This is the timeless question. Does more money make us happier? And even more specifically, will more money make high income earners like doctors happier? The answer is complex. And until recently, there seemed to be an answer even though it didn't really pass the smell test. Now, however, more recent research sheds some interesting and maybe more practical light on this age old question…
Is $75,000 really the golden benchmark?
In 2010, Nobel prize winner Daniel Kahneman and a colleague, Angus Deaton, published a paper looking at how emotional well-being correlated with income. What they found was somewhat surprising: emotional well-being rose steadily up until it hit a plateau at $75,000 gross annual income.
The authors' conclusions?
“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.”
Wait…what?
This study generated a lot of discussion. It is obviously a hot topic, but the results also went against most people's intuition or daily anecdotal experience.
Take me for instance. Before learning of any of these studies, I would have argued that higher income was necessary but not sufficient for happiness. Meaning that if you didn't have a high income, it was tough to be happy as daily stressors would weigh on you more heavily. However, just having a high income wasn't enough on its own to make you happy. Purpose, health, time – these other factors, among others, are necessary as well.
This seems to jive enough with the study. But the sticking point comes at the level of income identified. An income of $75,000 seems way too low to be the plateau point for a leveling off effect on happiness. In fact, this is right around the current median household income (Of course, that is in 2023 dollars, not 2010 dollars but still…).
This income is not far off from what I made as a resident living in NYC and I can tell you, it was not sufficient. Money stressors abounded and financial well-being was low as I have discussed at length here.
Something just didn't seem right. Were we all in a minority of people who should be more appreciative and happy as a result of our income and just weren't?
New research emerges
In 2021, Matthew Killingworth published a paper with a contradictory finding. In an experience-sampling study, he and his team observed a linear relation between happiness and income.
Again, this seems to make sense in some regards. But is there truly no limit at which enough money is enough? Or will our happiness keep skyrocketing with each dollar gained? And it therefore makes sense to chase every bit we can get?
That doesn't sit particularly well either.
A closer look at the complex relationship between money and happiness
In 2023, Kahneman, Killingsworth, and Barbara Sellers published a paper in PNAS titled, “Income and emotional well-being: A conflict resolved.”
This work was able to reconcile some of the differences in findings between studies as well as the differences between the studies' findings and most people's lived experience. The results are very interesting.
A quick aside
Both teams of researchers did something really incredible and rare in my opinion. They found contrasting results in their initial work. But, instead of sitting on their pride and arguing about who was right, they got together and tried to figure out what was going on.
For instance, they found that in the 2010 study, Kahneman was actually measuring “unhappiness,” not rising joy, when he discovered his plateau at $75,000. Meanwhile, Killingsworth used a continuous scale that proved more sensitive in measuring the relevant findings.
And the result was something greater than the sum of their initial works. Something that has real meaningful impact. And, as we will see, both were right.
This adversarial collaboration is something we should all aspire to as we seek truth and significance in not only our professional lives but also personal lives.
So, will more money make us happier?
Let's examine some of the key findings of this collaborative work as we seek some answers to this complex question.
For most people, more money makes us happier
- Across the study population of 33,391 adults, emotional well-being rose with higher income
- This relationship continued beyond the previously established threshold of $75,000
- In fact, this increase in markers of happiness continued to rise up until about $500,000 in annual income (although data was more limited at the high and low extremes)
- For the happiest 30% of study participants, this relationship actually accelerated and became more pronounced above $100,000
There is a plateau, but it's not what you think
- The 20% least happy people in the study still experienced rising happiness with rising income
- However, for this subgroup, this relationship only lasted until an income of $100,000 was reached
- After that, happiness plateaued even with more rising income
Why is this? Well, the researched postulate that this occurs in a subgroup of the population because they are experiencing issues (like divorce, work stress, etc.) that money cannot solve.
There is no magic number
- No broadly applicable or universal income threshold was identified at which everyone stops experiencing rising happiness
- However, the effect size diminishes. For instance, the authors find that doubling income provides the same boost in happiness as a weekend off. And other major life events can provide a much greater boost in happiness than a jump in income
- An individual's baseline happiness will strongly impact how rising income impacts them and their emotional well-being
So, overall, happiness will increase as income rises for a majority 80% of people, even though the effect size will diminish at higher levels. For a minority 20%, happiness levels off at $100,000 likely due to baseline traits as well as extrinsic stressors that money cannot solve.
But the question remains…
What do these findings mean for doctors – can more money make us happier?
Here are my key takeaways from this study as it relates specifically to doctors:
- More income will result in greater happiness for most doctors
- However, as we all exist at the higher end of the income spectrum, our happiness may be impacted by an even greater degree by things like health and time freedom once we reach a certain income level (perhaps $500,000)
- For all doctors, there will be factors that exist, including burnout, that more money cannot solve
- For a minority of doctors (likely around 20%), factors such as burnout will eliminate the gains in happiness that usually occur with increasing income.
- This explains why higher earning specialties do not necessarily have the greatest job satisfaction or happiness
And even more importantly…
So, what can we, as doctors, do to maximize of happiness in light of these findings?
- Work to maximize your income clinically as well as non-clinically using physician side gigs like these
- Build basic habits to improve your financial well-being and place yourself firmly on a path to financial freedom
- Spend your income intentionally to maximize the joy you get from it
- Focus on other aspects of your well being like increasing your time freedom, optimizing your mental and physical health, and nurturing your personal life – if these aspects of your life deteriorate, money won't help overcome them. Here is why this impacts some more than others…
- Burnout is an issue that money alone cannot overcome. I know because I experienced it. We should all focus on strategies to mitigate the impact of burnout on us in our professional lives
Putting a bow on things
Money can help make us happy. But it is not the only thing.
And that holds true in medicine as well.
The old taboo that we should not think about money as physicians is clearly wrong. Optimizing our financial well-being will improve our overall well-being and can make us better doctors. But it alone is not sufficient. At a certain income level, in which most physicians exist, other factors like time and professional satisfaction can make an even bigger impact.
And just knowing this information can help us all to maximize our happiness in a personalized manner!
