Money does indeed buy happiness, and more money leads to more happiness, according to a study released Monday by economic researchers.<\/p>\n
While a link between money and well-being is not surprising, the new study contradicts some earlier research which suggested the effect diminished above a certain level of income which allows people to meet basic needs.<\/p>\n
University of Michigan economists Betsey Stevenson and Justin Wolfers say in their paper in the May 2013 American Economic Review, Papers and Proceedings that there is no evidence of a “satiation” point in the money-happiness equation.<\/p>\n
“We find no evidence of a satiation point,” they wrote.<\/p>\n
“The income-well-being link that one finds when examining only the poor, is similar to that found when examining only the rich.”<\/p>\n
They found that the link is valid “when making cross-national comparisons between rich and poor countries as when making comparisons between rich and poor people within a country.”<\/p>\n
The study is the latest in a hotly debated field, and appears to contradict a theory dubbed the “Easterlin Paradox,” developed in 1974 by Richard Easterlin, now at the University of Southern California.<\/p>\n
Easterlin’s research, which drew notably on surveys from Japan, suggested little or no increase in national happiness despite the country’s post-World War II economic miracle.<\/p>\n
Later research pointed to annual incomes in the United States of $75,000 and in poorer countries in a range of between $8,000 and $25,000, beyond which money no longer impacts well-being.<\/p>\n
But Stevenson and Wolfers said their research showed the Easterlin Paradox and similar theories are just wrong.<\/p>\n
“If there is a satiation point, we are yet to reach it,” they wrote.<\/p>\n
“We find no evidence of a significant break in either the happiness-income relationship, nor in the life satisfaction-income relationship, even at annual incomes up to half a million dollars.”<\/p>\n
Stevenson and Wolfers used data from three different cross-country studies, including the Pew Global Attitudes survey, the Gallup World Poll and the International Social Survey Program.<\/p>\n
“They show a clear relationship between the average level of well-being in a country with its average … income,” they wrote.<\/p>\n
“While the gains from income slow down as countries get richer, they never disappear. Doubling the income of a country has the same impact on the well-being of its citizens regardless of the initial starting point.”<\/p>\n
Stevenson and Wolfers, who is also a nonresident fellow at the Brookings Institution, have been studying the field for years, and the latest research supports their conclusions in a 2008 study.<\/p>\n
“While the idea that there is some critical level of income beyond which income no longer impacts well-being is intuitively appealing, it is at odds with the data,” they concluded.<\/p>\n
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