Updated "experienced well being vs income" study

[heymrfancypants]

Came across this National Academy of Sciences publication/paper the other day:

"Experienced well-being rises with income, even above $75,000 per year"
https://www.pnas.org/content/118/4/e2016976118

TL;DR: The study posits that experienced well being increases linearly with log(income) beyond a previously-assumed ceiling. This correlation was found to exist for both "experiential" well being (how content am I in the moment?) and "evaluative" well being (looking back, how content am I?)

Some thoughts that come to mind:

1) Is this correlation without causation? Could it be that well being is a marker for success instead of the other way around?
2) What would a similar study look like if it evaluated the wealth vs income ratio (i.e. FI-ness/financial security) instead of just income? Is there other scientific work out there worth reading/that you would recommend? Has anyone come across studies that look at the relationship between FI and happiness?
3) What questions does this raise for fellow readers (about the study, about your own experiences)?

Hope this isn't a repost! :-)

[BradminOxt19]

Very interesting.

I can tell you I was happy when making $75k, but I'm *much* happier making far more than that now.  The main reason for me is we can accelerate our savings and be financially independent and free of mind numbing work whenever we want.

Another benefit that comes to mind is the more money one makes, the more work freedom one tends to have.  When I was making $75k, I was in a more traditional work role and managed.  Now that I'm making far more than that, I tend to have very little management and can control my work / schedule as I please, since the work I do is more highly valued and I have far more control over work & life.

It's really contradictory to what one would expect.  The less money one makes, the more one is managed. The more money a person earns, the less that person is managed.

Therefore, the benefit to me is not just having more savings, but much more freedom to do what I want, when I want, and get paid far more for it.

[2sk22]

Very interesting.

I can tell you I was happy when making $75k, but I'm *much* happier making far more than that now.  The main reason for me is we can accelerate our savings and be financially independent and free of mind numbing work whenever we want.

Another benefit that comes to mind is the more money one makes, the more work freedom one tends to have.  When I was making $75k, I was in a more traditional work role and managed.  Now that I'm making far more than that, I tend to have very little management and can control my work / schedule as I please, since the work I do is more highly valued and I have far more control over work & life.

You make a couple of interesting points. My observations:

• As a Mustachian, you get happiness from increasing savings when your income increases but this may not be true for the general population. My observation is that people tend to increase consumption as income increases. However, I do think there is a limit to the actual happiness derived from material possessions but I'm not sure if there are any studies on this topic.
• As my salary rose, my sense of obligation increased along with it. I felt a lot freer as a junior low-level employee than as a highly paid specialist making a few hundred thousand a year (just before I retired). Of course, this may be a personal failing on my part 😀

[2sk22]

Incidentally, I posted a collection of links to papers on the subject of the impact of money on happiness earlier on this forum here:

[LennStar]

I don't want to comb through the study, but I guess they didn't correct for important factors. Like occupation, where it is hard to find a hairdresser making half a million that is working in a normal street hair salon.

So the headline is wrong: Not "experienced well-being increases...", but: the experienced live changes.   

If you are a multi-billionaire, you can just start a car making company if you feel like, that is not possible (alone) for the 30K/year car engineer.

[cool7hand]

I was wired such that no amount of money ever helped my mental well being. I only found happiness through self work, identifying my demons, and coming to terms with them. In fact, I'm less frugal now then when I FIREd because frugalness to the point of self denial was one of my demons.

[American GenX]

Mehhhh....

I was actually happier when I was in my 20's and had a much lower income.

I'm very financially secure with a six figure income today, but that doesn't make me happier.  More financially secure though, so there's that.

[charis]

I'm happy now, but probably not more happy than when I was younger and making very little.  And I have to wonder, people generally make more money when they are older, but also have more stress and responsibility.  So that would be enough to be less happy.

[Metalcat]

I've had low incomes in jobs that made me miserable and low incomes in jobs that made me happy. I've had high incomes in jobs that were literally killing me and high incomes in jobs that inspired me daily.

None of my personal experiences in any way negate the research, but populational research means exactly fuck-all for the individual.

Do what works for you.
I'm currently deciding between two career paths, one where I can make 6 figures working part time from home doing something interesting and important, or one where I'll be on call 24/7, working a ton, and being very poorly paid, and more often than not totally unpaid.

Truthfully, I'm leaning towards the second option.

Different people need different things from life.

