I'm not sure, after a certain threshold, more money = more happiness.
But I'm quite sure not having the bare minimum to live your own life brings unhappiness.
Nothing lifted me up as much as finally having the income necessary to gain my independence from my parents, and I see many friends also in their late 20s struggling to achieve it and suffering because of it.
Right now, an average wage is not enough for this. Two might barely cut it. And the unhappiness is rising. Protests are growing. I worry for my generation and the new ones.
There's a transition through several states: not enough, barely enough, just enough, and more than enough. It's a sharp transition; there's a small difference in income needed to go through these stages, but a huge difference in stress and happiness from one side to the other.
My definitions:
- Not enough: you're having to choose which necessary expenses to pay and which ones to not pay. Are your children going to be hungry, or are they going to be cold?
- Barely enough: you can pay necessary expenses, but you have to micromanage every dime and make sure deposits clear before expenses are paid. You're forced to buy cheap things that don't last instead of quality things that are less expensive long-term. The slightest mistake in timing deposits/expenses with the resulting fees, or the smallest unexpected expense, throws you back into "Not enough"
- Just enough: basically the same as Barely enough, but you've got a little leeway on the cash flow timing and sometimes you can spend more on quality.
- More than enough: You can set up automated payments for regular expenses, and no longer have to worry about cash flow timing. That's a HUGE stress reduction. You're building savings for unexpected expenses.
- You have enough saved up that you don’t have to care about unexpected medical bills, car repairs etc in the thousands of dollars.
- You can pay for vacations and other unique experiences.
- You can move to nicer neighborhoods, send your kids to nicer schools.
- You can offload stress and inconveniences to others. Hire chefs, nannies, personal assistants, fly first class or private.
- You get to a stage where your money is making more money than most people’s net worth just by sitting around, and “work” is something you do for fun and fulfillment rather than survival.
People are kidding themselves if they think each successive stage of wealth doesn’t also come with more happiness. Yes they might be diminishing returns, but they are returns nonetheless.
- You have enough saved up that you could weather out a significant period of no work, after getting laid off. Enough that you can just walk away from a toxic environment while feeling comfortable. Maybe you can afford to take a risk and spin that side project you've been dreaming about into its own company.
Sure, but I think the transition through my stages is a sharp S-curve, and then going through your stages is a more gradual increase. And based on how many wealthy people behave, it seems like the happiness curve peaks at some point and then starts dropping again for many of them.
I feel like getting to that level of wealth while remaining in that sweet spot must be pretty difficult though (moreso than just accumulating that wealth in the first place). I imagine there are a few (legal) paths:
- Start a business that's successful, generates significant profit, but doesn't become public
- Make a series of amazing investment decisions (in other words, take high risk and get lucky)
- Exit a startup for an undisclosed sum (lots of acquisitions never disclose the price)
Even then, I'd imagine your closest friends will learn of your wealth at some point. Still seems like the best possible option though.
A lot of people might choose to legally incorporate as an individual, and pay themselves a salary, if their company has reserves to pay them the salary indefinitely they are essentially set for life while technically never wealthy enough to suffer some of the consequences of people knowing you're that wealthy
> I'm not sure, after a certain threshold, more money = more happiness.
One thing I've definitely noticed is the more you earn the more you seem to get for free.
- The ones who work for the bigger companies / multinational get complimentary private healthcare, additional to the state owned one. So they have shorter wait times and usually pay about 80% for healthcare than those without the benefit. I know some that work for international organizations that even have 0% copay insurance coverage valid worldwide.
- Those who have good credit record or higher credit limits. If they happen to run out for money before the end of the month. They can pay interest free with their credit cards as long as they pay back within the next month. And even if they pay back later, their interest rates are 1/4th of those with lower credit records or lower credit limits.
- Those with middle salaries, and stable jobs, can get a short term loan from their bank directly easiliy. There's interest payment but it's not that bad. But those with unstable incomes don't have any other option but to use the most expensive lenders.
- Higher paid jobs usually get complimentary phones and generous data plans from their employers, so they don't need to worry about buying or paying for their phones. If it gets lost or stolen then it gets replaced by their employer. On the other hand others have get second hand phones and pay them with their own money.
- Those with lower incomes can go on vacation to a nearby city or a nearby country. While those with higher income tend to travel at a vary discounted rate using frequent flyer miles.
> I'm not sure, after a certain threshold, more money = more happiness.
Well definitely, as can be seen because the richest man in the world does not appear to be the happiest man in the world. Within reason, I'd say more freedom = more happiness, and money is a tool for getting more freedom.
I found the following paper actionable: "If Money Doesn't Make You Happy Then You Probably Aren't Spending It Right"[1].
> The relationship between money and happiness is surprisingly weak, which may stem in part from the way people spend it. Drawing on empirical research, we propose eight principles designed to help consumers get more happiness for their money. Specifically, we suggest that consumers should (1) buy more experiences and fewer material goods; (2) use their money to benefit others rather than themselves; (3) buy many small pleasures rather than fewer large ones; (4) eschew extended warranties and other forms of overpriced insurance; (5) delay consumption; (6) consider how peripheral features of their purchases may affect their day-to-day lives; (7) beware of comparison shopping; and (8) pay close attention to the happiness of others.
The idea money doesn’t buy happiness has been pretty thoroughly debunked in psychology for years, was my understanding.
That greater income and wealth have diminishing returns is easily observed, but this idea there’s zero benefit past some threshold was always just innumeracy.
It’s just that people are terrible at understanding curves that look vaguely logarithmic, combined with small sample sizes of people with very high incomes willing to take psychology surveys.
