If you thought earning more money would make you happier, you were only partly right. There’s a point at which more money has decreasing returns in terms of our emotional well-being and life satisfaction.
Using a survey of 1.7 million individuals from 164 countries, researchers calculated that $95,000 is an optimum salary for achieving fulfillment. (That’s just for individuals, not families, and an international average.)
If it’s a matter of one’s day-to-day feelings of happiness–as opposed to broad satisfaction with your life–then just $60,000 to $75,000 may be sufficient, according to the study. After those points, the benefits of making more money decrease, athough there may still be benefits.
“Increases in happiness tend to diminish as you make more money,” Andrew Tebb, lead author of the new paper, tells Fast Company. “A $20,000 increase from $30,000 to $50,000 is likely to bring more change to your life than if you make $20,000 on top of $150,000.”
The results, which come from Purdue University and the University of Virginia, align with a well-known 2010 study from psychologist Daniel Kahneman and the economist Angus Deaton. They found that people’s happiness was correlated with income but only up to incomes of somewhere between $60,000 and $120,000 (though the number was widely reported as $75,000). After that point, the relationship between happiness and income weakened.
But Tebb notes that the previous study had limitations. For one, it looked only at emotional well-being, rather than life satisfaction, which is arguably more important. You can be emotionally happy hour-to-hour, like at the moment you are completing a survey. But you can feel differently about your life overall, when assessing your accomplishments and personal situation. And, two, it only considered the U.S., not other countries.
In other words, it’s very hard to pin down exactly what you should think about earning to be happy. It can depend on lots of factors. Previous research shows that relative income levels–how you stack up against your peers–matters as much as absolute levels, for instance.
“Expectations and social comparisons are important. We’re very finely tuned social creatures, so those social comparisons occur in most human domains including career, income, and the size of your house,” Tebb says.
And, of course, money isn’t everything where happiness is concerned. “Income is just one variable in the complicated equation of happiness. It’s not trivial, but there are other factors that are at least as important, such as meaning and significance and social relationships, family, and friends,” Tebb says.
Correction: The headline of this article originally stated that people needed less money than they were making to be happy, rather than more.
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