[BeanCounter]

I think it depends on the job.
My personal experience is that my job satisfaction and overall happiness decreased dramatically for every additional $20k over the $75k. Now that I've been FIRE for 5 months I've had a chance to think about it and I think it was directly related to no longer doing actual work. At the height of my career my job became sitting in long meetings of which only a small portion pertained to me, dealing with emails, and making stupid slide decks for aforementioned meetings. Honestly, it might have been the Power Point slide decks that pushed me over the edge and caused me to FIRE. I was no longer doing the work that I enjoyed, just managing others doing it and then explaining that work and it's outcomes to leadership.
The only benefit to the high salary was its contribution to accelerating FIRE. But in retrospect it might have actually been worth it to work a few more years at a lower salary while actually enjoying the work.

[Runrunrun]

What does everyone think of how they measured experienced well-being? A smartphone app pinged the study participants throughout the day asking "How do you feel right now?"

[Metalcat]

What does everyone think of how they measured experienced well-being? A smartphone app pinged the study participants throughout the day asking "How do you feel right now?"

That's as good a metric as any.

I mean, what are they looking for other than self reported states of being?

[partgypsy]

For me my happiness is associated with locus of control. I was happiest during times I could do what I want, whether as a kid riding my bike around and reading books, and college and the couple years after college. Otherwise, very little relation. Right now I make ok money but for various reasons and responsibilities my locus of control is -middling.  I think I felt the biggest "jump" in happiness re money, when moving from a grad student making 14k a year to a post doc making 24k. And then being an associate (non teaching faculty) being paid 35k a year with at that point long hours and not much control over my work situation, to a much lower position that paid more and 40 hour work week (and was overall more humane working situation with great colleagues). Overall my work life balance is good, just need to tweak it.

[Runrunrun]

What does everyone think of how they measured experienced well-being? A smartphone app pinged the study participants throughout the day asking "How do you feel right now?"

That's as good a metric as any.

I mean, what are they looking for other than self reported states of being?

True. I'm reading into it too much.

[Metalcat]

What does everyone think of how they measured experienced well-being? A smartphone app pinged the study participants throughout the day asking "How do you feel right now?"

That's as good a metric as any.

I mean, what are they looking for other than self reported states of being?

True. I'm reading into it too much.

Yep.

Social research can only show what it shows, and it's almost always based on self report data, which has very obvious limitations. It's up to the readers not to interpret beyond the limitations of research.

Unfortunately, that's *exactly* what all media reports of research do, because real research is actually pretty dull in isolation and not very interesting to report on in a responsible fashion.

So don't over think it.

[Captain Cactus]

It may just be nostalgia, but I think I was happiest when I was in college and the first few years of being in the Army.  I think it was primarily because I had friends, a shared common experience with those friends, and the future was wide open.  The world was my oyster.  I didn't have much money, I wasn't married, no kids...so freedom was high but money was low.  Couldn't wait to have some money though... 

As the fortune cookie says, "sometimes money costs too much"... 

As I grew in my career, increased my responsibilities, I got my money.  I also got married, had kids, bought a house, grew my nest egg, etc... my security grew (money saved, stable marriage, nice town, etc...) but my freedom of choice diminished and my options narrowed.  The world is no longer my oyster...I made important choices and now I have to live with them.  I no longer had the large pool of friends/colleagues sharing a common experience.  I just have my wife, my kids, my family members.  I love my family.  But we all know it's not the same.  My options have narrowed, so even though financially I could technically do pretty much anything I ever wanted to do when I was young and free, I can't (or choose not to) because of my responsibilities.

Anyone else feel this way? 



     

[Arbitrage]

I didn't read it in detail, but my initial impressions were:



- Correlation, not causation.  Not faulting the study for that.  However, I'm sure there's a huge influence of career satisfaction. 

- Make sure to note the logarithm scale on income. 

- We've often said on this forum that lots of spending doesn't evoke lots of happiness.  Income is not the same as spending.  Are these higher-income people spending more?  As a group, no doubt.  As individuals, likely most of them spend more.  Still, not exactly the same. 

- I could make various anecdotal observations, but those aren't compelling vs. a large set of data.  The premise seems reasonable overall, though it doesn't really fit the FIRE community well, given the focus on income vs. spending, and the fact that it wouldn't apply at all to FIREd individuals.

[Metalcat]

It may just be nostalgia, but I think I was happiest when I was in college and the first few years of being in the Army.  I think it was primarily because I had friends, a shared common experience with those friends, and the future was wide open.  The world was my oyster.  I didn't have much money, I wasn't married, no kids...so freedom was high but money was low.  Couldn't wait to have some money though... 