> It’s just that people are terrible at understanding curves that look vaguely logarithmic, combined with small sample sizes of people with very high incomes willing to take psychology surveys.
It’s also bc people gravitate towards beliefs that protect their ego, however false they may be. If you’re not wealthy, believing that wealth doesn’t make you happy is very comforting. It’s not so different from how religion is used to cope with life’s suffering.
Huh? The article basically confirms that small things are worth more happiness than many fold increases in salary. The one silver bullet seems like the cognitive defect being debunked.
I think society has changed a bit in terms of network effects and how much you had compared to a fixed group was more significant to both you and them when the original study was done.
Sure, but a cursory reading of this article stokes the temporary impoverished billionaire who think of future wealth in a way largely interchangeable with religious views on heaven...
It actually seems to say that disvomforts required to earn a lot of money would make you less happy than earning a good amount with less effort and it generally won't make up for more relevant factors in happiness. I.e. an easy tenure would make someone happier than being a law partner earning 4 times more.
There may be other things than money that make people happy!
But I agree with fairity that a lot of the appeal of this pop-science junk idea "$75k is all you need" was "haha, those rich people aren't actually any happier than me, in fact they're making dumb choices because more money is a dumb thing to pursue".
It's just not true. Much richer people are in fact very likely to be happier than you. Not 100% of the time, because money doesn't solve all human problems, but 10x more money solves a huge fraction of problems for basically everyone, and people who aren't rich are just fooling themselves a lot of the time.
That money buys happiness is painfully obvious to anyone who has been poor. I went through a few years in my twenties when I didn't have more than a hundred dollars and it was no fun. The constant stress made me say "never again," and I became disciplined at saving and investing after I started working. Now that we've way more than we need, I won't say that my happiness has grown, but the peace of mind is invaluable.
If that's the bar you want to use, then you will discover it is also hard to find anything that matters to happiness. As the authors put it:
"The correlation between average happiness and log(income) is 0.09 in the experience sampling data, for example, and the difference between the medians of happiness at household incomes of $15,000 and $250,000 is about five points on a 100-point scale. The flattening and accelerating patterns are even smaller modulations of a small effect. However, the emotional effects of other circumstances are also small. KD reported that the effect of an approximately fourfold difference in income is about equal to the effect of being a caregiver, twice as large as the effect of being married, about equal to the effect of a weekend, and less than a third as large as the effect of a headache."
That's a bit of an unusual way of characterizing it. Isn't a low correlation just implying that there are other factors that have a stronger influence? Which makes sense, I mean personality and lifestyle surely have to have large impacts
A low correlation tells you that the relationship between the two specific variables isn’t meaningful. It doesn’t tell you anything about other variables, maybe you’re thinking of R^2? Regardless both metrics assume you’re dealing with a linear model which is a big assumption in its own right.
I think it's a misjudgment on either side. Of course not having money and being stressed out financially would be alleviated by having money, this part is as obvious as drinking water quenching one's thirst.
On the other hand when thinking, being solely preoccupied and achieving things only for money's sake eventually leaves one empty, shallow and unhappy. Too much money does change people for the worse, it turns you into a snob if you get carried away in that direction. Plenty of people would be happy if they could make a living and not having to strain themselves or stress out about money matters, all that without needing to be the richest on the block. In that sense when having an unhappy attitude getting hold of a large chunk of money would only temporarily alleviate that unhappiness.
Not saying this is the complete picture, but the first thing I thought of was "Maybe it's just that $75,000 was the bare minimum to break the barrier of some specific level of unhappiness at the time the data was collected from the sample population?" which immediately led to "Also, $75,000 was probably a pretty outdated value well before the data was even published."
I beg to differ, happiness is very relative and beyond food and shelter, the rest is up to you. I was happier paying some money to help charities for free than having an IT job.
It's really up to your mind to define happiness in a way.
If you have money, you can go to any restaurant you like and order anything you like and now have to worry. IIRC DHH mentioned something like that happened with him after BaseCamp became popular.
You can avoid waiting in lines. At the airport, instead of waiting in long security lines and crowded terminals, you can buy first class and go through smaller dedicated security lines and wait in a nice lounge. You can even avoid the trip to a crowded airport completely if you fly via private jet.
You can pay someone to clean your home.
All these things buy time and attention. If you use that extra time and attention for something worthwhile - that is up to you
Article is paywalled, but I always thought that $75k/figure was bullshit, even adjusted for a very high cost of living area and inflation. There is just so much convenience money can buy, so many stressors that can be eliminated if you just write a check. I think happiness is largely tied to "health" and better health can be bought up to a point.
Think I heard that $75k figure bandied about when I was in college, and that was over 20 years ago when gas was about $1.25/gallon and $300k got a decent house in a Jersey suburb (or a near-mansion in my part of Central Texas).
So probably somewhere in the $150k-200k/yr range today.
In all likelihood a 75k number was output to an equation where there are two earners making that because I agree the 125 to 150 range is where households begin independence now. Anecdotally, I've debated this with friends and often times luxary and entertainment is 100% overlooked when in reality people have to do some sort of hobby or entertainment to make life tolerable.
The challenge is that the option to use money to resolve issues fast becomes to a tendency to resort to the conveniences of money. This tendency censors me from meaning embedded in everyday life, and it's something i have to work to avoid.
Not even getting to the part about all the sacrifices I've made to make this money.
But I'm quite sure not having the bare minimum to live your own life brings unhappiness.
Nothing lifted me up as much as finally having the income necessary to gain my independence from my parents, and I see many friends also in their late 20s struggling to achieve it and suffering because of it.
Right now, an average wage is not enough for this. Two might barely cut it. And the unhappiness is rising. Protests are growing. I worry for my generation and the new ones.