WASHINGTON – Money does indeed buy happiness, and more money leads to more happiness, according to a study released Monday by economic researchers.
While a link between money and well-being is not surprising, the new study contradicts some earlier research which suggested the effect diminished above a certain level of income that allows people to meet basic needs.
Betsey Stevenson and Justin Wolfers of the University of Michigan write in the May 2013 American Economic Review, Papers and Proceedings that there is no”satiation” point in the money-happiness equation.
They found that the link is valid “when making cross-national comparisons between rich and poor countries as when making comparisons between rich and poor people within a country.”
The study appears to contradict a theory dubbed the Easterlin Paradox, developed in 1974 by Richard Easterlin, now at the University of Southern California. Easterlin’s research, which drew notably on surveys from Japan, suggested little or no increase in national happiness despite the country’s post-World War II economic miracle.
But Stevenson and Wolfers said their research showed the Easterlin Paradox and similar theories are just wrong.
“If there is a satiation point, we are yet to reach it,” they wrote. “We find no evidence of a significant break in either the happiness-income relationship, nor in the life satisfaction-income relationship, even at annual incomes up to half a million dollars.”