New studies confirm that having more money can improve our wellbeing. 

News just in: money does buy you happiness. Duh, you might say. Anyone could have told you that; it’s hardly a Nobel-prize winning insight. Well, actually, it kinda is: in 2010, Daniel Kahneman, a Nobel prize-winning economist and psychologist, came out with the theory that there was a monetary “happiness plateau”. Once you hit an annual household income of $75,000 (£62,000), earning more money didn’t make you any happier. In 2021, the happiness researcher Matthew Killingsworth released a dissenting study, showing that happiness increased with income and there wasn’t evidence of a plateau. Now the pair have teamed up in a process known as “adversarial collaboration” and released a new study finding that they were both sort of right, but Killingsworth was more right: for most people, earning more money makes you happier.

There is some nuance to this. If you are extremely unhappy, happiness apparently increases with household income up to $100,000 (£82,000), then it “abruptly” levels off: there are some problems money can’t fix. For people who are in the “middle range of emotional wellbeing”, happiness increases linearly with income. And for very happy people, happiness accelerates above $100,000. The study didn’t look at incomes above $500,000, so we don’t have any insight into whether joyriding around space is making Jeff Bezos feel truly fulfilled. Or whether Rishi Sunak’s newly heated swimming pool is warming the cockles of his heart.

Anyway, no offence to these very smart researchers, but this feels like one of those studies that you can file under “pretty goddamn obvious”. You don’t need sports cars and private jets to be happy, but you do need shelter and stability – and those things cost a fortune these days. Housing affordability in the US is at a record low and the average American household needs to spend 42.9% of its income to afford a median-priced house, according to new data. It’s the same story in the UK: houses are at their least affordable since 1876. Sometimes I think about moving back to London from Philadelphia (which is still relatively affordable) and then, after five minutes on a property site, I abandon the idea in disgust.

And then there’s retirement. Stressing about whether you’re going to have to survive on cat food in your old age is generally not conducive to happiness. In the US, most companies don’t offer proper pensions any more. In the mid-1980s, about half of private sector workers had a defined-benefit pension plan; in 2022 only 15% of people in the private sector had access to them. Now you’re just expected to diligently put money in the stock market and see what you’re left with when you retire. Which, judging by recent events, might be nothing.

Don’t get me started on the cost of childcare. Kids are little bundles of germy joy, but my God are they expensive. A 2019 study found that, in many industrialised societies, there is “a decline in individuals’ subjective wellbeing – either happiness or life satisfaction – once parenthood begins” – something researchers have called the “parenting happiness gap”. Americans have the largest parenthood happiness gap. That’s largely down to the cost of childcare and the lack of paid holiday and sick days people can take. Earn enough money, of course, and you can paper over these structural cracks with hired help.

Unless you’re a yacht-dwelling billionaire with an army of nannies, none of this is really news. Most people are well aware that there’s a cost of living crisis, that prices of everyday essentials are out of control and that not having to stress about how to pay bills is good for your mental health. Still, while this study’s conclusions may seem obvious, I think it serves as an important corrective to a narrative that a lot of people in power have been trying to push. It’s funny how a lot of obscenely rich people are fixated on trying to tell everyone else that money doesn’t make you happy. See, for example, the CEO of Google recently telling all his employees that “having fun … shouldn’t always equate to money” after cutting staff benefits. It is very convenient to pretend that money isn’t important when you’re busy trying to hoard a lot of it yourself. ■

By Arwa Mahdawi

14 Mar 2023 | 715 words