As the fortune cookie says, "sometimes money costs too much"... 

As I grew in my career, increased my responsibilities, I got my money.  I also got married, had kids, bought a house, grew my nest egg, etc... my security grew (money saved, stable marriage, nice town, etc...) but my freedom of choice diminished and my options narrowed.  The world is no longer my oyster...I made important choices and now I have to live with them.  I no longer had the large pool of friends/colleagues sharing a common experience.  I just have my wife, my kids, my family members.  I love my family.  But we all know it's not the same.  My options have narrowed, so even though financially I could technically do pretty much anything I ever wanted to do when I was young and free, I can't (or choose not to) because of my responsibilities.

Anyone else feel this way? 
   

Nope, because I refuse to feel stuck in anything.

Granted, I've changed jobs/careers pretty dramatically every few years, which keeps things interesting.

[Nutty]

As I grew in my career, increased my responsibilities, I got my money.  I also got married, had kids, bought a house, grew my nest egg, etc... my security grew (money saved, stable marriage, nice town, etc...) but my freedom of choice diminished and my options narrowed.  The world is no longer my oyster...I made important choices and now I have to live with them.  I no longer had the large pool of friends/colleagues sharing a common experience.  I just have my wife, my kids, my family members.  I love my family.  But we all know it's not the same.  My options have narrowed, so even though financially I could technically do pretty much anything I ever wanted to do when I was young and free, I can't (or choose not to) because of my responsibilities.

Anyone else feel this way? 

Yes and no.  Kids, family and a loving and supportive spouse were chosen.  You are correct that responsibilities hold you back, but the freedom to do is there.  Take the family with you.  Make it work.  If you resent what you can't have, there might be a problem.

Did I miss a lot of stuff?  Yep.  Am I happy with my choices and the family?  You better believe it.  No regrets.

Without my family, I'd be much richer with money and different experiences and lonelier.  What do you value more?

I'd also be FIREd.  Like the man says, place your bets.  Make your choices and spin the wheel.

[ericrugiero]

I would guess there is some correlation AND some causation. 

Correlation:  People who report well being are likely to be people who are engaged in their work and get a sense of satisfaction from it.  Those traits lead people to perform better and be paid more. 

Causation:  People who make more money will have an easier time paying for necessities without stress while having some left for enjoyment.  This can lead to more feelings of well-being. 

A couple other things probably play into this as well. 
-  Do people feel like they are making a difference in their job?  A firefighter who enjoys his/her work and regularly saves people's lives might have higher satisfaction than someone flipping burgers for a living even though they might be paid similarly. 
-  Are people making progress financially?  Someone making $150K/yr who is mortgaged to the hilt in a mcmansion, driving a leased BMW, carrying credit card balances and struggling to make payments isn't going to feel like they are making progress.  A mustachian making $50K/yr with a 30% savings rate is making progress and might have more satisfaction/well-being.   

[ericrugiero]

As I grew in my career, increased my responsibilities, I got my money.  I also got married, had kids, bought a house, grew my nest egg, etc... my security grew (money saved, stable marriage, nice town, etc...) but my freedom of choice diminished and my options narrowed.  The world is no longer my oyster...I made important choices and now I have to live with them.  I no longer had the large pool of friends/colleagues sharing a common experience.  I just have my wife, my kids, my family members.  I love my family.  But we all know it's not the same.  My options have narrowed, so even though financially I could technically do pretty much anything I ever wanted to do when I was young and free, I can't (or choose not to) because of my responsibilities.

Anyone else feel this way? 

Yes and no.  Kids, family and a loving and supportive spouse were chosen.  You are correct that responsibilities hold you back, but the freedom to do is there.  Take the family with you.  Make it work.  If you resent what you can't have, there might be a problem.

Did I miss a lot of stuff?  Yep.  Am I happy with my choices and the family?  You better believe it.  No regrets.

Without my family, I'd be much richer with money and different experiences and lonelier.  What do you value more?

I'd also be FIREd.  Like the man says, place your bets.  Make your choices and spin the wheel.

Do I wish I was FIRE'd and had more time and money to travel and pursue the experiences I want?  Sure.  Would I give up my wife and kids to make that happen?  Absolutely not. 

Without supporting my family I would easily be able to FIRE right now.  With my family, I'm still several years away.  That doesn't mean I regret my choices.  Life would be much more empty without my family. 

