Benjamin Todd

It's a cliche that you can't buy happiness, but at the same time, better pay is people's top priority when looking for new jobs.

Moreover, when people are asked what would most improve the quality of their lives, the most common answer is more money.

What's going on here?

Which side is right?

A lot of the research on this question is remarkably low quality, but several major studies in economics offer more clarity.

We reviewed the best studies available, and the truth turns out to lie in the middle.

Money does make you happy, but only a little.

For instance, here are the findings from a huge survey in the United States in 2010.

This is a graph with household income on the x-axis and life satisfaction from 1 to 10 on the y-axis.

And there's a line labeled life satisfaction that begins by increasing quite rapidly, so that for every given increase in household income, there's quite a lot of life satisfaction increase.

But by the end of the graph, it's flattened out, so that life satisfaction isn't increasing much as household income goes up.

You can see that going from a pre-tax income of $40,000 to $80,000 was only associated with an increase in life satisfaction from about 6.5 to 7 out of 10.

That's a lot of extra income for a small increase.

This is hardly surprising.

We all know people who've gone into high-earning jobs and ended up miserable.

But this result may be too optimistic.

If we look at day-to-day happiness, income seems even less important.

Positive affect is whether people reported feeling happy yesterday.

The left axis of the chart below shows the fraction of people who reported yes.

This line goes flat around $50,000, showing that beyond this point, income had no relationship with day-to-day happiness in this survey.