Title: Experienced Well-Being Rises with Income, Even Above $75,000 per Year
Author: Matthew Killingsworth
Scope: 3 stars
Readability: 2.5 stars
My personal rating: 4 stars
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Topic of Article

Killingsworth attempts to determine whether increased happiness due to higher income plateaus at a certain level of income.

My Comments

Early in the research on happiness, researchers found that increased happiness plateaus after one reaches $75,000 per year. In other words, for those who earn less than $75,000, income was positively correlated with increased happiness. For those earning over $75,000, there was no correlation. This became known as the “Easterlin paradox.”

More recent research, including this study, shows that these initial findings were incorrect.

Key Take-aways

• Increased income correlates with increased self-reported happiness, and there is no upper income limit for that effect.

Important Quotes from Article

What is the relationship between money and well-being? Research distinguishes between two forms of well-being: people’s feelings during the moments of life (experienced well-being) and people’s evaluation of their lives when they pause and reflect (evaluative well-being). Drawing on 1,725,994 experience-sampling reports from 33,391 employed US adults, the present results show that both experienced and evaluative well-being increased linearly with log(income), with an equally steep slope for higher earners as for lower earners. There was no evidence for an experienced well-being plateau above $75,000/y, contrary to some influential past research. There was also no evidence of an income threshold at which experienced and evaluative well-being diverged,

Does earning more money lead to greater well-being? This is one of the most enduring questions in the science of human well-being, with relevance to individuals making trade-offs between income and other life goals.

One highly influential study compared evaluative and experienced well-being and their associations to income in the United States and found a striking difference: While evaluative wellbeing rose across the entire measured income range, experienced well-being did not. For incomes below $75,000, larger incomes were associated with greater experienced well-being, but beyond $75,000, there was no further improvement.

What was the observed relationship between income and wellbeing? Larger incomes were robustly associated with both greater experienced well-being and greater evaluative well-being. Moreover, the shape of the relationship between log(income) and experienced well-being was strikingly linear: There was no observed plateau in experienced well-being, and there was no obvious change in slope of experienced well-being or divergence between experienced well-being and evaluative well-being, either around $75,000/y or at any other income level (Fig. 1). Regression results confirm that people with larger incomes reported both higher levels of evaluative well-being and higher levels of experienced well-being (both values of P < 0.00001). Why might the current results find a linear relationship between experienced well-being and log(income), when some past research has found a plateau around $75,000? The current study possesses a number of methodological differences that may have contributed to this, including measuring experienced well-being in real-time.  The two studies finding a plateau both used a dichotomous (binary) measure of experienced well-being, which means there is no room left to register improvements once the higher of the two levels is registered. In both studies finding a plateau, over 70% of responses from people with the lowest level of income were already registering the highest possible level of positive feelings, and this proportion was well above 80% for upper income levels. With almost all responses at the response ceiling, it is possible that a considerable fraction of the people earning incomes above $75,000 experienced greater positive feelings than people who earned less, but there was no room in the scale left to detect it.