- Research has once again debunked the claim that happiness “plateaus” when you begin earning approx. US$75,000.
- When it comes to money, having more apparently translates to greater satisfaction.
- While happiness via annual earnings has no real defined limit, there is a minimum threshold which varies around the world.
We’ve all heard the competing clichés about how money is incapable of fulfilling your emotional needs vs preferring to cry in a Rolls-Royce over giggling on a push bike. But beyond these folksy sentiments, new research from the Wharton School of Business’ Matthew Killingsworth has recently provided an answer to the oft-pondered question: can money buy happiness?
Contrary to the famed 2010 study conducted by Nobel Prize-winning economists Daniel Kahneman and Angus Deaton — which claimed happiness plateaus after you begin taking home US$60,000 to US$90,000 any given year — Killingsworth’s findings indicate both millionaires and billionaires are significantly more satisfied with life than individuals earning over US$500,000 a year.
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From a sample size of 33,269 employed adults living in the US, those with two-to-three-comma net worths reported an average life satisfaction rating of 5.5-6/7; compared to a rating of approximately 4.6/7 for those banking around US$100,000 a year, and just above 4/7 for those around the US$15,000 to $30,000 benchmark.
Effectively, the gulf of “happiness” between the 1% and middle-income demographics are close to three times larger than the difference between middle and low-income demographics. Translation? It isn’t strictly a matter of clocking an eyewatering quota year on year; more (and a lot more) is simply better.
“The results suggest that the positive association between money and well-being continues far up the economic ladder,” explained Killingsworth.
These latest insights represent an elaboration to the findings the University of Pennsylvania PhD and senior fellow came forth with a few years prior. In his earlier paper entitled ‘Experienced well-being rises with income even above $75,000 per year,’ Matthew Killingsworth noted:
“[The $75,000 a year] finding has been the focus of substantial attention from researchers and the general public, yet is based on a dataset with a measure of experienced well-being that may or may not be indicative of actual emotional experience (retrospective, dichotomous reports).”
“Here, over one million real-time reports of experienced well-being from a large US sample show evidence that experienced well-being rises linearly with log income, with an equally steep slope above $80,000 as below it. This suggests that higher incomes may still have potential to improve people’s day-to-day well-being, rather than having already reached a plateau for many people in wealthy countries.”
Happiness, in this case, was classified in two forms of well-being: 1. How candidates felt when the moments of life in question were occurring right there and then (experienced well-being), and 2. How candidates evaluated moments of life in retrospect (evaluative well-being).
Sifting through data sourced from 1,725,994 experience-sampling surveys submitted by 33,391 employed adults, there was zero evidence an income threshold such as the purported US$75,000/year benchmark existed. General moods and day-to-day satisfaction only increased.
It only stands to reason. While money may not buy you happiness wholesale, it does infiltrate through various lifestyle avenues. Knowing your bills are paid will obviously relieve the tensions from your shoulders and alleviate headaches better than any dose of paracetamol.
Think about it.
Going out to eat without calculating whether an extra appetiser will leave you in financial ruin makes it a little easier to breathe; and having some leftover cash to treat the ones you love to what they truly deserve is, from our point of view, an unrivalled feeling.
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How much do you need to be “happy”?
According to data collated from a Purdue University study (via currency exchange website S Money), while there isn’t a “happiness plateau” when it comes to annual earnings, there are minimum thresholds.
As the country where “happiness” is the world’s third most costly, here in Australia, the magic number is US$121,191 (or just a touch under AU$185,000). This is only trumped by Iran at US$239,700 (AU$362,800) and Yemen US$172,140 (AU$260,500).
Check out where it’ll cost you the most and least globally below.
Countries With The Highest Price Of Happiness (USD)
- Iran — $239,700
- Yemen — $172,140
- Australia — $121,191
- Zimbabwe — $118,342
- Norway — $117,724
- Switzerland — $115,745
- New Zealand — $114,597
- Israel — $112,506
- Iceland — $111,908
- United States — $105,000
Countries With The Lowest Price Of Happiness (USD)
- Sierra Leone — $8,658
- Suriname — $10,255
- Madagascar — $11,355
- Guyana — $11,707
- Sudan — $11,845
- Nicaragua — $11,941
- Colombia — $12,159
- The Gambia — $12,597
- Bolivia — $12,795
- Ghana — $12,949
“There was substantial variation across world regions, with satiation occurring later in wealthier regions for life satisfaction,” said Andrew T. Jebb, the Purdue University study’s lead author.
“This could be because evaluations tend to be more influenced by the standards by which individuals compare themselves to other people.”
