Can Money Buy Happiness?
This Holiday Season, families will reunite and celebrate various holidays and traditions. This time of year is often filled with joyous emotion as many view their families, friends, and others closest to them as their main source of happiness. Many of those same people have also said, “Money can’t buy happiness!”
…But can it?
Many Americans would answer “no” to this question, but in a recent study done by Princeton University’s Daniel Kahneman, he argues the opposite. In economics, the Law of Diminishing Returns refers to the decrease in satisfaction you receive by consuming more of the same item. For example, the third cookie is never as delicious as the first. Kahneman argues that when it comes to diminishing returns, money is no outlier.
Common sense would dictate that you wouldn’t get as much joy from your millionth dollar as you would from your thousandth, but where does the additional happiness really level off? Kahneman believes the answer to be an income of $75,000. People in his study reported an increase in happiness until they reached that milestone, but any additional income beyond that was significantly less impactful on their day-to-day lives.
Kahneman offers the interesting perspective that money can buy happiness, but only up to a point. After that, many people will seek happiness elsewhere. Where do you find happiness this holiday season?