Dan Price has been getting a lot of good press recently. That’s because, at a moment in time when fast food workers literally need to take to the streets to remind people that $7.25 an hour isn’t anyway near a livable wage, Price, the founder of Gravity Payments, a Seattle-based credit card payment processing company, raised his firm’s minimum annual salary to—get this—$70,000. Even better, he financed the move, which will affect about half of his 120 employees, in part by cutting his own million dollar salary to the same level.

Score one for equality. It’s a small victory, true, but much like this April has been for long-suffering Mets’ fans, it’s finally a chance to cheer. The vast and growing disconnect between CEO pay and that of the average worker—about a 300-fold difference today—has been one of the primary forces behind the spectacularly distressing rise of the top 1 percent to the detriment of everyone else. So to see the gap close, even on a small scale, provides hope that another way is possible.

Price deserves the plaudits. If more of the well-off among us embraced a touch of his generosity, America would undeniably be a better place, though, as Vox points out, to make a real dent in inequality, the largess couldn’t be confined to within-company transfers—because there isn’t a neat one-to-one correspondence between the size of an executive’s paycheck and the number of low-wage workers he employs (for example, Wal-Mart CEO Doug McMillon makes $25.6 million, hardly enough to spread among the company’s 1.4 million American employees).

But there is a downside to this happy tale. The breathless and hyperbolic way in which it’s being reported risks distorting its most important lesson for policy. The lesson is this: money will not buy happiness.

Actually, if we’re being honest, that’s only partly accurate. The truth is that, once we’ve secured a middle-class standard of living, more money has almost no effect on our day-to-day emotional well-being. But that doesn’t mean money stops mattering. Indeed, how satisfied we are with our lives—another, more macro, sort of happiness—continues to rise with income, even after we’re quite wealthy. To put the relationship between money and happiness in simple terms, “It’s complicated.”

Why All the Talk of Happiness?

Price based his bold stratagem on an academic paper by Princeton economist Angus Deaton and his colleague, Nobel laureate Daniel Kahneman. The paper found that happiness rises with income up to about $75,000 a year, after which it plateaus. Upon reading the paper, Price realized there was happiness to be gained by boosting the salaries of his lowest-paid employees and, quite nobly, he took it upon himself to do just that.

But as with most academic studies, the results are not so simple. Glossing over the details in our rush to shower Price with praise would be a disservice to those who stand to gain the most from happiness-oriented public policy.

The first—and perhaps most important—point Deaton and Kahneman make is that we must distinguish between different kinds of subjective well-being (SWB). When most of us think of happiness, what we’re really thinking about is positive affect—our in-the-moment emotional state. On a research survey, this type of experiential happiness is measured by questions like “How happy were you yesterday?”

But there’s more to well-being than present-tense feelings. We also care about the general conditions of our life as a whole, a concept psychologists refer to as life evaluation. Measures of life evaluation encourage us to think broadly about how satisfied we are with our lives, and often ask respondents to rate their lives on a scale of 0 to 10.

The two types of SWB respond very differently to income. According to Deaton and Kahneman—and reinforced by studies from Justin Wolfers and Betsey Stevenson, among others—both emotional and evaluative well-being improve as people move from poverty to the middle class. But once household income reaches about $75,000, money stops making us happier, even as it continues to make us more satisfied.

As far as happiness is concerned, income is like a ticket for admission: you need enough to get in the door, but once you’re in, it doesn’t really matter how good your seats are. A lack of money can make us definitively worse off emotionally, but having attained a comfortably stable standard of living, other things matter more than dollars for our emotional health.

Among the factors Deaton and Kahneman identify as more influential than money are physical health, having strong social supports, access to leisure time, family demands, and age. This shouldn’t be too surprising. So long as you have enough to eat and a roof over your head, a nice evening spent with family and friends is more likely to bring a smile to your face than the type of car you drive or the brand of watch you’re wearing.

From Seattle to the Globe: Findings from the 2015 World Happiness Report

The idea that some things are more important than money is underscored by the latest World Happiness Report (WHR), conveniently released just last Thursday by the United Nations-sponsored Sustainable Development Solutions Network. As with previous iterations (the most recent of which came out in 2013), the 2015 WHR tracks trends in global happiness across countries and reviews recent development in SWB research to inform policymaking.

The report is full of interesting insights, but two findings in particular stand out. First, as is the case among individuals, differences in income explain almost none of the difference in average happiness—the emotional, experiential kind—between countries. But income does account for quite a lot of the international variance in life evaluation, with richer countries substantially more satisfied than poorer ones.

