Research Confirms Higher Salaries Make People Happier
(But These Other Things Help Even More)

We’ve all heard the old adage: Money doesn’t buy happiness. Sounds nice, but turns out it’s not actually true, and the researcher behind it has admitted he was wrong all along.

Though the saying has been around for some time, the scientific theory behind it was initially posited by Daniel Kahneman, a Nobel Prize-winning economist and psychologist, in a study that concluded “emotional well-being [also] rises with income, but there is no further progress beyond an annual income of $75,000.”

In early 2023 however, this theory of a “happiness plateau” was debunked by Kahneman himself in a new study that challenged his previous research.

The new study by Kahneman and Killingsworth, a happiness researcher and senior fellow at the University of Pennsylvania’s Wharton School, has found that people actually keep getting happier as they make more money, all the way up to at least $500,000 per year. The researchers also found that for most people, a happiness plateau doesn’t really exist:

“In the simplest terms, [the findings] suggest that for most people larger incomes are associated with greater happiness” – Matthew Killingsworth

The study concluded that only the least happy 20% of people – outliers the researchers named the “unhappy minority” – hit any sort of happiness plateau with their earnings. But while higher salaries do seem to make people happier, the researchers also found that other things can have an even bigger impact.

In a statement about the study, Killingsworth made clear that money isn’t everything — “just one of the many determinants of happiness.” For example, the study found that the effect of time off over the weekend on people’s emotional wellbeing was the same as making 4 times as much money.

So while it turns out that more money can after all buy happiness, other things can too. If you’re looking for innovative ways to boost emotional wellbeing in your organisation besides salary, here are other science-backed solutions to get started:

1. Foster inclusivity

In a rapidly-transforming workplace of shifting employee expectations around Corporate Social Responsibility, can organisations afford not to celebrate underrepresented groups year-round? Gen Z in particular are adept at seeing through performative D&I initiatives, and place authenticity and transparency high on their list of must-haves: In fact, 87% of Gen Z say a company’s diversity affects their decision to work there. Today’s candidates are increasingly seeking consistent, open, equitable and inclusive workplaces.

🡆 Read our guide on fostering inclusive workplaces year-round

2. Communicate better

Studies have shown that when people believe that the leadership of their organisation communicates effectively with the rest of the organisation, they are 73% less likely to feel burned out at work.

The good news? As with many great leadership qualities, mastering the art of communication is a learned skill that takes practice, failure, and the right tools to get right.

🡆 Read three ways to reduce burnout in your teams by equipping your leaders to be better communicators, influencers, and listeners

3. Invest in learning

93% of employees say they will stay longer at a company if it invests in their development. Your Gen Z hires in particular will be grateful for a comprehensive L&D offering: 51% say that their education has not prepared them to enter the workforce, and they have missed out on developing soft skills such as negotiating, networking, speaking, and developing the social stamina to work in in-person environments.

There are a myriad of ways to implement learning and development elements to your benefits offering – including self-led resources, skills sessions, or full learning events – that meet your peoples’ desire for development, while also meeting your organisation’s development needs (and budgets).

🡆 Read our 2023 Guide to Future-Ready Skills, an exploration of skills sessions that meet your peoples’ desire for growth and development