The money-happiness relationship is one of the most studied questions in wellbeing research and one of the most actively revised. For most of the first two decades of positive psychology, the dominant finding was what became known as the Kahneman-Deaton threshold: emotional wellbeing (day-to-day mood and feeling) plateaued at approximately $75,000 annual household income in the United States (around 2010 dollars), while life evaluation (how satisfied people are with their overall life) continued to rise with income above that level. The interpretation widely adopted was that beyond a certain point, additional income no longer purchased additional day-to-day happiness, even if it continued to provide a sense of overall life satisfaction — a nuanced finding that was widely simplified to “money can’t buy happiness above $75k.”
In 2021, Matthew Killingsworth published a study challenging this plateau finding, using real-time experience sampling via a smartphone app rather than retrospective survey recall. His finding: wellbeing continued to rise with income well above the Kahneman-Deaton threshold, with no visible plateau. The contradiction prompted a collaborative adversarial collaboration between Killingsworth and Kahneman himself, published in 2023 shortly before Kahneman’s death. The result is the most honest and nuanced account of the money-wellbeing relationship yet produced — and its findings deserve more attention than they have received.
The Kahneman-Killingsworth Synthesis
- The original 2010 finding: emotional wellbeing (positive affect, freedom from worry and stress) plateaus at approximately household income of $75,000. Additional income above this level provides life satisfaction gains but not day-to-day mood improvements.
- The diminishing marginal utility of income is a well-established economic principle that applies specifically to hedonic experience: the difference between $0 and $25,000 is enormous; between $75,000 and $125,000, much smaller; between $500,000 and $1,000,000, smaller still.
- The adaptation mechanism: people rapidly adapt to income increases, adjusting their reference point and lifestyle accordingly, such that the wellbeing boost from a raise or windfall is typically temporary.
- Research on the “hedonic treadmill” (Brickman & Campbell) suggests that even significant positive life events — including large income increases — produce only temporary wellbeing improvements before adaptation returns people to their baseline.
- Killingsworth’s real-time experience sampling found no plateau in the relationship between income and experienced wellbeing — wellbeing continued to rise logarithmically across the full income range studied.
- The 2023 adversarial collaboration synthesis: for most people (approximately 85%), emotional wellbeing continues to rise with income beyond the original threshold. For a specific subgroup (approximately 15%) characterised by existing emotional distress, income above the threshold provides no additional wellbeing benefit — suggesting that the original plateau finding accurately describes unhappy people but not the general population.
- The mechanism: higher income provides greater autonomy, reduced time pressure, better healthcare access, higher-quality social experiences, and reduced exposure to acute stressors — benefits that continue to compound beyond the “comfortable sufficiency” level.
- The type of spending matters: research by Elizabeth Dunn and Michael Norton consistently shows that spending money on experiences, on other people, and on time-saving services produces stronger and more durable wellbeing effects than spending on material goods.
The honest synthesis from the 2023 collaborative research: for most people, more money does continue to produce more wellbeing beyond the original threshold — but the mechanism is autonomy, reduced stress, and better quality experiences, not the accumulation of goods. And for a specific subgroup — people already experiencing significant emotional distress, anxiety, or depression — income above sufficiency provides essentially no wellbeing benefit. This is the crucial finding: money addresses financial stress effectively but does not address non-financial sources of unhappiness. The person who is distressed because of their relationships, their meaning, their health, or their unresolved psychological patterns will not find those conditions improved by additional income beyond what removes the material stressor. The prescription: get to financial sufficiency as a genuine priority (the difference in wellbeing below this level is enormous and real), then invest additional income deliberately in the things with the highest evidence-based wellbeing return: experiences, relationships, time, and contribution.
Spending for Wellbeing: The Evidence
S2 Day 19 Commitment
Audit your last month of discretionary spending. What proportion went to material goods, what to experiences, what to time-saving, and what to others? Then compare: which of those categories has produced the most durable positive effect on your actual wellbeing? The research prediction is consistent. The personal data usually confirms it. The audit tells you where to redirect future discretionary spending to get the highest wellbeing return on the same budget.
