Does Money Stop Buying Happiness at $75K?

For over a decade, $75,000 became the magic number everyone talked about when it came to happiness and money. Pop psychology articles cited it endlessly. Personal finance gurus built advice around it. The message was clear: once you hit that threshold, more money won't make you happier.

Turns out, that wasn't quite right.

The Study That Started It All

Back in 2010, Nobel Prize-winning psychologist Daniel Kahneman and economist Angus Deaton published groundbreaking research analyzing over 450,000 responses from the Gallup-Healthways Well-Being Index. Their finding seemed definitive: emotional well-being rose with income up to about $75,000 annually, then flatlined. Beyond that point, people reported no additional day-to-day happiness, even as their bank accounts grew.

The study distinguished between two types of happiness: emotional well-being (how you feel day-to-day) and life evaluation (how you assess your life overall). While life satisfaction kept climbing with income, those daily feelings of joy, stress, and sadness supposedly plateaued at the $75K mark.

What Changed?

Enter Matthew Killingsworth, a senior fellow at Penn's Wharton School, who wasn't so sure about that plateau. In 2021, he published research using a smartphone app that pinged over 33,000 participants throughout their days, asking in real-time how they felt. His data showed something different: happiness kept rising with income well beyond $75,000, with no clear ceiling in sight.

The plot thickened. Rather than fighting over whose data was right, Killingsworth did something unusual—he teamed up with Kahneman himself to figure out what was going on. Their 2023 collaborative study revealed the nuance both datasets were capturing:

• For most people, happiness does continue rising with income beyond $75K
• For the least happy people (roughly the bottom 20%), emotional well-being truly does plateau around $100K
• For the happiest people, more money correlates with even greater happiness, with no obvious upper limit

Why the Confusion?

The original $75K finding wasn't wrong so much as incomplete. It reflected an average that masked important variations between different groups. When you're already struggling emotionally, more money helps up to a point, then other factors become more important. But if you're generally happy? Additional income can indeed make things even better.

It's also worth noting that $75,000 in 2010 would be roughly $108,000 in 2024 dollars. Even if the plateau existed as originally described, the threshold would have shifted considerably.

The Real Takeaway

Money doesn't automatically buy happiness, but financial security and the freedom it provides matter more than we thought. The relationship between income and well-being is messier and more personal than a single number can capture.

What does stay consistent across all the research? Once you're past the point of meeting basic needs comfortably, how you spend your money and time matters more than simply having more of it. A $200K salary won't help much if you're working 80-hour weeks and never see your family.

The $75K happiness threshold made for a great headline, but reality is more interesting. For most people, there's no point where extra income stops contributing to well-being—it's just that the gains might be smaller than you'd expect, and other life factors matter tremendously too.