$75,000 Happiness Plateau Is a Lie
Research into wealth and happiness seemed to support the idea that money cannot buy happiness; however, a new study from The Wharton School suggests that an individual's well-being rises with the money they make. Previous research suggested a plateau between income and happiness once a person reached $75,000 annually, but that appears to be a lie.
Why Money Provides Happiness and Well-Being?
It is no surprise that money is the gateway to autonomy, being able to live as you please. According to Matthew Killingsworth, author of the Wharton study, higher income levels result in more control and independence, equating to a greater level of happiness and satisfaction in life.
Therefore, while many low-income families look to money as a means to an end, people with more discretionary income look at money for the opportunities it affords them. The original study that suggested the "happiness plateau" at $75,000 focused its assumption on limited data, primarily focused on a recollection of an entire year about how each participant felt about their life overall.
The new study not only used a large pool of people — 33,391 employed individuals, aged 18 to 65 — but also combined technology to remain connected to each participant throughout the seven-year study. The participants used an app that prompted them to rank their feelings and satisfaction multiple times per day.
Because of the focus on experiential well-being from day to day, the Wharton study provides more accurate accounts of how money actually influences happiness, specifically well-being. While often characterized as the root of evil, money is also a significant contributor to satisfaction in life.
Can Money Really Buy Happiness?
It is hard to argue with the results of Killingsworth's study. Money undoubtedly affects how people feel. However, well-being and happiness are not precisely the same thing. After all, a wealthy person might not have to worry about bills or a roof over their head, but they might have to worry about loneliness. In basic terms, their well-being — physical and financial — is OK, but how are they psychologically.
The pursuit of happiness is promised in the Declaration of Independence, but not happiness. Happiness is elusive and hard to define because it can mean something different to every person.
Money is not capable of providing happiness, but according to the latest study, it can provide opportunities for contentedness and balance. With enough money, you can have order in your life with few, if any, financial concerns or worries, resulting in the potential for happiness.
The Wharton study demonstrates that more money typically equates to less financial stress or burden, improving overall well-being and allowing for greater relief and happiness. However, one cannot argue that money can also result in more problems when you do not properly manage it.
As you progress through your career or stumble upon financial windfalls, know that learning how to invest and save is best. Investing and saving your money are two critical tools for building wealth and securing more opportunities for autonomy and, consequently, happiness.