Money can’t buy you happiness. Unless you make $75,000 per year, that is.
$75,000 yearly is the amount of personal income that provides optimum happiness to the average American, according to a study by Daniel Kahneman and Angus Deaton from the Princeton University School of Public & International Affairs. The research, which analyzed Gallup surveys of 450,00 Americans, found that Americans were less happy when making less than $75,000 per year and less happy when making more than the sum, making $75,000 the salary sweet spot.
The survey asked three questions:
- What is your yearly income? — The highest option being “$120,000 and more.”
- Emotional Well Being? — This asked respondents to gauge their day-to-day experiences, such as joy, fascination, anxiety, sadness, anger and affection.
- Life Evaluation? — This question used Cantril’s Self-Anchoring Scale, which includes a ladder of ten steps. The individual was asked where on the ladder they felt they belonged. The tenth step is the best possible life the individual can have, whereas the bottom step is the worst.
As an individual’s income increased, his or her happiness also rose until $75,000, at which point the feeling of emotional well-being leveled off, according to the study.
“In other words, the quality of the respondents’ everyday emotional experiences did not improve beyond an income of approximately $75,000 a year; above a certain income level, people’s emotional wellbeing is constrained by other factors, such as temperament and life circumstances,” the study said.
This survey shows that money actually does have an impact on your emotional well-being, causing it to fall and rise in relation to your salary decreases and increases. After $75,000, your emotions are no longer tied with your salary. Respondents’ life evaluations, however, became more and more optimistic with higher salaries, meaning individuals still perceived their lives as improving with salary increases after $75,000.
Adjusting for Geography
The Wall Street Journal crunched the cost-of-living numbers in various locations and found big differences in the optimum yearly salary for happiness. Here are a few notable locales:
- Abilene, Texas: $64,500
- Anderson, S.C.: $ 66,750
- Bangor, Maine: $96,750
- Fairbanks, Alaska: $100,500
- New York City: $163,500
This isn’t the first time researchers have studied the correlation between money and happiness. Researchers in the United Kingdom found if you are earning more than those in your social circle, you are more likely to be happier. If you’re not quite at the salary that makes you happy yet, check out this article about productivity and happiness and see if you can get the ball rolling toward a higher paycheck.