The study was led by Angus Deaton, an economist, and Daniel Kahneman, a psychologist who won a Nobel Prize. The two analyzed the answers of 450,000 Americans to find out how much money people need to be happy. The magic number turned out to be $75,000 a year.
The study indicated that when a person earned less than this magic sum, they felt unhappier. The study also indicated that regardless of how much money the person has once the $75,000 a year mark is reached, doesn’t lead to more happiness. So, you know, no need to aspire to millionaire status anytime soon.
Now, hold on a second before you go giving your people a raise just to see them work better. The study distinguishes between two forms of happiness. There’s the everyday happiness that changes easily as our mood does.
Then there’s a more important kind of happiness. The one that instills us with “deeper satisfaction.” This is the kind of happiness that keeps us feeling whole even when we are stressed and hit with overwhelming days. It’s the kind of happiness that tells you that you are leading a satisfying life.
With these two types of happiness in mind, the study distinguishes how money affects the two emotional states. The former happiness, the one that changes with our mood, is not affected by the fact that you may earn $75,000 or more. So, if you’re earning that much or more, you’re still going to feel stressed or reluctant to wake up in the morning.
When it comes to the other form of happiness, however, the “deeper satisfaction,” things are different. In this case, the magical sum of money does affect your happiness. “The more people make above $75,000, the more they feel their life is working out on the whole.”
The study required participants to answer a series of questions. They had to describe “how they had felt the previous day and whether they were living the best possible life for them. They were also asked about their income.”
Overall, the study showed that most Americans did feel happy each day, “regardless of their annual income.” 85 percent to be precise. 40 percent said they were stressed — not surprisingly, everyone seems to have that word on their tongue these days. Moreover, 24 percent reported feeling sad.
The study showed that Americans are generally satisfied with their life. Moreover, earning less than $75,000 didn’t automatically lead to sadness. Rather, a lesser income than that “made people feel more ground down by the problems they already had.”
When the income of the respondent hits the $75,000, “that effect disappears.” The study doesn’t indicate a specific reason why this is the magic sum. However, Deaton said that the sum “does seem […] a plausible number at which people would think money is not an issue.”
The study did reveal something more interesting than the magic number. It seems that people associate a higher income with a better life. “The more they made, the more they felt their life was going well.”
“High incomes don't bring you happiness, but they do bring you a life you think is better,” conclude the authors. A 10 percent rise in your salary, will raise your level of satisfaction. This is regardless of whether you earn $30,000 a year or $200,000 a year.