, ‘How did you feel yesterday? How did you feel over the last month?’ people have a much more complex mental calculation.”
Notably, he says, his findings have a major — and somewhat obvious — caveat: Money is most likely to influence your happiness if you highly value financial security. Many of the participants who reported the most happiness with high salaries also said they valued the ability to spend freely on their families, travel, classes or even medical bills.
The inverse notion was true on the opposite end of the scale.
“If I look at all the people who said money isn’t very important, then whether they had a low income or average income or really high income barely mattered for their happiness,” Killingsworth says. “Whoever in the survey said money doesn’t matter was actually right.”
The study has led him to a conclusion, he says: More money does, in fact, buy happiness – but it isn’t the secret to happiness.
“I don’t see any magic number. It’s essentially more is better,” Killingsworth says. “I wouldn’t advise to take second or third jobs because … [money] is just one of many inputs, one item in the happiness portfolio.”
Sign up now: Get smarter about your money and career with our weekly newsletter
Don’t miss:
Do these 4 things every day to be happier and more resilient, according to mental health experts
The psychology behind why you spend so much money on Amazon Prime
