It's official! Money does buy happiness but only till your income is up to USD 36,000.
Economists have shed light on the vexed question of whether economic development can buy happiness, and it seems that life satisfaction actually dips among people living in the wealthiest countries.
A new analysis led by economists Eugenio Proto from the University of Warwick and Aldo Rustichini, from University of Minnesota finds that as expected, for the poorest countries life satisfaction rises as a country's wealth increases as people are able to meet their basic needs.
However, the new surprise finding is that once income reaches a certain level, around USD 36,000, adjusted for Purchasing Power Parity (PPP) - life satisfaction levels peaks, after which it appears to dip slightly in the very rich countries.
"Our new analysis has one very surprising finding which has not been reported before, that life satisfaction appears to dip beyond a certain level of wealth," researchers said.
"What we aspire to becomes a moving target and one which moves away faster in the richest countries, causing the dip in happiness we see in our analysis," they said.
The study found that people in countries with a GDP per capita of below USD 6,700 were 12 per cent less likely to report the highest level of life satisfaction than those in countries with a GDP per capita of around USD 18,000.
However, once countries reach around USD 20,400 GDP per capita, the increase in happiness that higher wealth brings is less obvious.
Between this level and the very highest GDP per capita level (USD 54,000), the probability of reporting the highest level of life satisfaction changes by no more than two per cent.
This corresponds broadly to the well-known Easterlin Paradox - that the link between life satisfaction and GDP is more or less flat in richer countries.