[Bloop Bloop Reloaded]

Log scale sounds about right. I do think there is a point above which additional income is unlikely to provide much benefit, but $75k (or even, say, $100k to allow for inflation) seems a ridiculously low number. Even if I were to convert using PPP into Australian dollars, $150k a year (which is $110k net) does not guarantee a life without any sort of financial worry or hindrance in my country. Whereas, say, $250k a year pretty much does. And for me it's knowing that I have no financial worries at all - I could stop working today and still live pretty decently for 10 or 20 years, and in 5 years I could stop working altogether and do the same - that has taken away a lot of financial stress.

For example, I'm probably 3 years behind on my taxes and way behind on some utility bills. I don't care. They're all frozen due to covid anyway so there are no penalties. I just pay all my bills in one go every 12 months or so, and if the taxes cost me $150k then I'll just wire that. I'm not advocating for this sort of derelict behaviour but it's great knowing that it just doesn't matter. If I earned less than I did, I'd have to count pennies probably.

So I think a higher income = fewer worries as long as you don't get caught up in the wealth trap of allowing your consumption to scale up with income.

Does it equal more happiness directly? No, in my experience. You can't buy happiness. You have to create that for yourself. But you can certainly buy wellbeing and insulation from stress, for sure.

[martyconlonontherun]

Very interesting.

I can tell you I was happy when making $75k, but I'm *much* happier making far more than that now. The main reason for me is we can accelerate our savings and be financially independent and free of mind numbing work whenever we want.

Another benefit that comes to mind is the more money one makes, the more work freedom one tends to have.  When I was making $75k, I was in a more traditional work role and managed.  Now that I'm making far more than that, I tend to have very little management and can control my work / schedule as I please, since the work I do is more highly valued and I have far more control over work & life.

It's really contradictory to what one would expect.  The less money one makes, the more one is managed. The more money a person earns, the less that person is managed.

Therefore, the benefit to me is not just having more savings, but much more freedom to do what I want, when I want, and get paid far more for it.

I think you have to allocate the saved portion a bit for super savers. You are basically replacing future income with current income. Part of the $75k threshold is not worrying about basic needs which you are taking a portion of this years salary and applying it to future needs. So even if you are making $150k, you are only applying $75k to this year for covering needs and $75k in future years. Does that make sense?

[BicycleB]

It may just be nostalgia, but I think I was happiest when I was in college and the first few years of being in the Army.  I think it was primarily because I had friends, a shared common experience with those friends, and the future was wide open.  The world was my oyster.  I didn't have much money, I wasn't married, no kids...so freedom was high but money was low.  Couldn't wait to have some money though... 

As the fortune cookie says, "sometimes money costs too much"... 

As I grew in my career, increased my responsibilities, I got my money.  I also got married, had kids, bought a house, grew my nest egg, etc... my security grew (money saved, stable marriage, nice town, etc...) but my freedom of choice diminished and my options narrowed.  The world is no longer my oyster...I made important choices and now I have to live with them.  I no longer had the large pool of friends/colleagues sharing a common experience.  I just have my wife, my kids, my family members.  I love my family.  But we all know it's not the same.  My options have narrowed, so even though financially I could technically do pretty much anything I ever wanted to do when I was young and free, I can't (or choose not to) because of my responsibilities.

Anyone else feel this way? 
   

Not exactly.

Reading between the lines, you were happiest with vast choices and the feeling - perhaps excitement - that they brought. I didn't undertake the same responsibilities, so I didn't have a decline in choices the same way. I did experience a decline in choices over time because life inevitably means choosing something, but I don't feel the loss of the others as a bad thing. I don't argue with the inevitable.

It would be easier for me to feel bad about my failures to choose something exciting, or to maximize my skills/resources/intensity/adventures. That may be similar. But I kind of feel like "That's on me". Meanwhile I've begun finding new options, recognizing advantages in my choices, and so on.

I think nearly everyone whose childhood wasn't damaged felt very happy at some youthful point, and most people decline in happiness over time for a while. Some of that's probably responsibilities or lost choices. Studies show that after 40something, most people get happier again. That's been my experience so far.

I think that in the later ages, you become more at peace with yourself, your choices, and savoring what's available in the time left. Also you get through some of the burdens - children grow and leave (for better or worse), parents' need for care disappears (hopefully with as good an end as possible), estates are resolved, questions simplify.

TL;DR - The link between more money and less happiness sounds like coincidence. Maybe in your case you rushed into responsibilities you regret in hindsight, but I'm almost certain your choices wouldn't have stayed infinite even if you chose a different life.

