Does Money Buy Happiness?

High income improves evaluation of life but not emotional well-being, Daniel Kahneman and Angus Deaton, Center for Health and Well-being, Princeton University, Princeton, NJ - Proceedings of the National Academy of Sciences (PNAS), August 4, 2010.

We find that emotional well-being (measured by questions about emotional experiences yesterday) and life evaluation (measured by Cantril's Self-Anchoring Scale) have different correlates. Income and education are more closely related to life evaluation, but health, care giving, loneliness, and smoking are relatively stronger predictors of daily emotions. When plotted against log income, life evaluation rises steadily. Emotional well-being also rises with log income, but there is no further progress beyond an annual income of ∼$75,000. Low income exacerbates the emotional pain associated with such misfortunes as divorce, ill health, and being alone. We conclude that high income buys life satisfaction but not happiness, and that low income is associated both with low life evaluation and low emotional well-being.