Money does not always buy happiness, but are richer people less happy in their daily lives? It depends on how you analyze income

Do people who have more money feel happier during their daily activities? Some prior research has found no relationship between income and daily happiness when treating income as a continuous variable in OLS regressions, although results differ between studies. We re-analyzed existing data, treating household income as a categorical variable and using lowess and spline regressions to explore non-linearities. Our analyses reveal that these methodological decisions provide new insights into the relationship between income and happiness. We find some evidence that higher income is associated with less happiness and no substantive benefit to higher household income in the US after $35-40K and in Germany after €14-18K. Not all analytic approaches generate the same conclusions, which may explain discrepant results.