I mean, if there's a loss to grieve, grieve. Your youth might be gone. But you didn't do it wrong.*

*I mean, mayyybe you did it wrong for you. That's for you to decide. But you'd lose your youth regardless of what you chose. And regardless of the money you made.

Heck, if you made no money back then, your options would have shrunk too. I can attest to that personally! :)

[30to40]

It may just be nostalgia, but I think I was happiest when I was in college and the first few years of being in the Army.  I think it was primarily because I had friends, a shared common experience with those friends, and the future was wide open.  The world was my oyster.  I didn't have much money, I wasn't married, no kids...so freedom was high but money was low.  Couldn't wait to have some money though... 

As the fortune cookie says, "sometimes money costs too much"... 

As I grew in my career, increased my responsibilities, I got my money.  I also got married, had kids, bought a house, grew my nest egg, etc... my security grew (money saved, stable marriage, nice town, etc...) but my freedom of choice diminished and my options narrowed.  The world is no longer my oyster...I made important choices and now I have to live with them.  I no longer had the large pool of friends/colleagues sharing a common experience.  I just have my wife, my kids, my family members.  I love my family.  But we all know it's not the same.  My options have narrowed, so even though financially I could technically do pretty much anything I ever wanted to do when I was young and free, I can't (or choose not to) because of my responsibilities.

Anyone else feel this way? 
   

Logged in again after so long just to reply to this. YES! I feel that way. Got a great, career making job with a good pay and pension scheme, solid career path. Have good intimate relationships and save like never before. I feel like i am on track, but the tracks are now both behind and ahead of me. Something in me feel locked in. It is a privileged position sure, I dont have to work much overtime, and have a great deal of freedom in planning work. Still... something feels sort of meh.

[LennStar]

Honestly, it might have been the Power Point slide decks that pushed me over the edge and caused me to FIRE.

Honestly, not for the first time I think Power Point has done more for the FIRE movement than any other single thing in the world.

What does everyone think of how they measured experienced well-being? A smartphone app pinged the study participants throughout the day asking "How do you feel right now?"

That is actually a good one (at least for those who constantly look at that thing). Because it gets so automatic after a few days that people just push the "correct" number for their feeling. No thoughts distracting like "I have sex with my wife, I should feel happier than that" (and yes, there are people who answer calls in those situtions.) 

[vand]

This is pretty much what any competent  high school economics student should be concluding, given the immuable law of diminishing returns eventually kicks in on just about anything and everything.

More of something at a very high level may have very small positive marginal utility, but it is a positive effect nonetheless rather than a zero or negative one.

I've always thought those "happiness plateaus at $80k" studies to have a seriously questionable political agenda.

Hedonic adaptation is a real thing too... but ask the question in reverse - cut someone's pay from $160k to $80k and tell them that it shouldn't make any difference to their lives and see the look on their faces.

People saying "I was happier in my 20s when I was living in a slum and on minimum wage" are kinda missing the point. You're not the same person in the same situation as you were then.

[Morning Glory]

Autonomy and variety in my work is very important to my general happiness. I can see why this would be correlated with salary, but not always. I took a very bad transfer last year to a unit where I didn't have those things (pay was the same), and ended up with horrible anxiety and depression after a few months. I'm so much happier now that I left there.

I have to provide health insurance for my family so I couldn't leave until a couple days before my new job started, even though I had enough FU money to take a couple months off after I had the job set up. Single payer healthcare would do a lot for collective happiness, I think.

[Nutty]

Autonomy and variety in my work is very important to my general happiness. I can see why this would be correlated with salary, but not always. I took a very bad transfer last year to a unit where I didn't have those things (pay was the same), and ended up with horrible anxiety and depression after a few months. I'm so much happier now that I left there.

This is very true.  I worked long hours and was physically exhausted at a job I was thrilled with.  Challenges, details, and variety.  Compensation was paltry.  Time off nonexistent.  Financial and time away from family stresses finally won.

New job doubled the pay and stops after 40 hours.  There are high points, but monotonous.  Gave me a lot more time for the kids and to work on the hobbies I neglected.  Wow!  The change.

Amazing what a big change does for you.

[Just Joe]

For me my happiness is associated with locus of control. I was happiest during times I could do what I want, whether as a kid riding my bike around and reading books, and college and the couple years after college. Otherwise, very little relation. Right now I make ok money but for various reasons and responsibilities my locus of control is -middling.  I think I felt the biggest "jump" in happiness re money, when moving from a grad student making 14k a year to a post doc making 24k. And then being an associate (non teaching faculty) being paid 35k a year with at that point long hours and not much control over my work situation, to a much lower position that paid more and 40 hour work week (and was overall more humane working situation with great colleagues). Overall my work life balance is good, just need to tweak it.

