$75,000 the tipping point on well-being scale

Woman pulling her hair in stressIf you were making $75,000 and received a handsome raise, would your feeling of well-being increase? A new study concludes that it wouldn't.

The idea that additional money doesn't result in additional happiness for those of us who live in affluent societies was the product of a landmark study by economist Richard Easterlin in the 1970s. The oft-quoted conclusion, called the Easterlin Paradox, has been called into question recently by several new studies that illuminate the relationship between happiness and wealth.

One new study by Daniel Kahneman and Angus Deaton of the Center for Health and Wellbeing at Princeton, further complicates the question. The two reviewed responses to the Gallup-Healthways Well-Being Index of 450,000 Americans from 2008-2009.

Instead of simply looking at the question "How satisfied are you with your life as a whole these days?" they separated the question into two parts:
  • Emotional well-being; i.e., the "emotional quality of an individual's everyday experience"
  • Life evaluation: a "person's thoughts about his or her life"
This study first concluded that it does indeed stink to have a low income. For those of us with household incomes under $75,000, more money would improve both our emotional well-being and our overall view of our life. However, things change after we hit the $75,000-salary mark.

The study found that once our income reaches the $75,000 level our emotional well-being stops increasing as our income grows. In other words, it appears that bringing in more than $75,000 has little or no positive effect on emotional well-being, or on how we feel in the moment.

Satisfaction with our lives overall, however, keeps on increasing as we surpass that $75,000 level. Those making massive amounts of money, then, would likely be massively pleased with the course of their lives, but no more likely to be content in the moment than an underling bringing home $75,000. (Keep that in mind the next time a senior exec flames you.)

On a brighter note, the study also compared the U.S. poll with another Gallup World Poll and found that Americans rank ninth in life satisfaction. Those happier with their lives than us are "the Scandinavian countries, Canada, The Netherlands, Switzerland and New Zealand." On the downside, the authors also found that the U.S. is fifth in stress among the 151 countries studied.

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