There is an optimal point to how much money it takes to make a person happy. Past that point, says research from Purdue University, there are decreasing returns in terms of our emotional well-being and life satisfaction.
So how much money do you need to earn to be happy?
Apparently, the ideal income point, in a study of 1.7 million individuals across 164 countries, was $95,000 (€81,500) for life satisfaction, and $60,000 to $75,000 (€51,500 – €64,000) for emotional well-being.
Past that point, when your bills and living expenses are being met, the constant pursuit of material gains actually lowers emotional well-being.
Of course, life is not all about how much money you have, and there are many other factors that contribute to your happiness. You’re unlikely to be happy if you can’t afford life’s necessities—food, clean water, shelter, health care – but are multi-millionaires happier than the rest of us? It seems not.
The study found that once the threshold was reached, further increases in income tended to be associated with reduced life satisfaction and a lower level of well-being
“That might be surprising as what we see on TV and what advertisers tell us we need would indicate that there is no ceiling when it comes to how much money is needed for happiness, but we now see there are some thresholds,” said Andrew T. Jebb, the lead author of the report which was published in Nature Human Behaviour.
“It’s been debated at what point does money no longer change your level of well-being. We found that the ideal income point is $95,000 for life evaluation and $60,000 to $75,000 for emotional well-being. This amount is for individuals and would likely be higher for families.”
Emotional well-being, or feelings, is about one’s day-to-day emotions, such as feeling happy, excited, or sad and angry. Life evaluation, really life satisfaction, is an overall assessment of how one is doing and is likely more influenced by higher goals and comparisons to others.
After the optimal point of needs is met, people may be driven by desires such as pursuing more material gains and engaging in social comparisons, which could, ironically, lower well-being.
“There was substantial variation across world regions, with satiation occurring later in wealthier regions for life satisfaction,” Jebb said. “This could be because evaluations tend to be more influenced by the standards by which individuals compare themselves to other people.”
The study also found once the threshold was reached, further increases in income tended to be associated with reduced life satisfaction and a lower level of well-being. This may be because money is important for meeting basic needs, purchasing conveniences, and maybe even loan repayments, but to a point. After the optimal point of needs is met, people may be driven by desires such as pursuing more material gains and engaging in social comparisons, which could, ironically, lower well-being.
“At this point they are asking themselves, ‘Overall, how am I doing?’ and ‘How do I compare to other people?'” Jebb said. “These findings speak to a broader issue of money and happiness across cultures. Money is only a part of what really makes us happy, and we’re learning more about the limits of money.”