By mindnesto Editorial Team · Updated June 2026 · 9 min read
Sources cited from PNAS, Nature Human Behaviour, APA, NHS and peer-reviewed happiness and wellbeing research

Can money buy happiness? It is one of the oldest questions in human psychology — and for decades, researchers thought they had a clean answer. In 2010, Nobel Prize-winning economist Daniel Kahneman of Princeton University and his colleague Angus Deaton published a landmark study concluding that emotional wellbeing rises with income up to approximately $75,000 per year — and then plateaus. Beyond that threshold, more money produced no measurable increase in daily happiness.

That finding became one of the most-cited statistics in popular psychology. It appeared in TED talks, productivity books, financial planning guides, and approximately every article on this topic that exists — including Verywell Mind’s.

The problem is that the story moved on in 2021. And most content sites have not caught up.

A study by Matthew Killingsworth of the Wharton School at the University of Pennsylvania — published in PNAS — directly challenged the $75,000 plateau finding. Using real-time experience sampling data from over 33,000 employed US adults, Killingsworth found that happiness continued rising with income well beyond $75,000, with no plateau visible in his dataset.

Two of the world’s most respected happiness researchers now had contradictory findings — and what happened next is scientifically important. Rather than defending their respective positions, Kahneman and Killingsworth collaborated on a 2023 adversarial collaboration published in PNAS — a rigorous methodological attempt to resolve the contradiction. Their conclusion was nuanced and genuinely more useful than either original finding alone.

This is the story that most articles about money and happiness are not telling. This guide tells it in full.

We have connected this to our guides on how to deal with loneliness and social care mental health — because the strongest evidence in happiness research consistently points toward the same conclusion: connection and meaning outperform income as predictors of genuine wellbeing, especially above the financial security threshold.

Note: This article is for informational and educational purposes. Financial stress that is significantly affecting your mental health warrants professional support. In the UK, Mind’s financial wellbeing resources provide a helpful starting point.

What Does the Latest Research Actually Say?

The 2023 Kahneman-Killingsworth adversarial collaboration — published in PNAS — produced the most precise answer to the money-happiness question currently available. Their findings resolved the apparent contradiction between the two studies in a genuinely illuminating way.

For most people, happiness does continue rising with income beyond $75,000 — Killingsworth was right about that. However, for a specific subgroup — people who were already unhappy — the plateau that Kahneman observed was real. For unhappy people, higher income did not produce proportionally greater happiness gains. For people who described themselves as happy or moderately content, income gains continued producing wellbeing improvements well into higher income ranges.

The practical implication is significant. Money helps most when you start from a relatively positive baseline. For people in genuine distress — whether from relationship problems, mental health difficulties, health challenges, or meaning deficits — additional income does not fix the underlying issue. It simply provides more comfortable circumstances within which the same distress continues.

Furthermore, and most importantly, both researchers agree that the relationship between money and happiness is not linear, not universal, and not independent of how money is spent and what it frees you from or enables.

The Two Types of Happiness — Why the Distinction Matters

Happiness research distinguishes between two fundamentally different wellbeing dimensions that income affects very differently.

Hedonic wellbeing — the frequency and intensity of positive emotions in daily experience. This is what you feel moment to moment — joy, pleasure, contentment, engagement. Income improves hedonic wellbeing primarily through reducing the stress and scarcity that suppress positive emotion.

Eudaimonic wellbeing — the deeper sense of meaning, purpose, and living in alignment with your values. This is what psychologist Martin Seligman of the University of Pennsylvania identifies as the more durable and more psychologically significant dimension of genuine flourishing. Income has a much weaker and more complex relationship with eudaimonic wellbeing than with hedonic wellbeing.

Understanding this distinction reframes the original question. Money can buy relief from scarcity — and that relief produces real, measurable hedonic wellbeing gains. However, money cannot buy meaning, authentic relationships, a sense of purpose, or the psychological growth that eudaimonic wellbeing requires.

The Neuroscience of Financial Stress and Wellbeing

Money affects happiness through specific, measurable neurological pathways — and understanding them clarifies both why poverty is psychologically devastating and why extreme wealth does not produce proportional happiness gains.

Financial Stress and the Scarcity Mindset

Sendhil Mullainathan of Harvard University and Eldar Shafir of Princeton University — in their landmark book Scarcity — demonstrated that genuine financial insufficiency produces a cognitive state called scarcity mindset that impairs decision-making, reduces impulse control, and depletes the prefrontal cortex bandwidth available for long-term thinking.

Financial scarcity does not simply feel bad. It measurably impairs cognitive function — reducing IQ-equivalent performance by approximately 13 points in experimental conditions. This finding explains why poverty is self-perpetuating in ways that go beyond simply lacking resources: the scarcity mindset that poverty produces makes the decisions required to exit poverty cognitively harder to make.

