a new 'how much money to be happy' study

[timo2]

Is the point of this study to tell you when you should be happy? Maybe it's just another 'keeping up with the Jones?

from the article: "Using a survey of 1.7 million individuals from 164 countries, researchers calculated that $95,000 is an optimum salary for achieving fulfillment. (That’s just for individuals, not families, and an international average.)

If it’s a matter of one’s day-to-day feelings of happiness–as opposed to broad satisfaction with your life–then just $60,000 to $75,000 may be sufficient, according to the study. After those points, the benefits of making more money decrease, although there may still be benefits."

"Depending on the nation, so-called “satiation points” vary a lot. In Western Europe and Scandinavia, the optimum income level is around $100,000, according to the study. In North America, it’s $105,000. In Australia/New Zealand, it was $125,000. In Eastern Europe, the average was just $45,000 while in sub-Saharan Africa it was $40,000. The $95,000 headline is the average of all survey respondents everywhere."

https://www.fastcompany.com/4053435...-to-be-happy-less-than-most-people-are-making

 

[daylatedollarshort]

Someone should do a study on how much leisure time do you need to be happy.

 

[COcheesehead]

Define happy....

 

[timo2]

Define happy....

exactly!

 

[Major Tom]

I have brief moments of delirious happiness but, for the most part, am nearly always pleasingly content, with a few brief periods of slight grumpiness

I have always been like this, and it has been this way regardless of my income or net worth. I don't think that money and happiness are linked that much. Perhaps these articles, when using the word "happy" are actually referring to something else, such as "comfortable".

 

[timo2]

I have always been like this, and it has been this way regardless of my income or net worth. I don't think that money and happiness are linked that much. Perhaps these articles, when using the word "happy" are actually referring to something else, such as "comfortable".

Maybe this question is also tied in with the thread "Why Do Billionaires Want More?"

 

[Major Tom]

Maybe this question is also tied in with the thread "Why Do Billionaires Want More?"

I was going to comment in that thread, as I don't think that self-made billionaires have money as their main drive. I'm not talking about people who come in to money from family businesses, but the folk who start the businesses. People like Richard Branson, Bill Gates, and Jeff Bezos are, I think, driven by far more interesting motivations than merely making money.

 

[Car-Guy]

So I'm retired and my salary is zero (unless you count SS) but I'm happier now than I ever have been. By a long shot!

 

[scrabbler1]

So I'm retired and my salary is zero (unless you count SS) but I'm happier now than I ever have been. By a long shot!

Same here. I don't consider my investment income a "salary" at all. As my tagline suggests, it's my money working for me, not me working for my money. My money is earning a salary, and that's perfectly fine with me. Unlike me, it will never get tired of the commute, never have to deal with office politics, and it won't pay much in taxes.

 

[Sojourner]

I'm not quite sure what to make of the results of this study. Since the salary level for "broad life satisfaction" in the U.S. (for a single, not a family) was found to be $105K, and something like 90% of all individuals make less than $100K/year, does this mean that (generally speaking) the vast majority of people in the U.S. are not broadly satisfied with their lives? Perhaps, but I'm a bit skeptical. I think the Pollyanna principle is alive and well out there, such that most people tend to perceive their lives as substantially better than they actually are when evaluated objectively.

I suspect that what's more important than a raw dollar figure is your relative financial status compared to your immediate peers and community. I'd guess that a couple making a combined income of $90K in rural Mississippi would be far happier and more satisfied with their lives than a single person making $105K in Manhattan.

 

[OldShooter]

Recounted by John Bogle:

At a party given by a billionaire on Shelter Island, the late Kurt Vonnegut informs his pal, the author Joseph Heller, that their host, a hedge fund manager, had made more money in a single day than Heller had earned from his wildly popular novel Catch 22 over its whole history. Heller responds, “Yes, but I have something he will never have . . . Enough.”

IMO, "enough" is not a number. It is an attitude.

 

[RunningBum]

I'm not quite sure what to make of the results of this study. Since the salary level for "broad life satisfaction" in the U.S. (for a single, not a family) was found to be $105K, and something like 90% of all individuals make less than $100K/year, does this mean that (generally speaking) the vast majority of people in the U.S. are not broadly satisfied with their lives? Perhaps, but I'm a bit skeptical. I think the Pollyanna principle is alive and well out there, such that most people tend to perceive their lives as substantially better than they actually are when evaluated objectively.

