It’s a question that’s raised time and time again – can money buy happiness? Well, a recent study published in the Proceedings of the National Academy of Sciences has finally decided: Yes… to an extent!
The study was launched after two anonymous donors contributed a gift of $2 million to TED, who facilitated the study using Twitter. Those in the study came from three low-income countries: Brazil, Indonesia, and Kenya – and four higher-income countries: Australia, Canada, the United Kingdom, and the U.S. Two hundred of the participants were randomly chosen to receive $10,000 via PayPal, while 100 in the control group received no monetary “gift.”
Ultimately, researchers found that windfall wealth made people happier, though not to the same extent. The gains were greatest for recipients who had the least, such as those from lower-income countries or those earning around $10,000 per year. Participants whose annual income was greater than $123,000 did not report noticeable improvements in their happiness.
The findings align with a famous study published in 2010 , suggesting that emotional well-being improves as annual income rises, but only up to $75,000 (that’s about $102,000 in today’s dollars). Increases in income above this cap show no correlation to life satisfaction. In fact, the study concludes that higher income may buy life satisfaction, but not happiness, while low income is associated with both low life satisfaction and low happiness.
What does this mean for inheritors? A common goal of economic systems is to improve human well-being and advance achievements by making the best possible use of scarce resources. In the U.S., the official poverty rate in 2021 was 11.6 percent – meaning 37.9 million people earned less than $14,000 per year. According to the Wall Street Journal, this recently published study suggests that those who can gift with “no strings attached” should, as doing so is a surefire way to create happiness, especially for those who live below the poverty line. When giving charitably, consider tapping in to your potential to make a profound impact on someone’s well-being, and ultimately their life.