I agree with this the most.

[Just Joe]

It may just be nostalgia, but I think I was happiest when I was in college and the first few years of being in the Army.  I think it was primarily because I had friends, a shared common experience with those friends, and the future was wide open.  The world was my oyster.  I didn't have much money, I wasn't married, no kids...so freedom was high but money was low.  Couldn't wait to have some money though... 

As the fortune cookie says, "sometimes money costs too much"... 

As I grew in my career, increased my responsibilities, I got my money.  I also got married, had kids, bought a house, grew my nest egg, etc... my security grew (money saved, stable marriage, nice town, etc...) but my freedom of choice diminished and my options narrowed.  The world is no longer my oyster...I made important choices and now I have to live with them.  I no longer had the large pool of friends/colleagues sharing a common experience.  I just have my wife, my kids, my family members.  I love my family.  But we all know it's not the same.  My options have narrowed, so even though financially I could technically do pretty much anything I ever wanted to do when I was young and free, I can't (or choose not to) because of my responsibilities.

Anyone else feel this way? 

Yes. On paper life is just about perfect. In reality DW and I have to remind ourselves to be creative and have fun at times. It is easy (especially in this COVID year) to just come home and sit in front of the TV. There are many opportunities to have fun even during this pandemic - walks, hikes, games, new recipes, our hobbies, etc. When our teens are with us doing these things they act as a multiplier b/c we know our time all living together is ever growing shorter.   

[John Galt incarnate!]

For me my happiness is associated with locus of control.

 Locus of control is a major determinant of my happiness and contentment too.

Being FI facilitates my autonomy and maximum control of my life.

[LennStar]

Hedonic adaptation is a real thing too... but ask the question in reverse - cut someone's pay from $160k to $80k and tell them that it shouldn't make any difference to their lives and see the look on their faces.

But that is also true if you give someone a 50€ note and take it away 10 seconds later.
They are still on exactly the same wealth as a minute earlier, but a lot less happy about their money situation. Human put a lot more weight on loses as on gains of the same value. That is the sole reason why "conservative" parties exist. Change is bad, so you have to conserve what is now.

I've always thought those "happiness plateaus at $80k" studies to have a seriously questionable political agenda.

Afaik those studies don't say that there is no increase, just that it is very small and such negligible compared to the same amount of money in the lower regions; or that an increase in one part of happiness (like autonomy) is offset by a different part (like stress because you now have more to worry about).

And don't forget that a lot of the happiness comes from your neighbors. People compare themselves to other people, always and even if they don't want. (Another point why being Mustachian makes you happier: You compare yourself to lower income people with the size of your house etc.)

[vand]

Hedonic adaptation is a real thing too... but ask the question in reverse - cut someone's pay from $160k to $80k and tell them that it shouldn't make any difference to their lives and see the look on their faces.

But that is also true if you give someone a 50€ note and take it away 10 seconds later.
They are still on exactly the same wealth as a minute earlier, but a lot less happy about their money situation. Human put a lot more weight on loses as on gains of the same value. That is the sole reason why "conservative" parties exist. Change is bad, so you have to conserve what is now.

I've always thought those "happiness plateaus at $80k" studies to have a seriously questionable political agenda.

Afaik those studies don't say that there is no increase, just that it is very small and such negligible compared to the same amount of money in the lower regions; or that an increase in one part of happiness (like autonomy) is offset by a different part (like stress because you now have more to worry about).

And don't forget that a lot of the happiness comes from your neighbors. People compare themselves to other people, always and even if they don't want. (Another point why being Mustachian makes you happier: You compare yourself to lower income people with the size of your house etc.)

Yes, absolutely.  Happiness is also tied to your social status, and relative income/wealth play at least some role in that.

[John Galt incarnate!]

And don't forget that a lot of the happiness comes from your neighbors. People compare themselves to other people, always and even if they don't want.

I agree though I usually think of the comparison more broadly in terms of the "have" and "have not" cohorts.

I think for many mired in  difficult financial circumstances  "gratitude is the source of happiness" is the emptiest of  bromides while for others in favorable circumstances  it's a verity as they realize how much easier  their lives as a "have" are when compared to  the hardships endured  by the "have not" cohort.

[roomtempmayo]

What does everyone think of how they measured experienced well-being? A smartphone app pinged the study participants throughout the day asking "How do you feel right now?"

