Contrary to popular belief, more money does lead to to increased happiness without a cut-off point, according to economists.
Economists Betsey Stevenson and Justin Wolfers of the University of Michigan claim that life satisfaction keeps increasing as a person earns more money. This contradicts the plateau suggested by the Easterlin paradox theory, which states that money buys only a finite level of happiness, beyond which a person cannot expect to be any happier irrespective of increased wealth.
Stevenson and Wolfers believed that this was not correct and set out to prove the theory wrong. Analysing data from a range of sources and countries, they found that the wealthier people are, the happier they are, according to the report.
Graphs representing income and happiness levels showed no diminishing returns in relation to further increased wealth, regardless of whether someone may be rich or poor. However, richer households reported higher life satisfaction levels.
Source: http://au.pfinance.yahoo.com/fame-and-fortune/article/-/16977371/actually-more-money-increases-happiness/
