Despite the old expression stating otherwise, it turns out that money actually can buy happiness – with a new study revealing that extremely high net worth individuals are “substantially and statistically significantly happier” than even those with incomes in excess of $500,000 a year.
The analysis – conducted by senior Wharton fellow Matt Killingsworth – disputed not only the traditional belief that money isn’t directly correlated with happiness, but also a commonly-cited statistic that happiness plateaus at a certain income threshold.
“The difference between wealthy and middle-income participants was nearly three times larger than the difference between the middle- and low-income participants, contrary to the idea that middle-income people are close to the peak of the money-happiness curve,” Killingsworth wrote.
Perhaps somewhat counterintuitively, the difference in happiness between middle-income and wealthy study participants was actually greater than the difference between middle-income and low-income individuals.
“The difference in life satisfaction between the wealthy and those with incomes of $70-80,000,” the analysis explained “was nearly three times as large as the difference between $70-80,000 and the average of the two lowest income groups.”
While this distinction is stark, however, wealthy people still tend to be noticeably happier than their low income counterparts. The analysis indicates that the poorest people tend to report lower levels of life satisfaction than more affluent individuals.
In past analyses, Killingsworth partially attributed this difference to the decreased control associated with having less wealth.
“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,” he told PennToday in 2021.
“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.”