Wisdom//

How Much Money Do You Need to Feel Happy?

New studies prove there's no minimum wage for happiness

Photo Credit:  PM Images/Getty Images

Ever since a 2010 study suggested it, people have assumed that a $75,000 annual income was the amount you needed to be happy. However, newer research from Betsey Stevenson and Justin Wolfers and Nature Human Behavior have muddied the water on the original study, suggesting that there is in fact no single number you can place on happiness.

Stevenson and Wolfers had similar findings to the original research, finding that as GDP rose in a country so too did life satisfaction. However, where they differed was that they did not think that there was a set value of money beyond which income no longer affects well-being, saying that their data, taken from over 131 countries, did not support the conclusion of the original study.

The results themselves have also been questioned due to the nature of the original study. It was conducted on a ladder scale, whereby people were asked to rate their life from 0, the worst possible life, to 10, the best possible life. In this metric, how someone rates their lives keeps going up with the more money they make and has no dropping off point, making it hard to put a definitive number on it.

The problem of putting a single value on how much money someone needs to feel happy is that it’s inherently impossible since the amount varies depending on the cost of someone’s day to day living. If they have kids or spend a lot of money then obviously their income needs to be higher to match those extra expenditures.

Ultimately, financial happiness seems to depend on how someone earns their money and how they spend it. Grant Donnelly, Assistant Professor of Marketing at Ohio State University and co-author of a 2018 study in the Personality and Social Psychology Bulletin says that people who earn their money, rather than inherit it or are gifted, tend to be more happy. As do those who spend it on experiences, time-saving devices, and things that bring closer to other people rather than buying material items.

In short if you want money to make you happy then think about how you are living and what you would actually do with the money.

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