Research shows that there is a correlation between income and happiness, but this relationship is complex and not straightforward. According to a study by Kahneman and Deaton (2010), happiness increases with income up to a certain point, after which the effect diminishes. This means that there is a threshold above which additional income does not significantly contribute to more happiness. On the other hand, research by Killingsworth (2021) indicates that happiness continues to increase with income, even at higher income levels. However, this effect is stronger among people who are already happier.
A joint reanalysis of these studies showed that the level of happiness mainly stabilizes among the least happy 20% of people. For the rest of the population, happiness continues to increase with higher income, and among the happiest people, this effect even accelerates. This means that the relationship between income and happiness is not the same for everyone and depends on how happy someone already is. The misinterpretation of earlier studies may partly be due to limitations in research methods and the way happiness was measured.
Money is not the only factor that contributes to happiness, but a higher income can help. It provides financial security, better healthcare, and more opportunities for relaxation and personal growth. However, the pursuit of more money can also lead to constant comparison with wealthier people, which can make you unhappy. Therefore, it is important to find a balance between financial goals and other sources of happiness, such as friendships and personal fulfillment.
