A 2010 study by economist Angus Deaton of Princeton and Nobel Prize winning psychologist Daniel Kahneman found that happiness increases along with income – but only to a point. The two authors analyzed survey results from 450,000 Americans participating in a huge data collection effort called the Gallup-Healthways Well-Being Index. Their analysis of this sea of data led them to conclude that happiness increases along with annual income up to $75,000. People were happier as their income increased but at $75,000 in annual income the income/happiness marriage began to sour (flatten-out). On a daily basis, people who earn more than $75K are no happier than those who make less than $75K. They (high earners) are, however, more satisfied with their life over-all than their less wealthy brethren. It appears that other life factors like one’s health, family, and friends carry sway after the “basics” of food, shelter, and clothing have been met.
For those of us who make less, let’s say $50K per year, there’s still hope. A recent poll by the Marist organization placed this “tipping point” between happiness and income at $50K per year. Those earning less than $50K reported that their money worries spilled over into other areas of their lives and made them less optimistic about the future. At $50K or more, respondents reported that they were happier in nearly every aspect of their lives than their financially challenged cohorts.
The above results are an important reason why many happiness researchers are calling for non-economic measures of well-being, possibly a Gross National Happiness (GNH) index, in addition to economic measures like Gross Domestic Product (GDP) which is largely a measure of personal spending. As the above research suggests, at some point, more money just can’t deliver the goods (pardon the pun).
Dr. Jim RobertsDr. Roberts is a leading researcher on consumer behavior and the Ben H. Williams Professor of Marketing in the Hankamer School of Business at Baylor University in Waco, Texas. His new book SHINY OBJECTS will be available November 8, 2011 from HarperOne
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