Daniel Kahneman and Angus Deaton
How much money do you think it would take to make you happy? Would an extra $10,000 a year do it or would it take a $100,00 salary bump to improve your mood?
A new study from Princeton economist Angus Deaton and pyschologist Daniel Kahneman suggests that number depends on how you define happiness. The authors draw a distinction between emotional well-being, "the quality of a person’s everyday experience such as joy, fascination, anxiety, sadness, anger, and affection" and life evaluation "a person’s thoughts about his or her life (on a longer time scale)."
Their study of data from the Gallup-Healthways Well-Being Index found that while "life evaluations rise steadily with income," emotional well being drops off at about $75,000 a year.
Beyond $75,000, money is important for life evaluation, but does nothing for happiness, enjoyment, sadness, or stress. Both factors are important; it is good to have high emotional wellbeing, but it is also good to think your life is going well.
According to the most recent census data, the median US household income was $52,000 in 2008, with about a third of households making above $75,000.
(H/T: Robert Frank at The Wealth Report)