Millennials said in a survey they needed $525,000 a year to be happy. Here's what a Nobel prize winner's research says about money and happiness.

• On average, respondents to a new survey said they needed $1.2 million in the bank to be happy.
• Millennial respondents said happiness would come from a $525,000 annual salary.

If money can buy happiness, a new survey suggests each generation may have a different idea of what that price tag would be.

Last year, Empower — a financial-services company — released the results of a survey conducted by The Harris Poll in August 2023 that asked 2,034 Americans ages 18 and over about what they thought the key to financial happiness really was. Turns out, 59% of respondents said happiness could be bought, and respondents on average said it would take having $1.2 million in the bank to be truly happy financially.

When it came to annual salary, respondents said they needed $284,167 a year to be happy. Here's what each generation, on average, said it needed to earn annually, as well as the net worth required, to achieve happiness:

• Gen Z: $128,000, with a net worth of $487,711

• Millennials: $525,000, with a net worth of $1,699,571

• Gen X: $130,000, with a net worth of $1,213,759

• Boomers: $124,000, with a net worth of $999,945

Men said they needed to earn $381,000 annually, while women said $183,000 would make them happy.

To be sure, Empower's survey asked open-ended questions, meaning respondents could enter any amount and wildly high responses could presumably skew the data. In another survey question, only 17% of respondents defined "financial happiness" as "reaching a certain net worth," and less than two-thirds of respondents agreed that money could buy happiness in the first place.

The link between money and happiness

Daniel Kahneman, a Nobel-prize-winning psychologist and economist, has dedicated research to understanding the link between money and happiness. A 2023 study he coauthored found that happiness seemed to improve with higher earnings up to at least $500,000 annually.

"In the simplest terms, this suggests that for most people, larger incomes are associated with greater happiness," said Matthew Killingsworth, a senior fellow at Penn's Wharton School and coauthor of the study. "The exception is people who are financially well-off but unhappy. For instance, if you're rich and miserable, more money won't help. For everyone else, more money was associated with higher happiness to somewhat varying degrees."

The least happy people in the study seemed to see minimal happiness benefits after $120,000. People with higher happiness levels seemed to see continuing benefits up through about $500,000, the highest income they measured.

Those numbers seem to have risen over time. A 2010 study by Kahneman and another Nobel recipient, Angus Deaton, found money was linked to increases in happiness only up to $75,000 in annual earnings; after that point, extra money had little impact.

Still, there's more to it than just the annual salary. The Empower survey indicated that inflation, high interest rates, and student loans weighed on Americans' financial security and that having the comfort of spending money on everyday items could boost the feeling of financial happiness. For example, 62% of the millennial respondents said they would be willing to pay $7 for a daily coffee because of the joy it brings.

The latest economic data could make Americans' financial happiness goals more achievable. Inflation continues to come down as the US recovers from the coronavirus pandemic — the consumer price index, which measures inflation, increased 3.2% year over year in October, a decrease from the 3.7% reading a month prior.

The Federal Reserve has also pressed pause on its interest-rate hikes given the promising inflation data, and the central bank no longer forecasts a recession as the year ends.

But as Business Insider previously reported, millennials are still not doing too well in this economy. In Morning Consult's latest iteration of its financial well-being index, which tracks the financial security of respondents, millennials' score sunk to .94, compared with baby boomers' 4.04 score from August 2022 to August 2023. A one-point increase could be a result of incomes increasing or credit scores going up by 20 points, Morning Consult said.

The latest Survey of Consumer Finances from the Federal Reserve, however, gave a glimmer of hope for millennials when it comes to net worth. The survey indicated that net worth for the typical family surged 37% from 2019 to 2022 and that the median net worth of Americans ages 35 to 44 was $135,000 in 2022, up from $105,610 in 2019.

Have you found a way to be happy with your current salary? Do you have thoughts on the price of happiness? Reach out to this reporter at asheffey@businessinsider.com.

December 29, 2023: This story was updated to clarify the types of open-ended questions in Empower's survey and provide more details about the research findings from Kahneman, Deaton, and Killingsworth.