We’ve all heard the phrase, “money can’t buy happiness,” but a new study from Purdue University shows that more money can improve one's emotional well-being and overall life satisfaction up to a certain amount.
The study shows that $95,000 is the ideal amount an individual should earn for life evaluation (general overview of one's life satisfaction typically compared to others), and $60,000-$75,000 is the ideal amount for emotional well-being (daily emotions).
However, those amounts fluctuate depending on where someone lives. People in first-world countries attain happiness with higher monetary amounts compared to people in developing countries who reach satisfaction with less money. "This could be because evaluations tend to be more influenced by the standards by which individuals compare themselves to other people," Andrew Jebb, the study's lead author, told Medical Xpress.
Also, the study notes that after people begin earning more money than is needed to meet their basic needs their well-being begins to decline. The decline may be linked to people obtaining more material possessions and comparing their lifestyle to peers. "The small decline puts one's level of well-being closer to individuals who make slightly lower incomes, perhaps due to the costs that come with the highest incomes," said Jebb. "These findings speak to a broader issue of money and happiness across cultures. Money is only a part of what really makes us happy, and we're learning more about the limits of money."
Not everyone agrees
In 2013, researchers from the University of Michigan found evidence to the contrary. Money can buy happiness — but it's the definition of happiness that changes from person to person — with no satiation limit.
They looked at an individual’s well-being – happiness, satisfaction with life, basic needs being met – and determined that “The relationship between well-being and income is roughly linear-log and does not diminish as incomes rise."
The more money a person has, the more money it takes to make him happy, but there isn’t some magical point in which more money does not make one happier.
I’m not a researcher or an economist, but I can say from personal experience that I was certainly more stressed out when I was younger and making less than $20,000 annually. I had to pay a small mortgage on a townhome, healthcare costs, groceries, utilities and more. I didn’t even have a car note and so I walked a mile to the bus stop –—not bad for my overall health but on the hot summer Arizona days, it was grueling.
Now, I still have a mortgage to pay but as our family and income grew, so did our house. I also have healthcare costs and with two kids on the autism spectrum, those costs have gone up significantly. Our lifestyle grew as our income grew, but I can honestly say that I am less stressed now than I was when I earned less. Maybe it is because I have a family that I love or maybe it is because we have a salary that allows us to live a comfortable lifestyle.
Editor's Note: This file has been updated since it was originally published in May 2013.