The idea that money cannot buy you happiness is one of the world’s most persistent tropes. King Midas is granted his wish that everything he touches will turn to gold only to starve to death. Jay Gatsby finds that money cannot buy him Daisy’s love. Succession proved to be so popular not just because it is so cleverly written, but also because it dwells on the misery of the super-rich. The Roy children may live in a world of private planes, luxury yachts and subdued designer clothing, but their personal lives are marinated in toxicity. Better to be a happy peasant than Kendall Roy.
However, is there any real evidence for this? Or is it just a story we tell ourselves out of either resentment of the rich or a sense of social justice? We can all produce examples of rich people whose lives were ruined by horrible divorces or poor people who spend their lives doing what they love. However, anecdotes are not data and vague sentiments about just desserts are not arguments.
Over recent decades economists and psychologists have embarked on a rigorous study of happiness (or “well-being,” as they tend to put it). Their work not only explodes the myth of happy peasants and miserable millionaires. It also suggests, more tantalizingly, that there might be no upper limit to the happiness that wealth can bring.
Illustration: Mountain People
There is overwhelming evidence that up to a certain point greater average wealth produces greater average well-being. Nobel Prize-winning economist Angus Deaton in 2007 analyzed the data on life satisfaction supplied by a Gallup Organization poll of well-being in 132 countries and discovered that average life satisfaction is strongly related to per capita national income. Each doubling of income was associated with a nearly one-point increase in life satisfaction on a scale of 1 to 10.
Skeptics about the wealth-happiness equation have now retreated to a different argument: that there is a plateau in the relationship between wealth and happiness. People in rich countries might well be happier than people in poorer ones, because their basic needs are more likely to be met, the argument goes, but a point comes when the money effect diminishes and the real causes of happiness (a happy marriage or a compelling hobby) assert themselves.
Deaton conceded at least some of this point in subsequent work that he did with his Princeton University colleague and fellow Nobel Prize winner, psychologist Daniel Kahneman. In that 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 cannot buy any more day-to-day satisfaction (indeed the pursuit of money might even prevent you from enjoying your gains), but you can at least gloat that you are doing better than Mr. Jones.
However, 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. University of Pennsylvania Wharton Business School senior fellow Matthew Killingsworth has amassed a sample of more than 1 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 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.
What about people who earn well above US$80,000? In a new paper, Killingsworth compares the reported life-satisfaction of his sample of 33,000 Americans with a wide variety of incomes with the reported life satisfaction of two groups of ultra-wealthy individuals: millionaires from around the world and members of the Forbes 400 list of the richest Americans. His conclusions are well-summarized in the title of his study: Money and Happiness: Extended Evidence against Satiation. Truly wealthy people are significantly happier than the highest earners in the ordinary income group if you take “life satisfaction” as a meaningful measure of happiness. Moreover, the happiness gap between truly wealthy people and middle-income earners is three times as large as the happiness gap between middle and low-income groups. We not only get happier as we move from the middle-income herd to the Succession crowd, but we get a lot happier.
Killingsworth’s study is not perfect: There is such a shortage of evidence about the well-being of the truly wealthy that one of the studies he relies on, the Forbes 400, which dates from 1985 (the other is from 2018). Never has the phrase “more research is required” sounded more attractive.
I am afraid that my manager has rejected my request for an expanded expense account to explore the question of whether there is, in fact, an upper limit to the relationship between money and happiness. “Satiation” research sounds like my sort of thing. However, my few experiences of life among the super-rich suggest strongly that there is no upper limit. I used to think that no happiness is greater than being upgraded from economy class to business class, given the vileness of life in the former. In fact, first class is significantly better than business, happiness-wise, a lift on a private jet is significantly better still and a spell on a yacht is better than both.
The growing consensus among happiness researchers is more than an idle curiosity. It has important implications for social policy and individual choices. The world suffers from a growing plague of anti-growth activists who argue that growth does not really bring happiness. Commencement speakers routinely tell students to follow their passions rather than going for the money. In terms of personal happiness, the science suggests that this is nonsense.
Anti-growth activists should take a hike. Commencement speakers should adopt a more realistic template. Do not bother to follow your adolescent passions: You would end up as an unemployed musician or an itinerant professor moving from one miserable gig to another. Go for the money instead: That way lies not only long-term freedom, but happiness as well.
Adrian Wooldridge is the global business columnist for Bloomberg Opinion. A former writer at The Economist, he is author of The Aristocracy of Talent: How Meritocracy Made the Modern World.
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