Money Buys Happiness, Even if You’re Already Rich
A 10% raise delivers a similar boost in satisfaction across income levels, research finds
2 min
A big raise provides significant boosts in happiness even at household incomes of $500,000, according to a new research report.
A wealth of research has long shown that more money makes a big difference to people with low pay, moving them from insecurity to stability. Above that level, the effect is often assumed to be much smaller.
But according to a paper by Matt Killingsworth , a senior fellow at the University of Pennsylvania’s Wharton School, the bonuses and leaps in income high earners reap are so large that they keep adding to well-being in the same way that smaller pay bumps do at lower tiers of earnings.
“I think of this as a ladder across society. The rungs are separated by more and more dollars, but exactly the same amount of happiness,” said Killingsworth, who published his report on his Happiness Science website.
An academic paper in 2010 popularised $75,000 as the salary threshold beyond which earning more money didn’t make people any happier. More recent research indicates that there is no such plateau.
Killingsworth and other researchers stress that many things influence human happiness, including your relationships, your job and the country you live in.
“No single factor, including money, dominates the equation,” Killingsworth said.
Previous studies on money and happiness have consistently demonstrated two things: that richer people are happier, and that it takes progressively more money to keep generating a well-being boost of a given size.
Killingsworth says that many people draw the wrong conclusion from that latter finding. They assume that money makes the biggest difference on Americans’ happiness at lower levels of income.
His paper suggests this assumption is wrong. That is because earnings surge exponentially across the income distribution, offsetting money’s diminishing returns on happiness even at the high end.
The lowest-earning 20% of U.S. households on average brought in about $23,000 before taxes in 2021, and the middle 20% earned about $87,000, according to the latest data from the Congressional Budget Office. The top 20% averaged roughly $418,000, with the very highest earners making significantly more than that.
“It could be entirely reasonable for an individual to continue aspiring to climb one more rung in the income ladder” to pursue happiness, Killingsworth writes in his paper.
Even Americans earning a lot of money wish they could do just that. Last year, survey respondents with incomes of $200,000 or more said that the median income they would need to be happy and less stressed was $350,000, according to data from the financial-services company Empower.
More money doesn’t guarantee more happiness. The side effects vary. Some who receive big raises later report big letdowns. Others who voluntarily take a pay cut say they are glad they did.
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Continue reading “ASX falls 0.7 per cent as miners and property stocks retreat”
2 minAustralian shares fell on Thursday as Wall Street weakness, rising oil and persistent rate concerns weighed on most of the market.
The S&P/ASX 200 declined 0.72 per cent to 8,702. The All Ordinaries lost 0.66 per cent to finish at 8,897. Mining stocks were hit particularly hard, while real estate also dragged on the index.
Energy was the notable exception, gaining more than one per cent as Brent crude traded above US$103 a barrel. Oil had moved higher amid uncertainty surrounding potential US diesel-export restrictions and broader geopolitical supply risks. The move supported energy producers but renewed concern about inflation inputs across transport and the wider economy.
Gold shares were weak even as spot bullion remained historically elevated. The All Ordinaries Gold index fell about 2.25 per cent, showing that equity performance can diverge from the commodity because of valuation, currency, operating and company-specific factors.
Zip was a prominent loser, falling 11.38 per cent after the company reported short sales after the previous close. Nine Entertainment also weakened after UBS analysts warned of near-term revenue challenges associated with its advertising-supported subscription tier.
Premier Investments led larger winners despite caution about the retail environment. Breville, in which Premier owns a significant stake, also appeared among leading movers. In the broader ASX 300 screen, Myer gained 11.43 per cent and MAAS Group rose 7.93 per cent, while Lotus Resources fell 10.53 per cent. These percentage moves should be checked against company announcements and trading liquidity before attributing causes.
The Australian dollar was broadly flat at US70.38 cents. Spot gold was around US$4,280 an ounce, Brent crude approximately US$103.08 a barrel and iron ore near US$96.90 a tonne late in the session.
The rate outlook remains the central domestic catalyst. Labour-market weakness has not eliminated the possibility of an RBA increase next week, leaving banks, listed property and other rate-sensitive sectors exposed to changing expectations.
Market dashboard
S&P/ASX 200: 8,702, down 0.72 per cent.
All Ordinaries: 8,897, down 0.66 per cent.
Best sector: Energy, up more than one per cent.
Weakest areas: Real estate and materials were the major drags; confirm final sector percentages before publication.
Material winner: Premier Investments led the large-company gainers. Confirm its final closing move from the ASX before publication.
Material loser: Zip, down 11.38 per cent.
ASX 300 percentage leader: Myer, up 11.43 per cent.
ASX 300 percentage laggard: Zip, down 11.38 per cent.
AUD/USD: Approximately US$0.7038, broadly flat.
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