Cortisol and Chronic Financial Stress

Chronic financial stress activates the HPA axis — the body’s central stress response system — producing sustained cortisol elevation with the same physiological consequences as any chronic stressor: sleep disruption, immune suppression, cardiovascular risk, and increased vulnerability to anxiety and depression.

Research published in Social Science and Medicine confirmed that financial stress is one of the strongest predictors of poor mental health outcomes — independent of the objective financial situation. The perception of financial insecurity produces cortisol elevation even among people who are objectively above the poverty line.

This is why the lower end of the income-happiness curve is steep. Escaping genuine financial insecurity reduces cortisol meaningfully and consistently — and that cortisol reduction produces real, substantial wellbeing gains.

What Actually Makes People Happy — The Happiness Science That Goes Beyond Income

The most important contribution of decades of happiness research is not the answer to “How much money do you need?” It is the consistent identification of the factors that predict genuine long-term wellbeing more reliably than income above the basic security threshold.

Social Connection — The Strongest Predictor

The Harvard Study of Adult Development — the longest-running scientific study of adult happiness and health ever conducted — followed the same cohort of men for over 85 years and found that the quality of social relationships was the single strongest predictor of both happiness and physical health at every life stage measured.

Money ranked well below relationship quality in predicting which participants flourished in later life. This finding — replicated across multiple large-scale studies — represents perhaps the most important practical answer to the money-happiness question: invest in relationships with at least the same intentionality you invest in financial security. Our guide on social care mental health covers the science of building those relationships in depth.

Prosocial Spending — Giving Makes You Happier Than Receiving

Dr. Elizabeth Dunn of the University of British Columbia produced one of the most practically significant findings in happiness research: spending money on others produces greater and more durable happiness than spending the same amount on yourself.

Her research, published in Science, found this effect replicated across income levels and cultures — from university students with minimal disposable income to high-earning professionals. Prosocial spending activates the brain’s reward circuitry in ways that material self-purchase does not, and it simultaneously strengthens the social bonds that the Harvard Study identified as the primary predictor of long-term wellbeing.

This finding has a direct and actionable implication. If you want to use money to increase your happiness, the evidence consistently suggests spending it on others — or on shared experiences with people you value — rather than on material goods for yourself.

Experiential Purchases Outperform Material Ones

Professor Thomas Gilovich of Cornell University has demonstrated across multiple studies that money spent on experiences — travel, concerts, meals, classes, adventures — produces greater and more lasting happiness than money spent on material goods of equivalent financial value.

The mechanism involves hedonic adaptation — the brain’s tendency to habituate to new circumstances and return to a baseline happiness level. Material possessions are subject to rapid hedonic adaptation: the new car that produces delight in week one becomes simply your car by month three. Experiences resist adaptation more effectively because they exist in memory as narrative rather than as physical presence — and memories can be savoured, shared, and reinterpreted in ways that objects cannot.

Time Affluence — Why the Richest People Are Sometimes the Least Happy

Cassie Mogilner Holmes of UCLA and colleagues identified time affluence — the felt sense of having enough time — as a stronger predictor of daily happiness than material affluence for people above the basic security threshold.

This finding resolves a genuine paradox of high-income professional life. Many people who achieve the income levels that should produce happiness report instead feeling rushed, depleted, and disconnected — because the professional commitments that generated the income simultaneously consumed the time required to enjoy what the income provides.

Choosing time over additional income — whenever that tradeoff is available — is one of the most evidence-backed financial decisions for happiness above the security threshold.

Hedonic Adaptation — Why the New Always Becomes Normal

Hedonic adaptation — the universal human tendency to return to a stable happiness baseline after both positive and negative life changes — is perhaps the most important concept in happiness psychology for understanding money’s limitations.

Research consistently demonstrates that major positive financial events — a significant pay rise, a lottery win, a business success — produce happiness gains that are real but temporary. Within 6–12 months, most people have largely returned to their pre-event happiness level. The new salary becomes the baseline expectation. The new house becomes simply home.

This adaptation process is not a flaw or a failure. It is a well-documented feature of human psychology that has important practical implications. The hedonic treadmill — the tendency to pursue more in expectation of lasting happiness gains that adaptation then absorbs — is one of the most reliable drivers of chronic dissatisfaction in affluent societies.

A Practical Framework — Using Money for Maximum Wellbeing

Drawing on all of the above research, here is the most evidence-supported framework for using money to maximise genuine wellbeing.

Below the financial security threshold: Every pound or dollar that reduces genuine financial insecurity produces real, significant, and lasting wellbeing gains. Paying off high-interest debt, building an emergency fund, securing stable housing — these investments in basic financial security address cortisol-generating scarcity and produce the most substantial income-happiness gains available.

