Does Happiness Cost $75,000 a Year?
August 12, 2012
Ever feel like your boss doesn’t want you to be happy? A study by a pairof Princeton researchers conï¬rms that you’re probably right.
The study from the Woodrow Wilson School at Princeton University hasconcluded that they’ve calculated the cost of daily happiness—and it’s $75,000 a year. According to the study, if you’re below this level of annual income, which the majority of Americans are, you’re more likely to feel unhappy on a daily basis. Meanwhile, if you’re in the minority earning above that bracket, you’ve hit the threshold for diminishing marginal returns on daily happiness, which—since they’re probably paying you the big bucks to understand these types of concepts—you should have been able to ï¬gure out for yourself.
The researchers didn’t specify if the sweet spot of happiness cost $75,000 before or after taxes, although it’s a safe bet to assume that everyone’s happiness levels drops around tax time, regardless of annual income.
The study, published by economist Angus Deaton and psychologist Daniel Kahneman, who has won a Noble Prize in Economics, did parse types of happiness, separating the emotion into two categories: “enjoyment of life” and “life satisfaction.” While discerning the difference might feel like the corner clue on a Sunday New York Times crossword puzzle, it’s actually quite simple. The former measures things like how often you smile and laugh and how happy you felt yesterday. The latter is supposed to be a more profound measure of your life overall, but it’s actually more like rating yourself on HotOrNot.com—except you’re not measuring your
physical appearance but your total life domination.
For the former measurement, daily happiness increases until $75,000 when it plateaus, suggesting that it costs, on average, about this amount to live free of ï¬nancial stress in the United States. The fact that daily happiness plateaus after this amount also suggests that all the stuff people buy past this point—including those remote-controlled mini helicopters and BowFlex machines—don’t actually make anyone any happier.
However, the sheer ability to buy those things does inï¬‚uence the people’s overall assessments of their lives. Earning more money caused people to report higher levels of “life satisfaction”—i.e. total domination—even when annual income climbed well above $75,000.
For the study’s researchers, this result was unsurprising.
“Money is an object that many or most people desire and pursue during the majority of their waking hours,” wrote study researcher Ed Diener.
In other words, in a highly capitalistic society in which money equals self- worth, it makes sense that people with more money would say they are worth more.
As a freelance journalist who spends the majority of her day tracking the decline of capitalism, I found Diener’s conclusion somewhat of a newsï¬‚ash. Then again, I’ve already ï¬‚unked both this happiness study and August’s Pleasing My Man Cosmo Quiz so what do I know?
Maybe a lot, according to other happiness studies. One, which measured the happiness of 900 women in Texas, concluded that the activities that made them happy were sex, socializing, relaxing, praying/meditating and eating—in that order. Except for the last one, all activities were presumably free.
Other happiness psychologists think that losing money actually makes you happy—as long as you’re giving it up voluntarily, either through your time or actual cash donations.
"Giving makes you feel good about yourself," Christopher Peterson of the University of Michigan told Time. "When you're volunteering, you're distracting yourself from your own existence, and that's beneï¬cial. More fuzzily, giving puts meaning into your life. You have a sense of purpose because you matter to someone else."
Then again, not having enough money to survive within society can, of course, lead to lots of things that cause unhappiness, such as foreclosure, bankruptcy, sickness and lack of access to quality education.
The majority of Americans make less than $75,000 a year—often much less. The median annual household income is just over $50,000, according to the 2009 American Community Survey, although it varies widely by state. The median in Mississippi is $36,000, while folks in Maryland are pulling in a median income of $69,000. The researchers didn’t estimate ideal income by region, but presumably it takes approximately 204 times more money to be happy in New York City than in Nehawka, Nebraska, which coincidentally boasts exactly 204 residents.
The importance of context becomes more apparent when Americans’ happiness ï¬gures are compared with those of the rest of the world. While we’re doing better on happiness than infant mortality, the richest nation in the world is still lagging behind much of Europe, coming in 26th for daily happiness and 16th for “life satisfaction.” Denmark blew us out of the water, taking 1st and 7th.
However, they’ve only scored two measly gold medals this summer, so it might be time for a recount.