"Money can't buy happiness" is a phrase that baby boomers and rich people like to say, but we all know it's nonsense. Money does play, for better or worse, an important role in a person’s physical and mental well-being. That said, the exact nature of the relationship between money and happiness is less clear, so researchers from Purdue University set out to better understand it.
The team used the Gallup World Poll, which has surveyed 1.7 million people from 164 countries. The researchers looked at people's emotional well-being, day-to-day feelings, and life evaluation, which is essentially how satisfied you feel with your life. According to the study, which is published in Nature Human Behaviour, the relationship between money and happiness has certain thresholds.
“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. Again, this amount is for individuals and would likely be higher for families,” lead author Andrew T. Jebb said in a statement.
“And, there was substantial variation across world regions, with satiation occurring later in wealthier regions for life satisfaction. This could be because evaluations tend to be more influenced by the standards by which individuals compare themselves to other people.”
Your ideal income for emotional well-being in North America is between $65,000 and $75,000. In East Asia, Western and Northern Europe, Australia, and New Zealand it is around $50,000, while the threshold is lower for the rest of the planet, with the exception of North Africa and the Middle East where it is between $110,000 and $125,000.
The researchers were able to define the thresholds because people earning beyond a certain amount tended to report a lower level of life satisfaction, lower emotional well-being, or both. The team also highlights the fact that once you are capable of affording things beyond the basic needs of food and shelter, social factors like peer comparisons and expectations might influence the relationship between happiness and money.
“At this point they are asking themselves, ‘Overall, how am I doing?’ and ‘How do I compare to other people?’” Jebb added. “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.”