No, I don't think so. It's not binary, and it's also not a threshold. It's not that $105K makes you happy, and at $100K you are not, nor is it that anything over $105K makes you happy.

The way I read it, is that people will have a general happiness level no matter what income they have. Some people are happy no matter what, some are unhappy no matter what, and some people are so-so. This study claims that $105K would give the optimal happiness (or least unhappy) level, generally. Less than that, you're a little less happy, maybe due to money stresses. More than that, you're also a little less happy, maybe due to a less optimal work/life balance. Many other factors obviously, just examples off the top of my head.

Certainly there are people making half that or twice that who are happier than some or even most people making $105K. My reading takes that all into account, doesn't it? Because it's a relative personal scale. And those people may not even be happier at $105K, because it's not at all a hard and fast rule. Plus there is the whole regional cost of living thing.

Mostly I don't take these kind of studies very seriously, especially a hard and fast number like that, but I like the message that the quest and even achievement for more money can reduce happiness.

 

[RunningBum]

Also, wasn't the last number being thrown around more like $70,000? And now it's $95,000 or $105,000? Did something in the world change such that an extra ~$30K makes one happier now? Or is trying to establish any real number for optimal happiness an impossible task, and any attempt to do so is rife with flaws? I think the latter.

 

[NW-Bound]

Also, wasn't the last number being thrown around more like $70,000? And now it's $95,000 or $105,000? Did something in the world change such that an extra ~$30K makes one happier now? Or is trying to establish any real number for optimal happiness an impossible task, and any attempt to do so is rife with flaws? I think the latter.

Inflation. This optimal number for happiness has been a perennial subject for study.

I tend to agree with this number, because it's for a single person, and as a couple we are allowed 2x that. We do not spend at that level ($190K for two), and so have to say that it should be enough.

Would not mind having even more though. I can then revive my pipedream of a waterfront home on Bainbridge Island.

 

[NoiseBoy]

Also, wasn't the last number being thrown around more like $70,000? And now it's $95,000 or $105,000? Did something in the world change such that an extra ~$30K makes one happier now? Or is trying to establish any real number for optimal happiness an impossible task, and any attempt to do so is rife with flaws? I think the latter.

There is this from the article:

The results, which come from Purdue University and the University of Virginia, align with a well-known 2010 study from psychologist Daniel Kahneman and the economist Angus Deaton. They found that people’s happiness was correlated with income but only up to incomes of somewhere between $60,000 and $120,000 (though the number was widely reported as $75,000). After that point, the relationship between happiness and income weakened.

Also, there isn't anything in the linked story about the methodology of the study so it's hard to know how the research was conducted. For instance, did they allow people to indicated that making more would make them happier? This would account for someone, with say our national median income, stating that $105,000 would be the optimal "happiness" income for them I suppose.

 

[W2R]

I am LOTS happier with a place to live and knowing where my next meal is coming from, than otherwise. It's nice to be able to afford heating and AC as needed, too, internet, and medical care when I need that.

But once my basic needs are met, I am pretty happy. So, probably $30K is a closer estimate for me than $95K. I do spend more than $30K, because I can, but I don't think I need to do that in order to be happy.

 

[mamadogmamacat]

Well I made considerably more than $95k during most of my working years. But, am much happier, perhaps quite content is a better description, than I ever was during my working years now that I'm retired. I even look back on those years, including the worst of them in terms of office politics and dreadful management, with a degree of contentment because at least I was always socking it away into various investments in order to arrive where I am today.

 

[TimeMeasure]

Someone should do a study on how much leisure time do you need to be happy.

Yes! That might have been meant as a joke... and it is funny... but it would also be genuinely interesting to know.

As far as the "how much money to be happy" studies - they're good reminders of the marginal utility of money. DW and I were actually talking about this topic last night together at dinner. Told her that I don't recall being any less happy - at least, on account of money - when I was much younger, and sleeping on the floor because I didn't have a bed, than now. In fact, probably think about money more now - responsibility for our future, and the sense that the more you have, the more you have to lose.

