Money plays an awkward role in “the good life.” 

It’s a bit like a hulking chaperone escorting the young people to the party to make sure they have a good time and make it home safely; as much as we wish we didn’t need it, as much as we try not to focus on it, it lurks in the corner, silent and unbudging.

Aristotle notes in his Nicomachean Ethics, “The life of money-making is one undertaken under compulsion, and wealth is evidently not the good we are seeking; for it is merely useful and for the sake of something else.” ¹ Let’s assume he’s correct. How much money is enough to pursue a life of meaning, to be self-actualized, give to our favorite charities, and still afford emergency plumbing repairs? 

It takes a brave person to come up with a ballpark figure when the question alone can spark snarling debates. In 2010, the brave person was actually two individuals: Daniel Kahneman and Angus Deaton.  The “magic” number was $75,000. ²

Two studies, different results

Kahneman and Deaton (hereafter known as KD) arrived at this number by analyzing more than 450,000 responses to a survey that took almost an entire year to conduct. They used two types of questions.  The first was an exercise known as Cantril’s Ladder: imagine your life is a ladder with 10 steps; which step on that ladder do you see yourself at, with 0 being the worst possible and 10 being the best possible? 

The second involved a series of yes-no questions that asked the respondents about their recent emotional state (“positive,” “stressed,” “sad,” etc).  It measured feelings of well-being, compared to Cantril’s Ladder which measured a more general “idea” of how well respondents thought their lives were going as a relative whole.

KD found that respondents answered differently about money with the two approaches. When it came to Cantril’s Ladder, the more money the respondents had, the higher up the ladder they felt they were – and this number showed no sign of dropping off until $120,000 or even higher.  On the other hand, when it came to questions about their day-to-day emotional state, there was no significant improvement in respondents’ mood levels once they were earning $60,000 – $90,000; this is where the magical number of $75,000 comes from, since it’s the average of that range. So a safer conclusion is that emotional well-being peaks at $90,000 (in the year 2010, mind you). 

The “$75,000” headline stuck, however, for better or for worse, propelled to fame by popular writer Malcolm Gladwell. People were excited to have a hard number to tack to their goal charts, something they could wrap their arms around. One company even raised its base salary to $70,000, hoping to lure employees with a promise of minimum viable happiness. 

But a lot of us – maybe most of us – didn’t buy it. Even adjusting for inflation, how could you prove that a certain amount of money was enough to make you happy? Maybe the Smiths down the street are okay with $75,000 per year, but you have three kids, a sick dog, and a mother-in-law living with you! It was too simple to believe, too convenient to be true. KD themselves admitted near the end of their paper, “This topic merits serious debate.” ³

The invitation to debate was accepted. In 2021, psychologist Matthew Killingsworth came out with a study refuting KD’s findings, using a more precise method for sampling people’s emotional states. Emotional well-being, Killingsworth found, doesn’t have a limit with increased income. ⁴Either KD were mistaken, or there was something more complicated afoot.

Kahneman quickly reached out to Killingsworth, wanting to get to the bottom of this. They agreed to an “adversarial” collaboration (a delightful emerging practice in the scientific community) and enlisted a third researcher to help mediate. Together, they looked at the data from their studies to find out who was right. ⁵

It turned out, both of them were.

“Less unhappy” is not the same as “happy”

Killingsworth was right that, in general, emotional well-being rises with income. Kahneman’s failure was having a simple “yes/no” approach to finding out how happy people were. 

Here’s why: imagine Person A makes $90,000 a year and Person B makes $100,000. If you ask them both, “Do you feel content?” and they both answer, “Yes,” you could easily assume they feel the same. But if you ask them how content they feel on a scale of 0-100 and Person A answers, “80” and Person B answers “90,” we know now that Person B is happier than Person A. Kahneman’s yes/no method put a ceiling on the answers people could give.

But Kahneman was also right — at least, partly. When he and Killingsworth reanalyzed the data together, they found that while most people became happier with increased income, there was a minority group of about 15% whose emotional well-being did not improve beyond an income of around $100,000 (as of the year 2022). Killingsworth had originally focused on the overall average trend, which failed to pick up on this subgroup pattern that Kahneman’s method had found.

