In the last four articles, I introduced the concept of achieving happiness following the five W’s I have thought through. These are
Well-being of ourselves: physical, mental, and personality
Working partner/Spouse/Love
Work and retirement
⦁ Wealth or absence of poverty
⦁ Well-wishers (Friends, Family, Culture, Religion, institutions)
They say you can’t buy happiness – but money can help prevent you from being unhappy. This story of happiness and income level has two sides like a coin!!
Heads: Money can buy happiness only at a certain level. Happiness plateaued out at 75K in 1990 money. Increasing income is commonly associated with increased happiness and subjective well-being. However, a point at which subjective well-being no longer increases with income (Clark 2008; Dolan 2008; Easterlin, 1974).
Tails: There was no evidence for an experienced well-being plateau above $75,000/y, contrary to some influential past research. Higher incomes are associated with both feeling better day-to-day and being more satisfied with life overall (Killingsworth 2021; Stevenson 2008).
Those in favor of heads? (Some level of income is ok, but more than 105k/year will not bring you more joy or life satisfaction)
In a series of studies from 1974-2005, Easterlin found that despite the American economy experiencing growth over the previous few decades, the average level of happiness among American citizens remained the same. He called this the Easterlin paradox, where income and happiness correlate until reaching a certain point. That number has been modified from 75 k/Year in the 1990s to 105K/Year. The fundamental belief is that you need a basic income to attain security in life (Food, shelter, clothing, and some spending money). It also assumes that being rich will bring turmoil like pressure to continue making money, insecurity, people depending on you, and less time for leisure. It also states that rich people have inner dissatisfaction (Hedonic Treadmill). Rich people are labeled as money and power-hungry. Movies and media portray that those who make an obscene amount of money must do something wrong to get there.
Those who favor the tails (More money, more happiness)
• Stevenson has tried to debunk the Easterlin paradox. According to his team, facts about income and happiness turn out to be much simpler than first realized:
1) Rich people are happier than poor people.
2) Richer countries are happier than poorer countries.
3) As countries get richer, they tend to get happier.
• In another recent study, Killingsworth took a live sample from 33,391 employed, working-age adults (ages 18 to 65) living in the United States. They got random cellphone messages to rate their present happiness and life satisfaction. He found that those with larger incomes were associated with more momentary positive feelings and life satisfaction. The finding held even in incomes well above $75,000 per year, refuting earlier research. Some of the people were making half a million a year and their happiness keeps on climbing.
• Third evidence comes from the following facts: For example, people with higher incomes tend to be given lighter prison sentences for the same crimes, have better health and mental health, have greater longevity, have lower rates of infant mortality, are less frequently the victims of violent crime, and experience fewer stressful life events. Even amongst rich people, those with more weath have better health than the one level below. Citizens of wealthy nations have a 7/10 chance of being happy, and if you add free choice, the chance jumps to 8/10.
Now there is a third side of this half wallet full half wallet empty theory. If people perceive that they are poorer, had a higher chance of lower life satisfaction. Evidence suggests that perceptions of positive change in financial circumstances, as opposed to current circumstances, may also be necessary for well-being. Remember your first job or your first year out of residency? People are unhappy if they perceive their current financial situation to be worse than last year and will be worse in the coming years. A classic example is a current inflation and bear stock market. Do not be surprised if our misery index (the sum of the unemployment, inflation, and bank-lending rates, minus the percentage change in real GDP per capita) will go up the following year.
In our next blog, I will show you how to maximize your money for happiness and how can we buy happiness?