Above the security threshold: The evidence strongly supports prioritising:

Experiences over things — travel, shared meals, classes, adventures produce more lasting happiness than equivalent material purchases
Giving over receiving — prosocial spending activates reward circuitry more reliably than self-directed purchases
Time over income — choosing flexible hours, reduced commutes, and genuine rest over additional earnings produces wellbeing gains that salary increases often cannot
Relationships over status goods — investing money in shared experiences with valued people outperforms investing in social status signals
Meaning over comfort — supporting causes, creative projects, or community involvement that align with your values produces eudaimonic wellbeing gains that comfort spending cannot

Can Money Buy Happiness — Key Takeaways

What the 2026 science actually says:

The famous Kahneman $75,000 plateau has been significantly updated — Killingsworth’s 2021 PNAS study found happiness continues rising beyond this threshold for most people
The 2023 Kahneman-Killingsworth adversarial collaboration found the plateau is real but specific — it applies primarily to people who are already unhappy, for whom additional income does not resolve underlying distress
Money reliably buys relief from scarcity — and that relief is genuine and significant for people below the financial security threshold
Beyond that threshold, how you spend money matters far more than how much you have
Prosocial spending (giving) produces greater happiness than equivalent self-directed spending
Experiential purchases outperform material purchases due to hedonic adaptation
Time affluence is a stronger happiness predictor than material affluence above the security threshold
Social connection — identified by the Harvard Study of Adult Development — predicts long-term happiness more reliably than income at every level measured
Hedonic adaptation means happiness gains from income increases are real but temporary — the treadmill always resumes

A Word From mindnesto

At mindnesto, we think the money-happiness question is genuinely important — not because the answer is simple, but because most people are making financial and life decisions based on an outdated version of the evidence.

The headline answer — money matters a great deal when you do not have enough of it, and far less than people expect once you do — is clear and consistent across the research. What matters above that threshold is not the size of the number in your bank account. It is the quality of your relationships, the presence of genuine meaning, the felt sense of having enough time, and the capacity to give generously.

These are not consolation prizes for not being wealthy. They are the actual determinants of genuine human happiness — documented across cultures, income levels, and decades of rigorous research. 💙

Frequently Asked Questions

Can money buy happiness?

Partially — and in specific ways. Below the financial security threshold, money reliably produces significant wellbeing gains by reducing the cortisol-generating scarcity that impairs cognitive function and emotional regulation. Above that threshold, the relationship becomes much more complex and highly dependent on how the money is spent. The 2023 Kahneman-Killingsworth adversarial collaboration found that happiness continues rising with income for most people, but that additional income does not resolve happiness deficits rooted in unhappy baseline states, poor relationships, or absence of meaning.

How much money do you need to be happy?

There is no universal number. The financial security threshold — the income level below which scarcity meaningfully impairs wellbeing — varies significantly by geography, cost of living, family size, and individual circumstances. In the USA, the Killingsworth 2021 study found happiness continuing to rise well beyond the $75,000 figure Kahneman identified. The more practically useful answer is that once basic needs, security, and a modest buffer are met, how you allocate money and time matters far more than the absolute income level.

What does science say is the best way to spend money for happiness?

Research consistently identifies three high-return happiness expenditures: spending on experiences rather than material goods (Gilovich, Cornell), spending on others rather than yourself (Dunn, UBC), and spending money to buy time — delegating tasks you dislike or reducing commute — rather than acquiring additional possessions. All three consistently outperform material self-purchases in producing genuine, lasting wellbeing gains.

Does having more money reduce stress?

Yes — up to the financial security threshold. Chronic financial insecurity activates the HPA axis and produces sustained cortisol elevation, with all the associated mental and physical health consequences. Escaping genuine financial insecurity reduces cortisol measurably and consistently. However, above the security threshold, more money does not automatically reduce stress — and high-income professional lifestyles frequently produce their own significant stress burdens that offset the financial resources available to manage them.

Why do lottery winners not seem much happier?

Hedonic adaptation — the universal psychological tendency to return to a baseline happiness level following positive life changes — explains why lottery winners report only temporary happiness gains. Research published in Psychological Science confirms that major financial windfalls produce real but short-lived happiness increases. Within months to a year, most winners have adapted to their new financial circumstances and returned to approximately their pre-win happiness level — while simultaneously having lost the pleasure of ordinary small pleasures through upward comparison.

Mindnesto

Author Name

Can Money Buy Happiness? What the 2026 Science Actually Says

What Does the Latest Research Actually Say?

The Two Types of Happiness — Why the Distinction Matters

The Neuroscience of Financial Stress and Wellbeing