$75,000 Buys Happiness, Twice as Much Buys More

07/19/2011 10:21 pm ET | Updated Sep 18, 2011
  • Gernot Wagner Lead Senior Economist, Environmental Defense Fund

"Money doesn't buy happiness." Ask anyone who had been slaving away on his desk late last night. Happiness seems to stop going up at $75,000. Make more and you are no better off.

This is only a third of the story.

Double my income today and I'll tell you tomorrow that I am happier for it -- another piece of conventional wisdom. I might get used to my increased riches eventually, but for now let me enjoy the extra cash.

There's another, even more profound complication lurking in the background: Ask me how I evaluate my life overall, and the threshold goes away altogether. More money suddenly does buy more happiness, even for a household raking in more than $75,000 per year.

$75,000 itself, of course, is already high. Two thirds of American households make less. Half make less than $50,000. And that's Americans. Most of the world has a ways to go to hit any kind of plateau.

Even if we moved from our obsession with money to maximizing "happiness," we'll be accumulating quite a bit more stuff for a while.