Using a cell phone for self-reporting could skew the results.

People are used to over-representing their happiness on their phones (see Instagram, broadly), and so they very well might be primed to overrepresent their happiness on their phones in response to a survey.  This tendency to over-represent could be unevenly distributed across the income spectrum (and may even intuitively be unevenly distributed) if those on the top end of the spectrum disproportionately use their phones as tools to display status.

The real question is whether the study replicates when you don't use a phone to gather data.

Until I see replication across different methods of data collection, I'm inclined to give weight to Angus Deaton's original research (Nobel Prize and all that) rather than an outlier study that relies on an app.  The happiness research is pretty robust, and one app-based study that disagrees isn't enough for me to disregard it.

[ender]

$75k where? Anywhere in the USA?

I'm considerably happier now making well over $75k than I was making $75k.

[American GenX]

Someone earlier gave a bad example about telling someone you're cutting their salary from $160K to $80K and see the look on their faces.  No one wants their income cut in half, regardless of how much of it is really needed to make them happy.  Those are two different things.  And maybe more importantly, if someone has been making $160K per year, they've probably already setup their lifestyle/budget based on that income, so a sudden cut would take away their happiness when they can't even afford to pay their bills.  So it was a terrible comparison.  Based on the premise of the thread of money not buying happiness, if they had been making $80k all along, they would likely be as happy as they are now making $160K.  But there are so many factors as work, such as cost of living, family size, taxes, home ownership, debt. etc.  That threshold of income required to transcend into happiness will vary from person to person, family to family.

I've been thinking this through, and I think that anything above $30,000 income wouldn't make much difference in my happiness level as a single midwesterner.  My income is more than triple that now, and I maintain an 80% savings rate year after year because I don't need to spend a lot of money to be happy.  $25,000 income may be a little uncomfortable in my current housing situation, and I would probably downscale to make up for it and still be fairly happy.  It would take further cuts to actually make me unhappy.

The happiest time in my life was in my 20's, and I made much less than than $30K/yr, even when adjusting for inflation.  I lived in a lower cost house, but otherwise, the things that made me happy then would make me happy now.  The house itself doesn't change that much.  My feelings about happiness haven't changed.  I'm the same person today as I was then, but wiser!

[waltworks]

I am pretty sure I'll never again be as happy as I was as a grad student making ~$20k a year.

Mo' money, mo' problems.

I mean, I'm very happy now, too. But if you're not the type that really give a crap about material possessions, money isn't actually all that useful beyond a very low level. I am sure I had a 50% savings rate as a grad student, because what was there to spend money on?

-W

[Metalcat]

$75k where? Anywhere in the USA?

I'm considerably happier now making well over $75k than I was making $75k.

On the flip side, our household income is now much closer to 75K compared to the 300K+ it used to be, and we're both much happier.

We're still spending about the same amount, so it really makes no difference.

[vand]

Someone earlier gave a bad example about telling someone you're cutting their salary from $160K to $80K and see the look on their faces.  No one wants their income cut in half, regardless of how much of it is really needed to make them happy.  Those are two different things. 

Well my point, which you also reinterate, is that a great deal of the happiness derived from wealth and income is in "keeping score" which is largely determined by how you percieve yourself to be doing in comparison to another anchoring point. Typically your immediate neighbours or peer group, but in the case of the 50% paycut that anchoring point is your own last paycheque!


The reason the $75k figure tends to work well for these social (or should we say socialist) studies is that it is a level that is materially enough above the median US income which most people can easily relate to, yet not so obscene to warp their moral code - nobody likes to be painted as being "greedy". 

[vand]

I always found this article from the UK to be interest:
https://yougov.co.uk/topics/politics/articles-reports/2017/06/02/how-much-money-do-you-need-earn-year-be-rich

It shows that when asking the general public how they viewed each income decile, the consensus is that 35% think that the 9th decide of income (£39.4k) qualifies you as rich, and a whopping 68% think that the 10th decile (£60.5k) qualifies you as rich:



However, then when you ask individuals in various different income brackets if they considered themselves as being rich, here are the results:



Hardly anyone in any income bracket thinks of themselves as being rich, even amongst £50k+ bracket!  So somewhere between 35-68% of the overall population think that someone earning £50k+ a year is rich, whereas only 10% of those actually earning in that bracket think of themselves as rich.

So you see how people view others who are doing just "that bit better" than themselves as being rich. That extra 15-30% is a very relateable amount for nearly everyone that they all strive for.

