Commentary: Science suggests money does buy happiness – and not just up to a point

Deaton conceded at least some of this point in subsequent work that he did with his Princeton University colleague and fellow Nobel Prize winner, the psychologist Daniel Kahneman. In this work, the Nobel duo distinguished between two sorts of well-being – evaluative well-being (how you evaluate your life in retrospect) and moment-to-moment well-being (how you evaluate your life in real time).

They discovered that while evaluative well-being continues to rise with income, experienced well-being reaches a plateau at about US$75,000 a year.

One possible interpretation of this discrepancy is that, after a certain point, money is just a way of keeping score. You can’t buy any more day-to-day satisfaction (indeed the pursuit of money may even prevent you from enjoying your gains) but you can at least gloat that you’re doing better than Mr Jones.

THERE MIGHT BE NO UPPER LIMIT

But the latest academic work chips away at the idea that there is a plateau, just as previous academic work chipped away at the idea of happy peasants and miserable bourgeois.

Matthew Killingsworth, of the University of Pennsylvania’s Wharton Business School, has amassed a sample of more than one million real-time reports of experienced well-being in the US (compiled by getting people to report their day-to-day well-being on their smartphones).

In a 2021 paper, he studied 33,000 people who provided such real-time evidence and discovered three things: That there is no evidence of a divergence between evaluative and real-time well-being; that real-time well-being rises linearly with income and, third, that the slope is just as steep above US$80,000 a year as below.

The idea of a happiness plateau is for the birds: Higher incomes are clearly associated with both feeling better on a day-to-day basis and being more satisfied with your life overall.

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