The famous psychologist Daniel Kahneman and economist Angus Deaton published a famous paper in 2010. The paper reported that happiness goes up with income until the relationship starts to ” flatten ” at between $ 60000 and $ 90000 a year.

But the recent study says that happiness does increase in line with income and even accelerates as pay rises beyond $ 100000 a year – as long as the person enjoys a certain baseline level of happiness, to begin with.

Now Daniel Kahneman has reanalyzed his work in collaboration with Matthew Killingsworth. They found no happiness plateau at all in a 2021 study researching the same topic. They did find a happiness plateau, but only among the unhappiest 20% of people and only then when they started earning over $ 100000.

The above research can be analyzed from different perspectives. Happiness is a state of feeling good and contended. Happiness also depends upon our power to control the surrounding environment and unforeseen situations. Humans always have a fear of an unknown and uncertain future. It is a human fear psychology. The fear of future uncertainty may dent the feeling of happiness. Money may have the power, to some extent, to reduce the fear of uncertainty. So as the earning of a person increases, one feels confident about overcoming future uncertainty. As uncertainty reduces, happiness may increase.

To conclude, though there is a general perception that money doesn’t make people happy, it is not always correct.

Money Does Buy Happiness

Samta M Pantawane
MA, M.Phill (Economics)
Nagpur