We anchor ourselves to the world as we see it.. a recession is when the neighbour loses their job, whereas a depression is when we lose our job. Anyone driving faster than me is a maniac, anyone driving slower than me is an idiot. Anyone earning more than me needs is a greedy bastard, anyone earning less than me needs to pull their socks up.

[LennStar]

I always found this article from the UK to be interest:
https://yougov.co.uk/topics/politics/articles-reports/2017/06/02/how-much-money-do-you-need-earn-year-be-rich
...

90% of car drivers think they are better than average.
Old is your age + 20 years
Rich is someone that earns more than 25% more than you.
With an UBI 90% say they would continue working, but only 50% think others would continue working.

It's all the same - keeping up with Joneses with the greener gras and or that we think of ourselfs better than of others.

[Metalcat]

Someone earlier gave a bad example about telling someone you're cutting their salary from $160K to $80K and see the look on their faces.  No one wants their income cut in half, regardless of how much of it is really needed to make them happy.  Those are two different things. 

Well my point, which you also reinterate, is that a great deal of the happiness derived from wealth and income is in "keeping score" which is largely determined by how you percieve yourself to be doing in comparison to another anchoring point. Typically your immediate neighbours or peer group, but in the case of the 50% paycut that anchoring point is your own last paycheque!


The reason the $75k figure tends to work well for these social (or should we say socialist) studies is that it is a level that is materially enough above the median US income which most people can easily relate to, yet not so obscene to warp their moral code - nobody likes to be painted as being "greedy".

I don't think anyone derives actual joy from keeping score. Sick, ego driven satisfaction, sure, but not actual joy or happiness.

Happy people aren't bothered by their friends and neighbours having or making more money.

[Arbitrage]

I agree that it's a misleading narrative to take someone's income and downsize it to $75k and ask if they're happy now. 

You could just as well take someone in poverty and ask about their happiness if you triple (or whatever) their income to $75k. 

You'd get completely different answers, but neither of those scenarios is answering the question being asked. 

[vand]

I agree that it's a misleading narrative to take someone's income and downsize it to $75k and ask if they're happy now. 

You could just as well take someone in poverty and ask about their happiness if you triple (or whatever) their income to $75k. 

You'd get completely different answers, but neither of those scenarios is answering the question being asked.

One of the real problems with macroeconomic models used today is they are based on quantify everything cardially.

However human emotions don't work like that. We are better measure things ordinally, so we can only say that we prefer more of something or less of something, or one thing over another, but we can't say by how much, eg "I prefer a banana to an orange because I derive 40% more utility from it". Moreover, we may prefer bananas on one day and oranges on another day.

Walter Block (incomparable genius) gives a very good critique of mainstream model here:
https://www.youtube.com/watch?v=TI5fjTz1Rbw

[2sk22]

Here is a different paper that has a slightly more nuanced depiction of "happiness"

(Unfortunately, the paper itself is behind a paywall but the abstract looks interesting)

Globally, we find that satiation occurs at $95,000 for life evaluation and $60,000 to $75,000 for emotional well-being. However, there is substantial variation across world regions, with satiation occurring later in wealthier regions. We also find that in certain parts of the world, incomes beyond satiation are associated with lower life evaluations.

[Aegishjalmur]

I guess I agree with this because as my income went up, my 'experienced well being' went up as I was able to pay off debts quicker, accumulate a larger emergency fund and speed up savings, which all combined to improve my peace of mind. When it no longer was true, I FIRE'd.

[lutorm]

It would be very interesting to see what the results would look like if they broke out the FIREd people who make 50k per year from selling assets vs the people working for 50k/yr.

I don't doubt that people earning more while working are by and large happier than people earning less, up to some fairly large limit, precisely because accumulating assets means accumulating freedom. But that's entirely separate from whether people spending more are happier.

And I entirely understand people not feeling "rich" even though they make a lot of money, if they blow it all. If you're barely keeping ahead of your spending, I wouldn't feel rich either spending 250k/year if I knew I was just living paycheck to paycheck.

You can't really assess this on a one-dimensional scale based on income. You need to include the other variable, either spending or assets.

[Bloop Bloop Reloaded]

My average yearly spend is about $45k but I'd be less happy than at present if I only earned $55k (which after taxes is $45k). I like knowing that I'm accumulating an excess amount which can go towards freedom from worry, as well as frivolity when I feel like it.

As stated directly above, someone on $300k has perhaps only the same 'options'/utility in terms of spending and lifestyle as someone on $100k, but the former is going to be able to retire a lot earlier. Which, surely, must count for something.