Can Money Buy Happiness for Millionaires?

New research from Wharton’s Matt Killingsworth suggests that happiness keeps increasing with income, far beyond expected.

We’ve all heard the saying that money can’t buy happiness — but how true is that, really? In fact, research shows that people who have more money tend to be happier, though this association hasn’t been proven at the upper end of the economic spectrum, like with those earning above $500,000 a year. New research from Wharton senior fellow Matthew Killingsworth sheds some light on this, suggesting that happiness continues to rise with income — even beyond the half-million-dollar mark.

If there’s a point where money stops making a difference, Killingsworth said, it’s probably much higher than we previously thought.

This isn’t necessarily bad news. “It might seem simpler if happiness just leveled off once people had ‘enough’ money,” Killingsworth said. “But the fact that happiness keeps rising does argue against some worrying possibilities, for example, that we’re not chasing what really makes us happy — or that the economy isn’t delivering what we truly want.”

Happiness Grows with Income — Even for Millionaires

While there’s plenty of research on money and happiness, most studies haven’t looked at people earning high incomes. As a result, researchers have been left wondering if there’s a point beyond which money stops mattering for happiness. Killingsworth’s study, “Money and Happiness: Extended Evidence Against Satiation,” breaks new ground by comparing the happiness levels of a large U.S. group with a wide range of incomes, to two groups of ultra-wealthy individuals. According to him, it could be the most expansive look at money and happiness at the upper end of the economic distribution.

“Research shows that richer people tend to be happier, but we don’t really know how far that association extends,” he said. “Few studies include people with high incomes, and almost none include people who are genuinely rich, so it’s hard to tell if happiness plateaus beyond some modest level of income or wealth. The answer could be important for decisions around salaries, taxes, and financial planning.”

For his study, Killingsworth looked at more than 33,000 working adults in the U.S. who reported both their life satisfaction and income. He then compared their responses to two groups of wealthy individuals from previous studies — one group of millionaires from around the world and another made up of people from the Forbes 400 list, the wealthiest Americans.

The findings are striking: Wealthy people are significantly happier than the highest earners in the ordinary income group, when comparing their levels of life satisfaction. While the study doesn’t prove that money causes happiness, it adds to growing evidence that the two are closely linked. “This shows that the connection between money and happiness keeps growing, even well past incomes of hundreds of thousands a year,” Killingsworth explained. “And the difference is big enough to be quite meaningful.”

The Happiness Gap

What’s especially noteworthy is the huge gap in happiness between the richest and poorest people. Low-income participants reported an average life satisfaction just above 4 on a 7-point scale, while the wealthiest groups scored close to 6 out of 7. In other words, income and wealth accounted for more than half of the difference in life satisfaction between people with low incomes and those with a perfect life satisfaction score.

Another key finding in the study is that the happiness gap between wealthy people and middle-income earners is much larger than the gap between middle- and low-income earners. For example, people earning $70,000 to $80,000 a year are a lot closer in happiness to those with low incomes than they are to the ultra-wealthy. In fact, the jump in happiness for the wealthy compared to middle-income earners is nearly three times as large as the difference between middle- and low-income groups.

In other words: Middle incomes are far from the peak of the “money-happiness curve,” where levels of happiness are highest.

All groups used similar questions to measure life satisfaction, making it possible to compare them. The wealthy groups weren’t asked about their moment-to-moment feelings, but because life satisfaction and real-time emotions are closely related in Killingsworth’s research, it’s plausible that these new results reflect how people feel on a daily basis as well. But more research would be needed to confirm that, said the researcher.

Money Is Only a Piece of the Happiness Puzzle

Killingsworth is careful to point out that because the financial difference between the richest and poorest groups are huge, money alone is unlikely to generate such a big difference in happiness for most people. He also warned that money is just one piece of the happiness puzzle—putting too much focus on money could hurt well-being if other important factors, like strong relationships or living a meaningful life, are neglected.

Still, this research pushes back against the idea that money only makes small differences in happiness, or that money stops mattering beyond a modest level of income. Killingsworth’s findings suggest that money could have a major impact, especially when monetary differences are very large.