Wednesday, October 6, 2010

Money Does Buy Happiness

DSCN1096Image by tantek via Flickr
It seems there is a sweet spot in your income that determines your happiness level. That amount is $75,000. The lower your income is from the number, the more unhappy you will feel. But as you rise above that level, no matter how high you rise above it, there is no more increase in happiness. 
This study was conducted out of Princeton University by Nobel Laureate in economics psychologist Daniel Kahneman and economist Angus Deaton. The study draws on data from more than 450,000 Americans polled by Gallup and Healthways in 2008 and 2009. 
The participants were asked how they felt the previous day and how they would rate their life, from being the worst to the best. 
It turns out it isn't low income that saddens people; it's that less money makes them feel more ground down by other issues, like health and relationship problems. People that had health issues and a low income reported to be more unhappy about their problems. While people with the same problems but making much more income, only half the people reported to be unhappy. 
This effect disappears when the people make $75,000 and up. From there on up, individual temperament and life circumstances like age and education level have much more sway over how a person feels on any given day than money does. But the study doesn't explain why. Deaton concludes that there is a number where people think money is no longer an issue. Also at that income level people have enough money to do, what they want and pay for life's problems. 
There seems to be 2 kinds of happiness. Your day to day mood whether your stressed or happy. Then there is the overall happiness of where your life is going; that your on the right path and happy how your life is progressing. 
This study confirms to me a lot of my own experiences. You go through your life trying to attain money and things. There is a number of years your income is never enough. But you do reach an income level that is more than enough and that results in satisfaction. 
I have observed you reach a point when the car breaks, the A/C blows up and the roof leaks and you don't freak out. The reason being you have the cash to easily pay for the repair. That's what a good income does for you. 
They should of asked me before they did this study. I've been telling my kids this for years. My advice to them has been that no matter what problems you go through in life whether it's sickness, divorce, depression and anything that can go wrong does go wrong. If you have a good paying job and money in the bank, you may be in a fix for a period of time, but the money makes everything go a little easier. 


  1. You're right and the researchers are wrong. There is nothing like being able to call up a travel agent to arrange 10 days in Hawaii for your family to visit all the islands and see all the sites and not even blink an eye at the expense. You can't do that on $75,000/year while you are sending your kids to good colleges and living in the better parts of the country.

  2. I'll take the problem of not being happier as my income rises over the alternative.

  3. I was aware of the survey (and had/am considering a post on it), but I had not read the basis of it before reading this post. You explained it well.

    My question is this: don't many or most people continue their stupidity with money when they get more? $75,000, in my mind, would alleviate lots of stress (and create happiness) for those who already manage their money, but probably would only amplify the mistakes many are already making.

  4. Money makes life easier and less stressful but not necessarily happier. I say that from observing wealthy people around me

  5. Happiness can occur with or without money in the picture. For me it's easy because I have so many other things in my life that give me happiness. Money is nice to have to pay the bills and have fun but people are more important to me.


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