Some of our cultural wisdom about happiness looks suspiciously like a super-replicating false belief. Consider money. If you’ve ever tried to sell anything, then you probably tried to sell it for as much as you possibly could, and other people probably tried to buy it for as little as they possibly could. All the parties involved in the transaction assumed that they would be better off if they ended up with more money rather than less, and this assumption is the bedrock of our economic behavior. Yet, it has far fewer scientific facts to substantiate it than you might expect.

Economists and psychologists have spent decades studying the relation between wealth and happiness, and they have generally concluded that wealth increases human happiness when it lifts people out of abject poverty and into the middle class but that it does little to increase happiness thereafter.

Americans who earn $50,000 per year are much happier than those who earn $10,000 per year, but Americans who earn $5 million per year are not much happier than those who earn $100,000 per year. People who live in poor nations are much less happy than people who live in moderately wealthy nations, but people who live in moderately wealthy nations are not much less happy than people who live in extremely wealthy nations. Economists explain that wealth has “declining marginal utility,” which is a fancy way of saying that it hurts to be hungry, cold, sick, tired, and scared, but once you’ve bought your way out of these burdens, the rest of your money is an increasingly useless pile of paper.

Excerpt from Stumbling on Happiness by Daniel Gilbert