The Well-Being Theory: How Much Happiness Can Money Truly Buy?

We’ve all heard the old adage that money can’t buy you happiness. But can it?

Research indicates that while there is a positive correlation between income and happiness, the answer isn’t so simple, and some might even say that there is a limit to how far money goes in bringing us joy.

In 2010, Daniel Kahneman at Princeton concluded in a landmark study that people felt happier as they earned more. However, after reaching a certain threshold (which he estimated at $75,000 in annual income per person at the time), reported happiness stopped rising with income.[1]

Further research done since then from Purdue University supported this theory that well-being (how happy people were with their lives overall) stopped rising after $75,000 and life satisfaction (what people think about their lives in general) after income reached $90,000.[2] (Living in higher cost areas suggests those numbers should be inflated. Income would need to be 40% higher in LA, 50% in Seattle and 80% higher in San Francisco.)

An even more recent study measuring the correlation between happiness and money came in the form of Track Your Happiness, an app developed by Harvard psychology doctoral student and former software product manager Matthew Killingsworth. The app pings users at random intervals with one-minute surveys, gauging their activities and feelings on a sliding scale.

Killingsworth noted in his report, published in the Proceedings of the National Academy of Sciences, that the connection between satisfaction and money doesn’t diminish after reaching past the $75,000 or $90,000 income threshold. According to this report, money can keep buying happiness.

The reasons for money making us happy are mostly speculative, of course, and likely change over time as our needs, values, and priorities change. More money typically brings more complexities, however, that can absolutely impact our happiness. And we all know that people still have problems regardless of income – they’re just different kinds of problems. So, if money alone isn’t a surefire bet for increased happiness, what is?

Some say the answer lies in the well-being theory, which suggests an individual’s happiness is optimized when they report high levels of a number of different areas in their lives. Unsurprisingly, these areas can be improved independent of changes to income.

  • Positive emotion refers to how you view your past, present and future. People who cultivate optimism report higher levels of positive emotion and therefore happiness.
  • Engagement corresponds to how much “flow” or immersion you experience in tasks during your day. High scorers enjoy activities where they are so absorbed they often “lose track of time.”
  • Relationships are a cornerstone of high well-being. This doesn’t necessarily mean more relationships, rather those that are supportive and/or fulfilling in nature.
  • Meaning involves believing in a clear purpose to your life and your contribution to or belonging to something greater than yourself.
  • Accomplishment is defined as the pursuit of mastery over a skill, hobby, sport, educational endeavor or professional goals.

High scores in the above areas corresponded to a higher sense of well-being among the respondents. While income unequivocally increases happiness when it serves to meet basic needs and wants, above certain income levels we would do well to focus on other areas of engagement, in order to increase our happiness and well-being.

As a financial advisor, my goal is to help educate and guide clients to financial empowerment, whether through financial planning or investing. Even though my primary goal is to help my clients achieve their financial goals, those goals are always tied to something bigger than just more money in the bank. Whether or not your view on money is tied to how much joy it might bring you, it’s important not to lose focus of those intangibles that make having money that much more rewarding.

Private Ocean is a West Coast-based wealth management firm deliberately structured to give clients the intimate experience of a small firm while harnessing the power, depth and discipline of a much larger one. Formed in 2009, the firm has locations in San Rafael, San Francisco, and Seattle. 

Steve Branton, CFP, CPCC is a financial advisor, an Accredited Domestic Partner Advisor (ADPA), specially trained to advise on various financial issues including marriage planning, wealth transfers, federal taxation, retirement planning, and medical end-of-life needs for domestic partners and non-traditional clients, and a Certified Co-Active Coach (CPCC). 


“Happiness, income satiation and turning points around the world,” Nature Human Behaviour. Andrew T. Jebb, Louis Tay, Ed Diener and Shigehiro Oishi, 2018.

“From Functioning to Flourishing: Applying Positive Psychology to Financial Planning”. Journal of Financial Planning. Sarah D. Asebedo, CFP and Martin C. Seay, Ph.D., CFP. November 2015.

[i] “High income improves evaluation of life but not emotional well-being”, PNAS, Daniel Kahneman and Angus Deaton, 2010.

[ii] Money only buys happiness for a certain amount, Purdue University, 2018.

[iii] Source:



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