We’ve looked at this topic before. Since then, I’ve written an essay on the relationship between income and well-being. Although there has been a huge amount of work, the answer is not clear. There isn’t a yes/no answer to this question, unfortunately, and it depends on many different things. To explain what some of these things are, I’ll quote myself:
The presented research suggests that increases in income will bring the most happiness to an individual who is: relatively poor; has just experienced an income drop; is satisfied with their new income level; and who spends their money on experiential purchases and on other people. Income increase will have the weakest effect on an individual who is: relatively rich; living in an affluent country with a growing economy; has high aspirations and wants even more money; and spends their money on material goods for themselves.
Money might have a small, direct effect on happiness but the relationship is not as simple as asking “How much money do you earn?” It’s “How much do you earn, how much have you earned in the past, how much money do you want, where do you live, and how are you going to spend it?”
If you want to read my full essay (and why wouldn’t you?), you can find it here.