Can Money Really Buy You Happiness?

The question of whether money can buy happiness might depend on the type of happiness you mean.

Researchers Daniel Kahneman and Angus Deaton were the brains behind a well-known 2010 study that examined how people’s happiness levels were related to their income. Famously, they found that more money brought no further improvement after a certain income threshold.

The line they found in 2010 was $75,000 per year, which, in today’s money, would be equivalent to around $113,000.12

However, these results didn’t apply across the board. Kahneman and Deaton divided happiness into two types, and they got different results for each:

1. Experienced or emotional well-being: This type of happiness is about the quality of a person’s everyday experiences—essentially, their daily mood. This is the type that the study found plateaued after a certain threshold.
2. Life evaluation or life satisfaction: This refers to the overall sense of success people have and the satisfaction they feel with their lives. This kind of happiness continued to trend upward with income in the study’s results and didn’t level out the way that emotional well-being did.

Why the $113,000 threshold exists

Kahneman and Deaton suggested that this “plateau” effect is seen because the main role of money in daily happiness is to buffer against life’s misfortunes.

To test their theory, they compared how people in different income brackets reacted to physical pain. They found that a simple headache caused much more emotional distress for low earners than high earners.

They speculated that even though a headache is physically the same for everyone, people with money have more resources—such as medication, the ability to take a day off, or childcare—that can prevent the physical problem from becoming an emotional one.

They suggested that $75,000 (now $113,000) might represent “a threshold beyond which further increases in income no longer improve individuals’ ability to do what matters most for their emotional well-being, such as spending time with people they like, avoiding pain and disease, and enjoying leisure.”1

Real-world testing

This theory was put to the test in 2015 when a Seattle company called Gravity Payments raised its minimum salary to $70,000. The company’s leaders cited Kahneman and Deaton’s study as the inspiration for their decision.3

According to the company website, the pay boost helped staff feel more stable, to the extent that the company saw a “baby boom,” with a string of employees deciding to expand their families.

Gravity underwriter Katie Parr was among them. She explained that the money gave her the peace of mind and financial stability to get excited about expanding her family and feel “relatively less stressed.” She added that her husband had also been able to take a lot more time off work after she started working at the company.

Kahneman and Deaton’s ideas about the money–happiness relationship were challenged by Matthew Killingsworth in another 2021 study. This also distinguished between emotional well-being and life evaluation, but found that happiness levels kept on rising indefinitely with increasing income, contradicting the original findings.

In 2023, Kahneman and Killingsworth collaborated on a new study which complicated the picture even further.

They found that the ability of increased income to make people happier depended on their baseline level of happiness. They divided participants into percentiles according to how happy or miserable they were, and created three groups containing the top 30% (the happiest people), the bottom 20% (the most miserable people), and the 50% in between (the middle).

They then plotted the relationship between participants’ incomes and mood, with the following results:

• The most miserable people: For these participants, the relationship between money and happiness levels followed the pattern from the original 2010 study: the subjects’ happiness increased with income up to a threshold, then flatlined.
• The middle: These people’s happiness levels continued to steadily increase with income growth and did not plateau.
• The happiest people: For these people, after their incomes passed a $100,000 salary threshold, the positive effects of increased income actually accelerated.

In plain English, this suggests that, if you’re struggling emotionally, money probably won’t make you happier. However, the happier you already are, the more it will help.

Hedonic adaptation: snapping back to a happiness baseline

The famous 1978 study that compared lottery winners with people who had been in catastrophic accidents yielded interesting results related to this topic. Although the winners and victims saw immediate changes in their happiness levels, those eventually returned to something resembling their original baseline.

This tendency of people to revert to a baseline level of happiness appears in a lot of research. For example, the work of Frederick and Loewenstein described how people eventually adapt to the emotional effects of a stimulus (such as higher income) if it goes on for long enough. Because of this, the stimulus eventually stops impacting their mood.

Another piece of research from 1985 rated the happiness levels of individuals on the Forbes list of the wealthiest Americans. It found that the average happiness of the wealthy was only modestly higher than the other groups studied.

Experts have sometimes called this tendency—the way our circumstances emotionally impact us less as we get used to them—the “hedonic treadmill” or “hedonic adaptation.”

The upshot is that when someone reaches a financial milestone they’ve been chasing, often, their mood lifts temporarily. Later on, however, they return to their natural state of happiness or unhappiness.

Your natural happiness baseline appears to be one important personality trait that affects whether money will make you happy. However, the money–happiness relationship may also depend on other aspects of your personality and how much you value the ideal of being wealthy.

Research on this topic has included:

• Killingsworth, 2021: This research not only investigated how people’s happiness levels changed with income, it also investigated how a person’s beliefs about money change that relationship. Killingsworth found that some people are much more sensitive to income changes than others, depending on how much they value money and equate it with success.4
• Soto and Luhmann, 2013: Earlier research found that people high in neuroticism benefited more from the effects of increased income than less-neurotic people. This study found that the former group needs money to buy peace of mind, whereas the latter can more easily cope with financial limitations.
• Park et al., 2017: This research from the US found that whether people derive emotional benefits from money depends on whether they consider it to be just a goal or whether it determines their self-worth. Those in the latter group tend to feel stressed and out of control even when they’re doing better financially.
• Gladstone et al., 2020: This research used data from a UK-based money management app to show that for individuals who are low in conscientiousness (meaning they’re less organized or more impulsive), having liquid cash in the bank can boost life satisfaction much more than for highly disciplined people.

Judging from the research, the emotional payoff of money depends a lot on the person receiving it.

Certain types may find it easier to cope with financial instability, but, for others, the money–happiness correlation may be much clearer.

When billionaires like Elon Musk remark that money can’t buy happiness, their reasoning probably has a lot to do with their starting point.

