Most of us have heard that magic number: $75,000 a year.

The story went like this: up to that point, every extra thousand noticeably improves your life, but after that — the benefits plateau. Happiness supposedly hits a ceiling and says, "Thanks, I’m good."

That idea originated in 2010 from Daniel Kahneman (the Nobel Prize–winning psychologist) and Angus Deaton. Their graph went viral: it suggested that emotional well-being rises steadily until about $75k, then flattens out almost completely. Magazines, bloggers, and financial gurus repeated it for a decade: "Money can’t buy happiness beyond a certain point."

Then Matthew Killingsworth from the Wharton School came along and quietly said, "Sorry, but that was a data artifact."

What Killingsworth actually found (and why it changed everything)

Killingsworth tracked 33,391 working American adults, but he didn’t just ask them to rate their lives once a year. He pinged their phones several times a day with one simple question: "How do you feel right now, 0 to 100?" Over a year, he collected 1.7 million real-life moments.

The graph looked completely different.

Happiness kept rising — linearly and continuously — all the way to the highest incomes in the sample (people earning $500k+). What’s more, the richer people were, the fewer truly bad days they had and the more genuinely great days they experienced.

No plateau. No ceiling.

When Killingsworth and Kahneman later sat down together to re-analyze everything in an "adversarial collaboration" (yes, Kahneman intellectually honestly admitted the original conclusion needed revision), they arrived at a fascinating compromise picture:

• For about 80–85% of people, happiness continues to rise with income, with no upper limit in sight.
• For an unhappy minority (15–20%), there really is a plateau, usually around $100k. The most striking finding? These people are often dealing with "misery" that money simply cannot fix: severe clinical depression, heartbreak, or chronic pain.

Why money actually works better than we thought

Psychologists point to three main mechanisms that explain why higher income correlates with higher well-being:

• Removing the negative. A financial cushion turns down the constant background stress of "What if I can’t pay rent / feed the kids / fix the car?" Your brain stops scanning for threats 24/7. This isn’t about luxury — it’s about the ability to sleep without dread.
• Boosting perceived control. In psychology, this is known as an Internal Locus of Control. People with an internal locus believe their actions shape their future. Money gives you real tools to exercise this: you can move to a better neighborhood, leave a toxic job, study what you love, or get medical care without panic. Every such choice is proof to your brain: "I can steer my life." A strong sense of control is one of the most powerful predictors of happiness ever discovered.
• Buying time and experiences. Instead of cleaning the house yourself, you pay someone and go play with your kids. Instead of cooking when you’re exhausted, you order quality groceries and actually enjoy dinner with friends. Money doesn’t buy the most precious resource (time and attention), but it lets you redirect yours toward what actually feeds your soul.

But why do some rich people still look miserable?

Two classic psychological traps: Hedonic Adaptation + Social Comparison.

A new Porsche feels normal after six months. Your neighbor buys a bigger yacht — suddenly yours feels small. The brain adapts lightning-fast to the good stuff and starts demanding the next dopamine hit.

The people who fall into that "plateau minority" in the data are often those spending money on status and keeping score with others, rather than on freedom and meaningful experiences.

So how much is actually "enough" to be happy?

Short answer: enough to solve your basic problems, have 6–12 months of expenses saved, and occasionally do what truly matters to you.

For someone in a small town, that might be $40k a year. For a family of five in an expensive city with medical issues — maybe $200k+. The big news from the 2021–2025 studies is that there is no universal magic number. There’s only one rule that always holds:

Money increases happiness to the exact degree that you use it to reduce pain and increase freedom — not to impress the neighbors.

When you pay someone to do the things you hate, you’re buying happiness. When you buy yet another designer bag solely to signal status, you’re buying an illusion.

Choose wisely. And remember: the latest science says there’s more financial room for real freedom than we ever believed.

So maybe it’s time to revisit your money goals — not for the number in your bank account, but for how many days a year you actually feel alive.

References

• Kahneman, D., & Deaton, A. (2010). High income improves evaluation of life but not emotional well-being. Proceedings of the National Academy of Sciences. (The study that established the $75k plateau theory).
• Killingsworth, M. A. (2021). Experienced well-being rises with income, even above $75,000 per year. Proceedings of the National Academy of Sciences. (The study using smartphone tracking that debunked the plateau).
• Killingsworth, M. A., Kahneman, D., & Mellers, B. (2023). Income and emotional well-being: A conflict resolved. Proceedings of the National Academy of Sciences. (The adversarial collaboration that reconciled the previous two studies).