Income and emotional well-being: Evidence for well-being plateauing around $200,000 per year

Is emotional well-being monotonically increasing in the level of income or does it reach a plateau at some income threshold, whereafter additional income does not contribute to further well-being? Using a data-driven approach to detect the placement of the threshold, we find a flat relationship betw...

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Bibliographic Details
Published in:Economics letters 2024-05, Vol.238, p.111730, Article 111730
Main Author: Bennedsen, Mikkel
Format: Article
Language:English
Subjects:
Income
Quantile regression
Structural break
Well-being
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Summary:Is emotional well-being monotonically increasing in the level of income or does it reach a plateau at some income threshold, whereafter additional income does not contribute to further well-being? Using a data-driven approach to detect the placement of the threshold, we find a flat relationship between household income and emotional well-being above a threshold around $200,000 per year. Our analysis relies on a number of assumptions, which we briefly discuss. We conclude that although the analysis of this paper provides some evidence for well-being plateauing around $200,000 per year, more research is needed before any definite conclusions about the relationship between emotional well-being and income can be drawn. •We find that the relationship between emotional well-being and income reaches a plateau for high incomes.•A data-driven method suggests that the threshold is around $200,000 per year.•The finding relies on a number of assumptions; more research is needed before any definite conclusions can be drawn.
ISSN:0165-1765
DOI:10.1016/j.econlet.2024.111730