Price of happiness: US$75,000 a year

Income only affects well-being up to a certain level, finds study
||Last Updated: 10/06/2010

Money does buy happiness but after a certain level, salary increases have little effect on the quality of people's emotional daily experience, according to a new study from researchers at Princeton University in Princeton, N.J.

While people’s life evaluations continues to rise steadily with increases in annual income, the quality of respondents’ daily experiences did not improve beyond about US$75,000 a year, found the study that analyzed data from the 2008 and 2009 Gallup-Healthways Well-Being Index, a collection of 450,000 Americans’ responses to a range of questions about financial and emotional issues.

The emotional quality of an individual’s everyday experience, or emotional well-being, is based on the respondents’ report of the time spent in positive and negative emotional states the day before the survey. Life evaluation refers to a person’s thoughts about his or her life.

As income decreased from US$75,000, respondents reported decreasing happiness and increasing sadness and stress. The data suggest that the pain of life’s misfortunes, including disease, divorce, and being alone, is exacerbated by poverty.

“We conclude that lack of money brings both emotional misery and low life evaluation; similar results were found for anger,” noted professors Angus Deaton and Daniel Kahneman in the study published in Proceedings of the National Academy of Sciences.

“Beyond $75,000 in the contemporary United States, however, higher income is neither the road to experienced happiness nor the road to the relief of unhappiness or stress, although higher income continues to improve individuals’ life evaluations.”

The study suggests that above a certain income level, people’s emotional wellbeing, but not their quality of life, is constrained by factors other than money, such as temperament and life circumstances.

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