Study shows money linked to happiness, but only to a point

Study shows money linked to happiness, but only to a point

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SALT LAKE CITY — While money may not be able to buy happiness, a new study co-authored by a University of Utah researcher indicates money and happiness are definitely linked.

Additionally, the amount of cash it takes to make a person happy varies widely around the world depending upon a country's standard of living, among other factors.

According to the study's lead author, Andrew Jebb, a doctoral student in the Department of Psychological Sciences at Purdue University, the research on happiness found the average income globally for optimal life satisfaction was around $95,000 for an individual. However, in the United States, that amount was closer to $105,000 for an individual.

"We've known that as you make more money, increases seem to matter less," he said.

One of the aims of the research was to determine at what life satisfaction reached a plateau and making more money failed to increase happiness, he explained.

"We called that point satiation," he noted. "When everything you really want or need is in terms of your happiness is fulfilled."

The amount would likely vary for households with more than one person, he said.

"If you have (kids and a spouse), the household income is going to need to be higher to reach that (satiation) point," Jebb said.

He noted that the research studied long-term happiness, not the short-term joy one might receive from a large pay hike or one-time bonus.

"We're talking about long-term happiness levels. So say you're making $105,000, that doesn't mean that if you got a $100,000 pay increase that you wouldn't feel happy temporarily in the immediate future. You certainly would. We're comparing long-term stable income," he said. "We're saying that (an American) at $105,000, their long-term happiness is basically the same as individuals higher up than that. It just levels off and stabilizes."

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He added that individuals who made higher incomes eventually began to experience declines in their happiness.

"If you do hit that point where money may not be able to bring more benefits to you, the increased 'costs' — workload, traveling and time (away) — begin to take their toll," he said. "CEOs would have 60-hour work weeks and be traveling all over, so you could reach a point where you reduce your satisfaction."

He said the point at which money no longer changes your well-being has been debated, but the study establishes thresholds — and those thresholds are higher in wealthier regions.

"This could be because evaluations tend to be more influenced by the standards by which individuals compare themselves to other people," Jebb said.

The study also found emotional well-being was achieved at a lower-income level — in the $60,000 to $75,000 for an individual.

"It's one other way you could look at happiness, just raw feelings," Jebb said. "Happiness would include having lesser negative emotions, fewer worries, et cetera."

One of the co-authors of the study was Ed Diener, who has joint appointments at the University of Utah and University of Virginia.

The analysis used data from the Gallup World Poll, which includes observations from more than 1.7 million people in 164 countries. Diener, who has studied happiness for more than 35 years, is a Gallup senior scientist.

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"What we show here for the first time is that in some places increasing income after some point actually leads to decreases in life satisfaction," Diener said. "We don't yet know why this is — perhaps these people work so hard that they cannot enjoy life, or they become focused mostly on materialistic goals or whatever. We just don't know."

He said the findings may help individuals and governments understand that at a certain point more money doesn't necessarily lead to greater well-being.

"This helps individuals focus on the priorities in their lives — working hard enough to rise out of poverty can help, but after that, the gains won't be so large," he said. "People might at that point start focusing a bit more on relationships and leisure and other rewarding activities besides earning more."

For governments, there may be a consideration that progressive taxation — which taxes wealthier people at higher rates — might not harm happiness, he said.

"Well-off people might be just as happy, and if the money is then used in productive ways to improve the society, everyone may be better off," Diener said.

The study was published in Nature Human Behavior.

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