Put another way, a billionaire’s happiness levels won’t usually be significantly affected by a $50,000 pay raise the way yours might be.

This was demonstrated in a 2022 study from the University of British Columbia, in which participants received a $10,000 gift. People making $10,000 a year gained twice as much happiness from it as those making $100,000 per year.

With that said, the gift made almost everyone happier—except for people who already lived in households earning more than $123,000 a year.

The relationship between money and happiness

The same dynamic was also illustrated by Killingsworth, who plotted happiness against income and found the graph to be “strikingly linear.”4

The logarithmic relationship in these research findings means that, each time you double someone’s income, they get the same fixed unit of happiness in return. For example, the jump from $25,000 to $50,000 provides the same happiness boost as the jump from $100,000 to $200,000.

YouTuber Jimmy Donaldson, better known as MrBeast, is the most successful content creator in internet history, with a net worth of billions. He agrees that extra wealth doesn’t have the same effect after a certain point.

On an episode of the Lex Fridman Podcast, he said, “Once you take care of … basic necessities, so we’ll say make over hypothetically a million dollars … adding an extra zero—going from 10 million to a hundred million or whatever it is—makes no difference.”

Autonomy, security, tranquility

Killingsworth suggested that much of the link between income and happiness can be explained by how people answer one question: “To what extent do you feel in control of your life?”

He suggested that money can’t buy happiness directly. Instead, it buys the autonomy that makes happiness possible.

Other research supports the idea that autonomy is very important when it comes to people’s happiness levels. For example, a large-scale meta-analysis of 63 countries in 2011 found that autonomy is a consistently better predictor of well-being than wealth alone.

There’s also research showing that many people value autonomy over money at work. For example, FlexJobs conducted a survey in which 50% of workers said they’d take a decrease in pay in exchange for the opportunity to work remotely.5

A simpler life

A former HR executive using the pseudonym Claire Smith wrote in The Guardian about losing her six-figure salary. Although she admitted that the loss of income came with many struggles (especially during the pandemic), she also experienced unexpected benefits:

“Life has become more simple by necessity,” she wrote. “I take joy from different things, mainly books, and my dog, who is my constant companion … and is so happy I am at home all the time.”

She also found that some of her relationships improved, saying that some of her friendships felt “more authentic and closer than before.”

In Smith’s case, the transition to a simpler life was an accident. However, some people consciously choose to downgrade.

In one recent thread on the Reddit forum r/careerguidance, a poster asked whether they’re an “idiot” for wanting to give up their high salary for a more satisfying job. Dozens of commenters advised that the exchange would be worth it.

Many described following a similar trajectory in their own lives, saying that the mental health benefits of quitting their jobs outweighed the salary they gave up.

When University of British Columbia researchers tested the effects of a $10,000 gift on people’s happiness levels, they speculated that the durability of the mood boost recipients experienced depended on how they spent their money.

The researchers suggested that sustained happiness improvements were seen in “participants [who] used the funds to improve their long-term circumstances rather than just increasing their immediate consumption.”

This would explain why autonomy and security are such effective investments. They improve someone’s long-term situation instead of offering a temporary high.

Billionaire Warren Buffett is famous for eating McDonald’s, driving old cars, and generally avoiding flashy consumption. Yet, he maintains that his life couldn’t be happier.

“It’d be worse if I had six or eight houses,” he once said. “I don’t need any more.”

Does your spending fit your personality?

Buffet may have found a winning formula for himself, but what someone should purchase to gain more happiness might not be a one-size-fits-all question.

One study from 2016, often dubbed the “Spending for Smiles” study, analyzed over 76,000 bank transactions in the UK to find out how people’s spending habits affected their well-being. The conclusion was that if you want to spend your way to happiness, this process has to be personalized.

“An extrovert may prefer spending which reinforces her preference for social activities,” such as eating out with friends, the authors claimed. Similarly, they suggested people with “agreeable personalities” may derive more happiness from spending on charities or pets, and so on.

More recent research from 2025 suggests that extroverts get more happiness per dollar compared with introverts. According to the findings, extroverted people are more likely to perceive monetary purchases as a way to facilitate “experiences.” Consequently, they get more happiness from them.6

Using money to buy time

Some research suggests that using money to save time is better for happiness than using it to buy physical goods. For example, a 2017 study from Ashley Whillans and Elizabeth Dunn found that spending money on time-saving services—such as hiring a cleaner or paying someone to mow the lawn—is linked to greater life satisfaction than spending the same amount on material goods.

This may depend on living circumstances; a 2024 study from several researchers found similar results, but only in wealthy countries like the US and Canada. In less-developed countries, time-saving purchases didn’t offer the same happiness boost.

The benefits of spending on others

Overall, the research suggests that there’s a lot of variation regarding the question of how someone should spend their money to maximize their happiness. However, prosocial spending (spending money on others) is one investment likely to benefit everyone.

Research on this has included a 2008 study and 2014 study from Dunn, Aknin, and Norton, as well as a 2013 study from Aknin et al. All three concluded that people often derive more happiness from spending money on others than themselves—a trend that seems to hold across the world, in both rich and poor nations.

Even MrBeast has chimed in on this topic. He recalled, “When I first came into money, one of the first things I did was retire my mom, and that brought me tons of happiness.”

Much research has been dedicated to the money–happiness relationship, with many studies supporting the idea that being richer makes you likely to be happier, too.

However, there’s a great deal of nuance to this correlation. The research suggests that exactly how much a cash injection will lift your mood depends on how much money you already have, your personal values, and many other factors.

If you’re like many people, there’s also a limit after which chasing after wealth will only make you richer, not happier. At that point, you’ll probably be better served by trying to find other sources of happiness.