At what Income does Money no Longer Affect your Happiness?
Money & Happiness Study Looks at the Magic Number
A recent happiness and money study completed by Princeton economist Angus Deaton and psychologist Daniel Kahneman analyzed Gallup surveys of 450,000 Americans in 2008 and 2009 to determine the ‘magic’ annual income level at which day-to-day happiness no longer increases.
What ‘magic’ number did they come up with?
But there’s a caveat. The study also suggests that there were two forms of happiness:
- day-to-day contentment (emotional well-being)
- overall “life assessment” (feeling accomplishment)
While a higher income than $75,000 didn’t have much impact on day-to-day contentment, it did boost happiness in the life assessment area – the more you earned, the higher your ‘life assessment’ happiness level was – with no plateau, apparently.
But what About Cost of Living?
I do think this study is a little flawed in that $75,000 in New York, for instance, is much different than $75,000 in Alabama. They would have earned a little more credibility in the study had they worked in cost of living data somehow (maybe that data wasn’t available to them).
I do agree that once your daily needs are met and you have a base amount of ‘stuff’, you reach a plateau where more money and stuff doesn’t increase your day-to-day happiness. I also agree that working towards larger goals does have an impact on your happiness. Can you separate the two completely? Probably not. But it is a distinction worth making.
I’d like to poll you all to see what you think (would love to see your comments on your $ amount and place of residence for context, additionally).