Does Money Make You Happy?: A Selection from Paul Bloom’s The Sweet Spot (2021)

“When it comes to experienced happiness, more money makes you happier. This makes sense. Money can buy you positive experiences and can make your life better in all sorts of ways. More to the point, being poor makes everything worse—as the authors put it, ‘Low income exacerbates the emotional pain associated with such misfortunes as divorce, ill health, and being alone.’

There are diminishing returns, though. If you are making $30,000 a year, another $5,000 is a big deal, but if you are making $300,000, not so much. This makes sense; it’s true of good things in general. Being friendless is rough, so it’s a lot better to have one friend than no friends, and better to have two rather than one . . . but you wouldn’t expect the same sort of jump when you have twenty friends and get one more.

It turns out that for experienced happiness, money matters only up to an annual income of about $75,000. (This study was done in 2010, so we might adjust that to $89,000 for inflation.) Apparently, the day-to-day experiences of a well-off person and a very rich person aren’t that different, perhaps because the sorts of things that lead to experienced happiness, such as social contact and rewarding work and good health, don’t necessarily become abundant as you get richer.

What about the effects of money on satisfaction? Just as with experienced happiness, money is related to satisfaction, and again there are diminishing returns. But here’s the difference: While there is a threshold after which experienced happiness levels out, there doesn’t seem to be one with satisfaction. There is no point in their study where more money isn’t associated with more satisfaction. When the question is ‘How is your life as a whole?,’ the more money, the better.

This point is worth emphasizing, since there seems to be an urban legend that money, at least past a certain point, doesn’t make much of a difference in the quality of your life or even makes you miserable. This just isn’t so. Take a poll from 2019, which looked at people split into four categories: lower income (less than $35,000 per year), middle income ($35,000–$99,999 per year), higher income ($100,000–$499,999 per year), and top 1 percent (more than $500,000 per year). Most studies underrepresent people at the higher income levels; this one took care to include 250 respondents. And here is the proportion of each group that were ‘very’ or ‘completely’ satisfied with their lives:

Lower: 44 percent

Middle: 66 percent

Higher: 82 percent

Top 1 percent: 90 percent

It doesn’t stop there: Another study looked at the superrich and found that people with more than $10 million in wealth were more satisfied with their lives (though just by a bit) than those with a mere $1 to $2 million.

Taken as a whole, these findings suggest that when we think about our overall lives, we tend to compare ourselves with others—and when it comes to social comparison, the sky is the limit.”—Paul Bloom, The Sweet Spot: The Pleasures of Suffering and the Search for Meaning (2021)