Americans have a peculiar conviction that the one thing money can't give us is satisfaction. You can't buy happiness, we've all been told. "Mo Money Mo Problems", Biggie concurred. And while we can all agree that desperate poverty is hideous, there is a broadly held view that after a certain level of income (around $75,000, say), more money doesn't buy more well-being.
But it's just not so. Economists Betsey Stevenson and Justin Wolfers have been arguing for years that, yes, richer families tend to be happier, and no, there is not an automatic cut-off point. In other words: Mo money, fewer problems.
Their elegant and straightforward new paper can be nicely summed up in the two graphs below. The first graph looks at income groups within countries. In all nations surveyed, richer households reported more life satisfaction. (Statistical note: This graph is logarithmic. That means doubling your income from $1,000 to $2,000 raises satisfaction by the same amount as doubling your income from $10,000 to $20,000. You can imagine why this might make a good theoretical case for income redistribution.)
The next graph compares different countries, rather than different households within countries. Here, each circle represents a nation, with the richest ones clustered on the right. If extra income didn't matter for well-being, you'd expect the line to flatten. Instead, it steepens. More money doesn't just mean happier families. It means happier countries.