It seems like every couple of years a new study comes out proclaiming just how much money a person will have to make to be truly happy. Everyday life is sprinkled with drastic hypotheticals like, “Would you rather be poor and have a lot of friends, or be rich with no friends.”
To say 21st century Americans are obsessed with the idea of money would be an understatement. That is why society cannot resist discussing this money versus happiness debate, and studies alike.
Like a recent Time Magazine finance article reported, one study in particular continues to bring in comments and waves of attention because of its bold claims. In 2010 economist Angus Deaton published a study, co-authored by psychologist Daniel Kahneman, finding that happiness and income are correlated, but not beyond $75,000.
While online commenters often like to fascinate on this number, it is the less quantitative data that is interesting. Deaton and Kahneman broke happiness down into two separate categories, “emotional well-being” and “life evaluation.”
They found that money does contribute to a person’s emotional well-being, but only up to that benchmark $75,000 annual income. Intuitively this makes perfect sense, a person who makes significantly less than this would easily suffer emotional distress over pressing financial issues.
Interestingly they also found that, contrary to the Notorious B.I.G., more money does not always equate to more problems. Deaton and Kahneman found no correlation between making funds more than this benchmark and a decrease in happiness.
However, it appears impossible for the iconic rappers catch phrase to hold no truth. In a country so fascinated by excess and displays of financial superiority, it seems fair to assume people are hardly ever satisfied.
What do people do with money other than spend it and show off their new purchases? Relentlessly try to make more of it.
It is clear money would help combat adversities, just as Deaton and Kahneman quantitatively reported. But it falls incredibly short of making people happy. Money can buy security, comfort and support an easier lifestyle, but it cannot buy joy, friendships or a less obsessive perspective towards money.