How Much Money do the Happiest People in the World Make?

Oct 31

By Amanda Da Silva, B.Hkin, B.Ed, and M.Ed

5-minute read

Can money buy happiness? Are wealthy people happier than those who make less?

This question has been widely asked in contemporary society.

The belief that people who have more money lead better lives is a commonly held one. From an economist's point of view, money can be used as a means of exchange to fulfill a person’s needs.

So, in this context, money can buy happiness.

The correlation between happiness and income cannot be denied. There has been expensive research on the topic and evidence indicates that wealthy people tend to be more satisfied with their lives and benefit from increased well-being.

Richard Easterlin, a professor of economics at the University of Southern California was the first modern economist to investigate the relationship between income and happiness. His findings indicate that not only people with higher incomes are happier but that their happiness plateaus at a certain level despite the continued growth of their income.

This is known as the happiness-income paradox [1].

Is There a Magic Number When It Comes to Income and Happiness?
Is the Happiness-Income Threshold a Myth?
Purpose Is More Important Than Wealth to Be Happy
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Is There a Magic Number When It Comes to Income and Happiness?

Psychologist Daniel Kahneman and economist Angus Deaton uncovered similar findings in their study on income, evaluation of life, and emotional well-being.

Of all the interesting conclusions they arrived at, the magic number of $75,000 as an annual income is linked to peak happiness. In simpler terms, people who make that much are as happy as anyone can get. With that said, they stated that money can buy life satisfaction but not happiness.

On the other hand, individuals with low income have both a low life evaluation and low emotional well-being [2]. However, a more recent study from Purdue University found a different “magic number”, as it stated the ideal income point for life satisfaction is $95,000 while the ideal income point for **emotional well-being** falls somewhere between $60,000 and $75,000.

This study tells us that when people earn more than $105,000, their happiness declines [3].

Is the Happiness-Income Threshold a Myth?

While previous researchers all tended to agree on the “happiness-income setpoint theory” but disagree on the “magic number” it takes to be happy, Matthew Killingsworth, director of TrackYourHappiness.org confirms that money does buy happiness.

In his 2021 research paper, he states that there is no dollar value at which income stops influencing an individual’s life satisfaction and well-being. Killingsworth says that wealthy people can be perceived as happier because they have more control in their lives, something that became quite evident during the COVID-19 pandemic.

“When you have more money, you have more choices about how to live your life. 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.”[4]

Be that as it may, Matthew’s research tells us that people who equate money and success as well as people who work long hours for more money all tend to be less happy than their peers. Even though this study shows there is no threshold for happiness as it relates to income, Killingsworth goes out of his way to demonstrate that money is only a small determinant of happiness and that we shouldn’t overemphasize its importance in the grand scheme of things.

Think about a past event when you’ve risen above a challenge, or think about others who have been able to do the same. It’s important to remember that stress is only as powerful as you allow it to be.

Purpose Is More Important Than Wealth to Be Happy

The pandemic has pushed many people to re-evaluate their lives in terms of personal fulfillment.

The great resignation we did and continue to witness shows us that people are more interested in living according to their values and pursuing a purpose that aligns with their authentic selves.

Even the ones who find themselves **stuck** and trying to figure out which way to go and how to proceed with their lives are breaking free from the thought of basing **happiness** on money and income.

We’re all becoming more aware of the hedonic adaptation phenomenon.

After a positive or negative event and following the increase of positive or negative feelings, we do return to a relatively stable level of affect [5]. So, it’s critical that we override our need to compare ourselves to others and our inclination to match their standards of living.

Instead, we should all strive to make decisions based on our core values, our purpose, and what genuinely lights us up, not what the external world and societal norms dictate.

So, if you find yourself stuck at a crossroads, unable to decide what future you’d like to pursue, sign up for one-on-one coaching with me and we can work through some of these difficulties.

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