Can money buy happiness? A review of new data

Abstract

Everyone knows the adage “money can’t buy happiness,” although few of us seem to believe it. The best-known theory on this topic is that money actually can buy happiness, but only up to a point. This comes from a study by two Nobel Laureates, Daniel Kahneman and Angus Deaton (2010), which found that emotional wellbeing rises with income. However, it rises logarithmically. That is, as an individual’s income increases, their wellbeing increases at a slower and slower rate. And after income surpasses about $75,000 per year, Kahneman and Deaton’s data suggests, wellbeing stops increasing altogether. However, new research from Matthew Killingsworth challenges this finding.