Whoever said money can’t buy happiness isn’t spending it right. There must be some connection, but once your basic human needs are met, does more money buy more happiness? An increase in income from $20,000 a year to $50,000 makes you twice as likely to be happy, but the payoff from more than $90,000 is slight.
a. What does the fundamental assumption of marginal utility theory suggest about the connection between money and happiness?
b. Explain why this news clip is consistent with marginal utility theory.