Money can buy you happiness, but to what extent?

More Money = More Happiness?

According to a money vs happiness study on over 1.7 million individuals worldwide on human behavior. The researchers seek to answer this mind boggling question,

“How much money do you need to be happy?”

The results are shocking.

Surprisingly, you can earn millions, but it don’t correlates to the amount of happiness you get.

In fact, you can have a lower paying job but happier.

The study is based on a life-satisfaction survey conducted worldwide with over millions of people took part in the Gallup World Poll.

Respondents across the world were asked a few simple questions to rate their life-satisfaction on a scale of 0-10.

  • 0 is the “worst possible life”
  • 10 is the “best possible life.”

The researchers subsequently run through the data to analyzed the relationship between the survey score and household income.

income vs happiness graph

Income vs Happiness Graph

Income level and happiness study credited to: Happiness, income satiation and turning points around the world. Andrew T. Jebb, Louis Tay, Ed Diener & Shigehiro Oishi. Nature Human Behaviour volume 2, pages 33–38 (2018)

More Money ≠ Happiness

money does make you happy but only to a point

The findings…

8 points is the highest rated points for anyone who want to achieve the maximum level of happiness (best possible life).

Which means, ‘8’ is the highest level of happiness that money can buy in the world.

If you are earning $10,000 today and got a pay raise to $20,000.

Increase in income does have an significant increase to your happiness and life satisfaction level.

In fact, you almost have an 1 point jump from just being ‘acceptable (5.5)’ to ‘pretty happy (6.5)’.

Same goes if you get another pay raise and increase your income from $20,000 to $40,000.

You’ll have another 0.6 point jump from just ‘pretty happy (6.5)’ to ‘happy (7.1)’.

But you’ll notice, as your earning increases, the jump in the happiness level decreases.

Eventually, at a certain income level, the happiness level will start to plateau, or even fall.

magic number for happiness

The magic number of happiness is $95,000 annual income.

These people not only have enough wealth to meet basic needs, such as access to healthcare and a safe place to live.

They have a fulfilling life that meet the higher level of the Maslow’s Hierarchy of Needs.

Level Maslow’ Hierarchy Description
1 Physiological Needs Basic needs: Food, water, clothing and shelter.
2 Safety Needs

Basic needs: Protection from violence and general well-being.

3 Love and Belonging Needs Physical and emotional intimacy, ranging from emotional bonds to sexual relationships.
4 Esteem Needs Self-confidence and acknowledgment from others.
5 Self-actualization Needs Fulfilment of one’s potential as a person.

For wealthier countries like America, United Kingdom, Canada, Singapore and Japan. The study shows, $95,000 annual income allows an individual to reach the highest level of happiness. 

Globally, people who are earning $60,000 to $75,000 per year shows the highest level of emotional well-being.

lower paying job but happier

Surprisingly. In certain parts of the world, earning more than $95,000 are associated with lower level of happiness.

Why?

Different research have come up with a few different theories of why more money doesn’t always make you happier.

The reason is simple,

“Money influences happiness through the fulfilment of both needs and increasing material desires.”

This is a psychological phenomenon called “hedonic adaptation”.

Over time, we get used to that change in our life and our expectations changes, eventually our lifestyle changes as well.

When we reach the satiation point of $95,000 annual income per year, the desire to fulfil material desires increases exponentially. Thus, lower level of happiness.

The Hedonic Treadmill

The Hedonic Treadmill

Does money brings happiness

According to the studies, the perfect salary for happiness is $75,000, which sits just around the middle of $60,000 and $95,000.

But depending on why you live in the world,

“Income of $60,000 to $95,000 will make you quite a happy individual according to science.”

Yes, money can buy happiness.

Question

Does the study surprise you?

Are you going to find a higher paying job? Or even a lower paying job so you can be happy?

Let us know in the comments below!

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