May 022013

Yes, money can buy you happiness

We all know the sayings: Money can’t buy you happiness; more money, more problems.

But while those are nice little feel-good platitudes, they may not hold water in the real world, according to a new study from economists Betsey Stevenson and Justin Wolfers.

By mapping income versus self-described happiness in several countries worldwide, the study’s authors found that the more money people had, the happier they tended to be. The trend was clear across the board, leading the economists to conclude that there’s “no evidence of a satiation point,” a theoretical level of contentment past which more cash doesn’t translate into more happiness.

Two charts in the report tell the story. The first plots income groups within countries by happiness, clearly showing a correlation in higher income to higher reported happiness.

“While there are some differences in the slopes, the more remarkable feature is simply that for every country, the relationship estimated at low incomes appears to hold in roughly equal measure at higher incomes,” the authors note. “In particular, there is no evidence that the slope flattens out beyond any particular ‘satiation point’ in any nation.”

The second chart compares countries to each other, revealing that richer nations report markedly higher levels of happiness. If more money didn’t really mean more happiness, that line should level off. Yet instead, the slope actually increases as it moves toward the richer end of the spectrum, indicating that the “well-being–income relationship extends to them as well.”

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