Wednesday, September 15, 2010
(Wall Street Journal) Money can't buy happiness, but a study shows that we can earn it.
The study, which analyzed Gallup surveys of 450,000 Americans in 2008 and 2009, suggests that there were two forms of happiness: day-to-day contentment and overall satisfaction with one's place in the world. While a higher income brings little day-to-day contentment, it does boost people's overall satisfaction.
The study, conducted by Princeton University economist Angus Deaton and famed psychologist Daniel Kahneman, found that there's a specific dollar number, or income plateau, after which more money has no measurable effect on day-to-day contentment.
As people earn more money, their day-to-day happiness rises. That is, until you hit the magic number: $75,000 a year. After that, it's just more stuff, with no gain in happiness.
That doesn't mean wealthy and ultrawealthy people are equally happy. More money does boost people's overall satisfaction all the way up the income ladder. People who earned $160,000 a year, for instance, reported more overall satisfaction than people earning $120,000, and so on.
"Giving people more income beyond 75K is not going to do much for their daily mood...but it is going to make them feel they have a better life," Mr. Deaton told the Associated Press.
He added: "As an economist, I tend to think money is good for you, and am pleased to find some evidence for that."
However, $75,000 in New York doesn't buy as much as it would in, say, South Dakota. Based on cost-of-living index values from Kiplinger.com, the happiness salary would vary widely across the nation. For example, New Yorkers would have to earn $163,000 a year to achieve the $75,000 happiness level; in Chicago, $84,750. It took the least amount of money to achieve happiness in Fort Smith, Ark., and Pueblo, Colo., where a $62,000 salary buys $75,000 worth of happiness.