Money Can Buy Happiness, but Hobbies are Even Better

If you saw his Ted talk, you may already be familiar with Princeton psychologist Daniel Kahneman’s research on happiness. Dr. Kahneman and a group of researchers surveyed people across income brackets in a national sample on their overall happiness.

Those who made $90,000 reported being twice as happy as those who made $20,000. However, an interesting thing happens around the $50,000 mark: happiness begins to level off.  There’s little difference between the happiness of people who make between $50,000 – 89,000 and those in the highest income groups (e.g., over $100,000).

A Key to Increased Happiness: Engage in Active Pursuits

Kahneman and colleagues offer an explanation for this trend. They suggest that higher income people, although they work more, spend more free time in active pursuits (e.g., exercise) than passive activities (e.g., watching TV). The researchers suggest the more important key to happiness is how we spend our time off.

From this perspective, money is important so long as it allows us to actively engage what we enjoy. However, once we reach a certain income level (about $50,000 a year or so), we might better spend our time focused on doing fun things than on making more money. As a more concrete example, the researchers suggest we should be working harder to reduce commutes—which people particularly hate—and spend more time in the company of people we enjoy, as people tend to rate the latter particularly high.

Think about this the next time you think about getting a new job or promotion that will earn you more money but may lead to longer hours and a longer commute. Also, consider more carefully how you spend your free time. Is it something active (e.g., exercising, socializing) or passive (e.g., vegging out)?


Kahneman, D., Krueger, A.B., Schkade, D., Schwartz, N., & Stone, A.A. (2006). Would You Be

Happier If You Were Richer? A Focusing Illusion. CEPS Working Paper No. 125.

Jason Luoma, Ph.D.

Author: Jason Luoma, Ph.D.

Jason is a psychologist who researches ways to help people with chronic shame and stigma and also works clinically with people struggling with those same problems.

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