Study: Money Does Buy Happiness


Source: Money News

A new study from University of Michigan economists Justin Wolfers and Betsey Stevenson shows that the wealthier people are, the happier they are, whether they are rich or poor.

The duo looked at statistics from more than 150 countries. Sources ranged from the World Bank to the Gallup World Poll. The study will be published in the May 2013 American Economic Review, Papers and Proceedings.

Unlike some previous studies, Wolfers and Stevenson found there isn’t a threshold where more wealth no longer creates more happiness.

“Even America’s millionaires don’t think of themselves as rich,” writes Fortune’s Nin Hai-Tseng. “So are they any less happy than poorer folks scraping by earning minimum wage? Not exactly.”

The ultra-wealthy just need more money to make them happy, according to Wolfers and Stevenson.

The study found that no millionaires are unhappy.

Hai-Tseng distinguishes between day-to-day happiness and overall, “life assessment” happiness.

The latter is what Wolfers and Stevenson focused on, finding that fulfillment keeps climbing and climbing as long as income is rising.

“If there is a satiation point, we are yet to reach it,” the researchers write.

” While the idea that there is some critical level of income beyond which income no longer impacts well-being is intuitively appealing, it is at odds with the data,” they add.

Another issue is whether spending by the wealthy makes them happy. Whether the answer is yes or no, that spending is apparently headed higher.

A study by the American Affluence Research Center found that among the top 10 percent of consumers, as measured by income, more than half plan to spend the same or more this year as they did in 2012, CNBC reports.