There is a long-standing romantic notion that money does not bring happiness. Woody Allen famously said that it doesn’t bring happiness, but it creates a sensation that is very difficult to distinguish from complete happiness.
In this vein, some studies suggest that the relationship between money and happiness is not linear, and that beyond a certain income threshold (e.g., $80,000 USD), there is no positive effect on happiness.
However, the 2023 study «Income and Emotional Well-Being: A Conflict Resolved,» which includes the late Daniel Kahneman, suggests otherwise, stating that unlimited money generates unlimited happiness (https://www.pnas.org/doi/10.1073/pnas.2208661120).
Here are the main conclusions:
- Positive and Continuous Relationship: The study finds a continuous positive relationship between income and emotional well-being. Contrary to previous studies that suggest a diminishing return, the results show that higher incomes are associated with higher levels of emotional well-being, even at high income levels.
- Diminishing Returns: Although emotional well-being increases with income, the study confirms that this increase slows as income rises. Nevertheless, the impact of higher income remains significant, even at the higher ends of the income scale.
- Emotional Variability: The study also reveals that emotional variability among individuals can influence perceptions of how income affects well-being. The results suggest that the higher the income, the more consistent the reported levels of emotional well-being among participants.
In light of these findings, policies aimed at improving the population’s well-being should be reconsidered. It is crucial to account for the significant role of income, especially in the context of ensuring basic income levels to maximize individuals’ emotional well-being.