Experienced well-being rises with income, even above $75,000 per year

Experienced well-being rises with income, even above $75,000 per year. Matthew A. Killingsworth. Proceedings of the National Academy of Sciences, January 26, 2021 118 (4) e2016976118; https://doi.org/10.1073/pnas.2016976118

Significance: Past research has found that experienced well-being does not increase above incomes of $75,000/y. This finding has been the focus of substantial attention from researchers and the general public, yet is based on a dataset with a measure of experienced well-being that may or may not be indicative of actual emotional experience (retrospective, dichotomous reports). Here, over one million real-time reports of experienced well-being from a large US sample show evidence that experienced well-being rises linearly with log income, with an equally steep slope above $80,000 as below it. This suggests that higher incomes may still have potential to improve people’s day-to-day well-being, rather than having already reached a plateau for many people in wealthy countries.

Abstract: 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, suggesting that higher incomes are associated with both feeling better day-to-day and being more satisfied with life overall.

Keywords: well-beinghappinessincomesatiationexperience sampling

One way to assess the extent to which results from the current sample are generalizable is to assess the degree to which the current sample of people “behave like” a representative sample in terms of key variables that are shared across the current study and previous studies of representative samples. One such variable is evaluative well-being, which can be effectively measured without experience sampling and whose relationship with income has been widely studied in representative samples. Results from representative samples in the United States and around the world generally find that evaluative well-being rises approximately linearly with log(income), without a plateau (10). The 2010 study finding a plateau in experienced well-being likewise found that evaluative well-being rose linearly with log(income), without a plateau (11). In the current study, evaluative well-being rose linearly with log(income), without a plateau (Fig. 1 and SI Appendix, Fig. S1), following the same trajectory that has been repeatedly observed in representative samples [although see one recent exception (12)]. This suggests that the general form of the relationship between well-being and income found here matches the population as a whole, and offers a reason to expect results for experienced well-being to generalize as well. Additionally, while the sample was not recruited with the intent of being representative, the actual distribution of incomes values is a close match to the US census distribution (SI Appendix, Table S8). Finally, after controlling for other demographic variables, including age, gender, marriage, and education level, the relationship between income and experienced well-being remains statistically significant and with a majority of the effect intact, including when analyzed across all income levels, below and up to $80,000, and above $80,000 (all values of P < 0.00001; SI Appendix, Table S9). A concern that sample bias might explain the current results seems even less plausible after a close inspection of the relationship between well-being and income. If the sample just happened to include some unusually happy people with large incomes, there are many possible patterns of results that this could generate, most of which would be noisy patterns even if they did trend upward overall. The actual results from this study, however, show an almost perfectly linear relationship between well-being and log(income), as shown in Fig. 1 and SI Appendix, Fig. S1. Accordingly, if sample bias were the explanation for this study’s results, the sample would have to be biased in exactly the way necessary to produce the linear relationship that is observed between well-being and log(income). This is not strictly impossible, but it seems highly improbable.

Do the present data offer any insight into why income is correlated with well-being? The answer to this question is necessarily speculative, since the factors linking well-being to income are likely numerous, complex, and interrelated. One possibility is that people spend money to reduce suffering and increase enjoyment, and that marginal dollars are differentially deployed against these aims depending on one’s income. The difference between positive and negative feelings described above provides some evidence in favor of this: Compared to variation in incomes above $80,000, larger incomes below $80,000 had a stronger association with reduced negative feelings, consistent with the possibility that moving from low to moderate income might be especially useful in avoiding (or mitigating) causes of suffering. Perhaps low earners have many avoidable sources of suffering, but as one earns more, there are fewer sources of suffering whose avoidance can be purchased. In contrast, positive feelings rose more evenly across the entire income range, and even had a directionally steeper association with income above $80,000. Another possibility, not incompatible with the first, is that larger incomes give people more control over their lives. People’s sense of control, measured with the question “To what extent do you feel in control of your life?,” was able to account for 74% of the association between income and experienced well-being (b = 0.105 with no covariates vs. b = 0.027 with sense of control over one’s life as a covariate, in the same participants, Pmediation < 0.00001). Financial insecurity, measured with the question “Did you have trouble coping with regular bills during the last 15 days?,” also played a role and was able to account for 38% of the association between income and experienced well-being (Pmediation < 0.00001). Although higher incomes could hypothetically allow a person to “buy” more time and feel less rushed (22), time poverty, measured with the question, “Do you have too little time to do what you’re currently doing?,” actually increased with income (P < 0.00001). It was a small but significantly negative mediator of the association between income and experienced well-being (Pmediation < 0.00001), such that the association between income and experienced well-being was significantly steeper when time poverty was held constant.

There was also evidence that the strength of the association between income and experienced well-being was systematically larger for some people and smaller for others. The importance of money, measured with the question “To what extent is money important to you?,” was only modestly related to income (r = 0.12, P < 0.00001) yet had a sizable statistical interaction with income in predicting experienced well-being (P < 0.00001). Based on the size of the interaction term, results estimate that the association between income and experienced well-being was over four times as steep when comparing people 1 SD above vs. 1 SD below the mean in money importance (b+1SD = 0.149 vs. b−1SD = 0.035). Whether people who rate money as relatively unimportant simply do not care about money, have found that “the best things in life are free,” or have tried and failed to spend money to improve their lives is unclear, but this result shows that there is something systematic causing income to matter more for some people’s well-being than for others. The importance of money on its own was virtually unrelated to experienced well-being (r = 0.02, P = 0.06), so it was not better or worse overall to think money was important; instead, low earners were happier if they thought money was unimportant and high earners were happier if they thought money was important. A question that asked participants “To what extent do you think money is indicative of success in life?” similarly showed that the association between income and well-being was steeper for people who equated money and success (P < 0.00001). Unlike money importance, however, the more people equated money and success, the lower their experienced well-being was on average (P < 0.00001), and there did not appear to be any income level at which equating money and success was associated with greater experienced well-being. Detailed results for these and other mediators and moderators are available in SI Appendix, including SI Appendix, Tables S5 and S6.

When interpreting these results, it bears repeating that well-being rose approximately linearly with log(income), not raw income. This means that two households earning $20,000 and $60,000, respectively, would be expected to exhibit the same difference in well-being as two households earning $60,000 and $180,000, respectively. The logarithmic relationship implies that marginal dollars do matter less the more one earns, while proportional differences in income have a constant association with well-being regardless of income.

Taken together, the current results show that larger incomes were robustly associated with greater well-being. Contrary to past research, there was no evidence for a plateau around $75,000, with experienced well-being instead continuing to climb across the income range. There was also no income threshold at which experienced and evaluative well-being diverged; instead, higher incomes were associated with both feeling better moment-to-moment and being more satisfied with life overall. While there may be some point beyond which money loses its power to improve well-being, the current results suggest that point may lie higher than previously thought.