Money Does "Buy" Happiness, Up to A Point

According to a report that analyzed 450,000 responses from 151 nations, personal income is indeed related strongly to two categories of subjective experience:  “life evaluation” and “emotional well-being“…but only up to an annual income of 75, 000.00. Beyond that level, subjective reporting of emotional well-being and “positive affect” do not change.

Researchers sought to quantify the relationship between income, life satisfaction and emotional well-being. Data used in this analysis was collected through the Gallup Healthways Well-Being Index which surveyed 1,000 persons per day from 2008 to 2009.

The analysis found that “income and education are more closely related to life evaluation, but health, care giving, loneliness, and smoking are relatively stronger predictors of daily emotions.”

The category of life evaluation refers to the thoughts one has about one’s life when we think about it. The typical question (from the survey) is: “How satisfied are you with your life these days?” This assessment was made using what is known as the Cantril’s Self-Anchoring Scale which asks respondent to rate his/her current life on a ladder scale ranging from ‘0’ to ’10’ (where ‘0’ is the worst possible life, and ’10’ is the best possible life).

Emotional well-being refers to the emotional quality of one’s daily experience of life–the intensity and frequency of emotions like joy, sadness, stress, anger and affection. Measures of  “positive affect” such as frequent smiling and laughter, and reporting of happiness or enjoyment were averaged together to derive a score. Measures of worry and sadness — the “blue effect”– were also included in this average.

Measures of stress and anger were measured separately (see graph).

Emotional well-being is assessed by questions about the presence of these various emotions in the individual’s recent experience (i.e., yesterday).

Positive affect, blue affect, stress, and life evaluation in relation to household income. Positive affect is the average of the fractions of the population reporting happiness, smiling, and enjoyment. “Not blue” is 1 minus the average of the fractions of the population reporting worry and sadness. “Stress free” is the fraction of the population who did not report stress for the previous day. These three hedonic measures are marked on the left-hand scale. The ladder is the average reported number on a scale of 0–10, marked on the right-hand scale.

According to authors Daniel Kahneman and Angus Deaton:

“The aims of our analysis of the GHWBI were to examine possible differences between the correlates of emotional well-being and of life evaluation, focusing in particular on the relationship between these measures and household income.”

The researchers also note that in regards to a change in income, it is not the absolute change that matters, but the percentage change in income that more strongly correlates (“logs”) with a higher life evaluation measure.

As an example of this logarithmic difference, the authors observe:

“In the context of income, a $100 raise does not have the same significance for a financial services executive as for an individual earning the minimum wage, but a doubling of their respective incomes might have a similar impact on both. The logarithmic transformation reveals an important regularity of judgment that risks being masked when a dollar scale is used.”

Some general findings of the analysis:

85% of respondents reported much positive affect each day, while sadness and worry were reported by 24%.

39% reported experiencing stress each day.

Overall, the U.S. ranked 9th out of 150 countries in its reporting of daily positive affect (trailing just behind Scandinavian countries, Canada, The Netherlands, Switzerland, and New Zealand). We also ranked 5th in happiness and 10th in enjoyment.

However, we ranked much lower on measurements of worry (89th from best), sadness (69th from best), and anger (75th).

U.S. respondent Americans report very high levels of stress (fifth among 151 countries).

For more detailed information, check out the published paper High income improves evaluation of life bu not emotional well-being

Top photo:Psychonaught

Graph: Kahneman, Deaton (paper figures,

1 thought on “Money Does "Buy" Happiness, Up to A Point”

  1. General note: this topic was somewhat covered in the media back in the summer, and there were previous studies (referred to in the paper) on the topic of human happiness and wealth, but I thought that the topic warranted a second look. I also encourage folks to read the academic paper, which contains more nuanced information than in a typical press or blog article.

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