However, even in the case of life evaluation, other things matter even more for well-being than income, including social support and freedom to make life choices. Indeed, an increase in the share of population reporting they have social support (someone to count on in times of trouble) from a quarter to three-quarters has the same effect as increasing per capita GDP by 366 percent—that is, going from Namibia to Italy in affluence. What’s more, if you add just three more factors—healthy life expectancy, generosity, and freedom from corruption—to the social support/freedom of choice/GDP per capita mix,you can explain 74 percent of the international variation in life evaluation. Money can buy life satisfaction, but there are ways of doing it more cheaply.

That brings us to takeaway two: money is the wrong thing to focus on, if our objective is happiness. As we’ve seen, the relationship between income and affect is weak, at both the personal and national levels. In all but the very least satisfied countries, wide majorities of the population experience happiness daily, in the emotional sense. In the United States this is emphatically more the case; as Deaton and Kahneman report, about 85 percent of Americans feel happy in a given day.

Of course, this insight begs a corollary: if income can alter satisfaction but not affect, then economic policy ought to concern itself primarily with the former. That means that when we incorporate SWB into policy design and evaluation, we must ensure the our measures of well-being are appropriately broad in scope, examining people’s perceptions of their life trajectories rather than their minute-by-minute moods. But the bigger lesson is that SWB should occupy a more prominent place in national policy discussions in general. Traditional measures of national success, such as GDP, are important, but they do not tell the whole story.

Moving Economics Beyond Dollars and Cents

Which brings us back to Dan Price and his $70,000 salaries. Though his stated goal was to improve his employees’ happiness, most of the commentary surrounding his announcement has dwelled on dollars, as in “This CEO raised all his employees’ salaries to at least $70,000 by cutting his own,” accompanied, of necessity, by pictures of the beaming beneficiaries.

In the moment, news of their unexpected good fortune undoubtedly lifted the spirits of Price’s staff. In time, the initial thrill will inevitably wear off, both because we tend to adapt to our circumstances, and because we judge ourselves in relation to those around us; when the norm is $70,000, it seems less special.

But it’s also questionable whether the raise will yield the happiness dividend Price cited—for the reasons he expects. For one, we already know that most Americans, regardless of income, are generally happy. Further, if you read through Deaton and Kahneman’s paper, you’ll see that the $75,000 threshold is really more of a ballpark estimate than a magical number; it’s quite possible that, at Gravity’s average salary of $48,000, most of the staff was already pretty near their satiation points. It’s also the case that we need to account for cost-of-living. Deaton and Kahneman’s estimate was from 2009; if we adjust for inflation and Seattle’s higher-than-average prices, $70,000 in 2018 (when the raises are fully phased in) is worth just $54,800—a raise, yes, but not a headline one.

That doesn’t mean Price’s gesture was a coy marketing ploy. Instead, as I’ve tried to emphasize, some things matter more than money. In the long run, it may well be the case that Price’s generosity will do more for the psyches of his staff than will the digits on their paychecks. Goodwill begets reciprocity. Being surrounded by positive people is a good way to make yourself more upbeat, too. With greater job satisfaction and greater equality, it’s likely Gravity will grow closer together. And as we’ve seen, few things matter more for happiness than positive social environments. (A case in point: Gravity had already been rated as a top place to work.) The good times will roll at Gravity, but it won’t depend mostly on income.

It’s also likely the performance of Price’s staff will improve. A strong body of research documents (see Chapter 4 of the 2013 WHR) that happy workers are more productive, in part because they are more creative and more cooperative. Productivity will lead to greater profits, which will help pay for the salary increase. And the virtuous cycle should continue: research shows that not only can income lead to greater well-being, but well-being can lead to greater future income.

Policymakers would do well to appreciate these lessons. Well-being, not dollars, should be our most important performance metric. There is a place for money—it does boost life satisfaction, even among the wealthy—but it’s most important role is in establishing a baseline standard of living for the least well-off among us: the poor, the unemployed, and those suffering from physical or mental illness or disability.

At the same time, we must expend more energy engendering the other things that constitute the good life: social capital, leisure, and the freedom to seek personal fulfillment and communal growth. Want specifics? Policies like the Affordable Care Act and programs like the Nurse-Family Partnership are a good place to start; guaranteeing paid family leave, making public assistance more compassionate, and improving our schools are places we could improve.

As revolutionary as a recalibration of our priorities from GDP to SWB may seem, it is really just a return to our roots, for among the unalienable rights our creator endowed us are, indeed, “Life, Liberty and the pursuit of Happiness.”