Money doesn’t buy happiness, but it helps make you less unhappy.

What are we (and Aristotle) to make of all of this?

Kahneman and Deaton suggest that being happy is not the same thing as not being unhappy. A double negative does not equal a positive. Almost anyone driving a Ford Focus with peeling paint and broken doors who lives paycheck to paycheck is getting an instant mood lift when that paycheck goes up. The pain of not having enough money is not unlike the pain of a splitting headache that a dose of extra-strength Tylenol will fix. Aristotle, I think, would agree:  “He is happy who lives in accordance with complete virtue and is sufficiently equipped with external goods, not for some chance period but throughout a complete life,” he writes in the Nicomachean Ethics (emphasis mine). 

But once you have the basic needs and comforts covered, you’re in different territory. You have more complex problems to solve, whether it’s boredom, loneliness, or existential dread. Who were these people in the 15th percentile who weren’t emotionally any better off earning over $100,000? The paper suggests “heartbreak, bereavement, and clinical depression” as possible explanations. Maybe they were. Or maybe they had chronic back pain, gambling addictions, or a lack of life purpose. Maybe they lived far away from their adorable grandchildren and hated flying. If there’s a key message we can take away from this series of studies – and I do so with great caution – it would be this: money doesn’t buy happiness, but it helps make you less unhappy. 

Here are a few other interesting things that these researchers discovered:

• While higher incomes did allow people to “buy” time, time poverty actually increased with income. This was measured by the question “Do you have too little time to do what you’re currently doing?” Other research has shown similar findings for high earners. (Killingsworth, 2021)

• The more people equated money with success, the lower their experienced well-being was on average (Killingsworth, 2021)

• The relationship between happiness and income levels explains less than 1% of the variance in people’s moment-to-moment emotional well-being. In other words, over 99% of the variation in how happy people feel at any given second is due to reasons other than income. (Kahneman and Killingsworth, 2022).

And what are we to make of the 85% of people whose emotional happiness continually rose with their income? I don’t find it surprising, considering that more money, at least in theory, gives us more freedom and power to help ourselves and others. But correlation is easy to prove; causation is much harder. Perhaps optimistic, gritty, virtuous individuals are more likely to flourish in whatever they put their mind to, earning more money in the process, causing a virtuous cycle. No matter how much you earn, however, it’s not worth much if you have trouble feeling grateful for it.

2,000 years ago, Epicurus wrote: “Nothing is enough for the man to whom enough is too little.” The school of Epicurean thought held that the highest happiness was found in simple pleasures and the absence of pain. Money is the means, not the end. I doubt Epicurus would be surprised by the findings of 21st-century research, nor would most of his frenemies over at the school of Stoicism. Seneca, the ancient Roman equivalent of a billionaire, agreed:  “It is not the man who has too little, but the man who craves more, that is poor.”

Happiness is more of a process than a pursuit. A simple money formula can’t fill the God-shaped hole inside us, although not for lack of trying. But while money can’t solve all our problems, it can at least help solve the problem of unhappiness – and there’s something to be said for that. 

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Read Next: 3 Ancient Solutions to the Problem of Happiness →

1. Aristotle. Nicomachean Ethics. Translated by Robert C. Bartlett and Susan D. Collins. University of Chicago Press, 2012. 
2. Kahneman, D., & Deaton, A. (2010). High income improves evaluation of life but not emotional well-being. Proceedings of the National Academy of Sciences, 107(38), 16489-16493. Read it here.
3. In all fairness, the details of KD’s actual research paper are often ignored or glossed over, distorting the actual findings. The “$75,000 income happiness rule” has suffered a similar fate to the “10,000 hours of practice” rule; it’s enjoyed viral distribution but most people don’t read the fine print.
4. Killingsworth, M. A. (2021). Experienced well-being rises with income, even above $75,000 per year. Proceedings of the National Academy of Sciences, 118(4), e2016976118. Read it here.
5. Killingsworth, M. A., Kahneman, D., & Mellers, B. (2023). Income and emotional well-being: A conflict resolved. Proceedings of the National Academy of Sciences of the United States of America, 120(10), e2208661120. Read it here.