Name: Money DOES Buy Happiness | Scientific Research Explained
Uploaded: 2020-09-16T19:31:13.000Z
Duration: 8 min 9 s
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I often hear the 2010 study by Kahneman and Deaton cited as the decisive study concluding

that making anything more than $75,000 a year won't make you any happier.

In this video, we'll go over the new research and explain what the research really has to

What's going on guys, Dr. Jubbal, MedSchoolInsiders.com.

For those of you who are new here, I graduated with my M.D. in 2017 and matched into plastic

You can learn the story on my vlog channel.

After publishing and presenting dozens and dozens of peer reviewed papers and abstracts

(you can find the full list on my personal website), I've developed an astute sense

of research methodology, analysis, limitations, and even the research culture.

I constantly hear studies being misquoted or misattributed, and so I've decided to start a series of

videos that debunk common misunderstandings and misconceptions of the scientific literature.

We'll be starting with money and happiness.

First, let's talk about the most commonly quoted study when it comes to money and happiness,

Kahneman and Deaton's study from 2010 titled “High income improves evaluation of life

Funny enough, the title says nothing about happiness, in fact, it even states that money

doesn't improve emotional well-being, but everyone seems to think it does.

The authors define two types of wellbeing: emotional well-being and life evaluation.

Emotional wellbeing is the quality of a person's everyday experience such as joy, fascination,

Life evaluation refers to a person's thoughts about his or her own life on a longer time scale.

The main conclusion of the study was that people's life evaluations rose steadily

The authors interpreted the findings that more money did not buy happiness, but

rather less money is associated with emotional pain.

Based on their results, perhaps $75,000 per year is the threshold beyond which further increases

in income no longer improve their ability to do what matters most to their emotional

wellbeing, such as spending time with people they like, avoiding pain and disease, and

Right off the bat, there are limitations in that the study doesn't account for drastically

variable costs of living by region or city, and as this study was done close to a decade

ago, we need to factor in inflation for our current understanding.

Beyond that, the highest income bracket was simply defined as “greater than $125,000

per year”, net worth was not included, and the sample had a very small number of participants

Lastly, and most importantly, this study, and the ones that follow, are all cross-sectional studies.

Without going into the types of study designs, understand that cross-sectional studies can

And in science, the findings from a cross-sectional study are not nearly as strong as a well designed

Ok so what does the scientific literature say now? Donnelly and colleagues published a paper

titled “The Amount and Source of Millionaires' Wealth (Moderately) Predict Their Happiness.”

This Harvard Business School study surveyed over 4,000 millionaires on various factors,

from their net worth to income, marital status, employment status, country of residence, gender,

And unlike Kahneman's study, they looked at factors beyond income, including net worth.

Two factors were most significantly correlated with improved levels of happiness: first, a net

worth of*$10 million or greater, and two, earning your wealth rather than inheriting it.

Now I need to have a net worth of $10 million to be the happiest?

Again, taking any single study as gospel is dangerous.

And again, this is correlation, not causation.

Other studies, such as Boyce and colleagues from 2010 suggest that an individual's relative ranking

of their income compared to others is more important than their absolute wealth.

Ok, So How Much Money Do I Need to Be Happy?

If I were to blindly go off the conclusions of these studies, I would tell you to make

$75,000 per year and have a net worth of $10 million or more, which you had to have earned rather

Again, make $75k per year and have $10 million in the bank that you earned.

Starting to see why this doesn't make sense?

No single study should be treated as the singular truth.

Aknin et al in 2009 demonstrated that people place too much emphasis on accumulating wealth.

We think more money makes us happier than it actually does.

We spend more time at work, grinding, putting off time with friends and loved ones because

we believe moving up the ladder and making more money will make us happier in the end.

So perhaps there's something else we aren't considering.

Could how we spend our money be more important than the actual dollar amount?

Gilovich and colleagues as well as Van Boven et al. demonstrated that spending on experiences

and spending on others was associated with greater happiness than spending on material goods.

Dunn and colleagues demonstrated that giving to charity was also more happiness-inducing

At this point, I'd like to invite you to take a step back.

Sure, giving to charity and spending on experiences will make you happier than buying goods, according

But if you're struggling to make ends meet and put food on the table, will you maximize

your happiness by spending money on healthy groceries or on a vacation to South Africa?

Blanket statements summarizing any study are misguided and ignorant.

Out of the people who tout the statistic that you don't need more than $75,000 per year

to maximize your happiness, how many do you think actually read the study?

How many have a research background or can at least critically analyze the merits and

The ability to think for yourself and filter incoming information is one of the most underrated

Doctors should always know what's wrong, and Google should answer all of my questions.

The reality is, as humans, there's so much that we don't understand, and there are

still gaping holes in the scientific literature.

Instead of focusing on a certain number to justify your behavior or lack of behavior,

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Money DOES Buy Happiness | Scientific Research Explained

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