And the standard deviation must be large on the average numbers arrived at in these studies. So many other factors - relationships, health, etc. - can either mitigate or increase the amount of money needed to be satisfied with life.

Also, even a quick shift in perspective can make a difference:

DW and I watch "60 Minutes" nearly every week. Last night, there was a segment on Mexican and South American illegal immigrants to the US, highlighting the very dangerous crossings which so many attempt. In some fairly wrenching scenes, immigrants were being rescued by the Border Patrol, half-alive, from overheated conditions in the trailers of semi-trucks, where 20, 30 or more had been crammed together, lying down or standing. Some died en route to medical treatment. Regardless of politics, when one sees such scenes - and more, when one hears the explanation for why so many attempt a crossing they may not survive (they are often fleeing "intense violence," as a professor put it, from the cartels in their native countries - violence which threatens the migrants, and also their spouses and children), it would be difficult not to feel empathy - and it would be difficult not to see one's own life in a broader perspective. Minor monetary concerns ("more would be nice") and minor first-world problems (e.g. a poor customer service experience, a less-than-perfect restaurant meal, etc.) fade into the background. DW and I often remark to each other on how fortunate we are. Looking around us at the broader world often reminds us of that.

 

[scrabbler1]

When my wage income peaked in 2000 at about $74k, I was at my peak in misery. After I switched to working part-time in 2001 and saw my salary nearly halve, I became happier. When I reduced my salary by another 40% in 2007, I became happier. And when I ERed and reduced my income by 100% of what little was left, I became even more happy!

 

[audreyh1]

Also, wasn't the last number being thrown around more like $70,000? And now it's $95,000 or $105,000? Did something in the world change such that an extra ~$30K makes one happier now? Or is trying to establish any real number for optimal happiness an impossible task, and any attempt to do so is rife with flaws? I think the latter.

No - it's highly individualistic.

There is just some number above which people become less worried about financial issues/outcomes. Again - it totally depends on the individual and their cost of living.

 

[6miths]

I think that it is a pretty theoretical concept. Asking people at what income they would be happiest and not having them consider how hard they would have to work, what they might have to do or the sacrifices they would have to make seems quite artificial. I had two earning peaks in my career and my times of maximal unhappiness probably corresponded with each of them.

 

[daylatedollarshort]

Yes! That might have been meant as a joke... and it is funny... but it would also be genuinely interesting to know.

I meant it seriously. We have enough income to be happy according to most of the studies, but another factor is are you the richest person in your neighborhood. We are probably kind of in the middle on that criteria, but I'm still think I'm pretty happy most days. So I thought about it and wondered would I be happier if we moved to where we can be the Joneses? I decided the reason we are happy is our currency of choice is probably free time more than more money. If we wanted more income it would be easy enough to get some kind of jobs again. We live in a suburb people move to for houses with yards and good schools for the kids, but then many have long commutes to get to work. Working full-time, commuting, raising kids, sports, school activities - there just isn't a lot of free time leftover.

 

[NW-Bound]

Well I made considerably more than $95k during most of my working years. But, am much happier, perhaps quite content is a better description, than I ever was during my working years now that I'm retired. I even look back on those years, including the worst of them in terms of office politics and dreadful management, with a degree of contentment because at least I was always socking it away into various investments in order to arrive where I am today.

Ah, I forgot that income during working is not the same as expenses during retirement.

Yes, in my peak years, I made more than double that $95K (not counting wife's income), which would be more in today's dollars due to inflation.

Not having earned income for a while, when an amount of money is discussed, I always think of it as expenses. And $190K for a couple is plenty to spend. I have never gone anywhere that high, though when children were in college a low 6-figure was the usual number.

 

[NW-Bound]

And I am reminded of something that we talk about again and again here.

An income of $X means different things in different scenarios. High or low cost of living area? Retired couple with no mortgage nor dependents, or a younger couple paying much in taxes and raising 4 kids with two in college, while still paying off their home?

The retired couple can have a ball and travel the world on much less than what the younger couple are sweating to earn.

 

[Plantman]

I've never been happy.