You've probably heard that studies have shown an income of about $70,000 to $75,000 leads to the most happiness. A new study expands that research to provide a more complete picture of how much cash is required to make us not only happy day-to-day, but to provide more overall life satisfaction.
"We found that the ideal income point is $95,000 for life evaluation and $60,000 to $75,000 for emotional well-being... this amount is for individuals and would likely be higher for families," explained Andrew T. Jebb, a doctoral student at Purdue University. "That might be surprising as what we see on TV and what advertisers tell us we need would indicate that there is no ceiling when it comes to how much money is needed for happiness, but we now see there are some thresholds."
Jebb is lead author of the study published recently in Nature Human Behavior.
The research essentially confirmed past studies that found around $70,000 was an ideal income for providing day-to-day happiness in the United States, but it also expanded the work globally using data from the Gallup World Poll.
The researchers found that while regions with lower living standards and costs of living like eastern Europe and Latin America reached peak happiness at a lower amount of income, the global average still worked out to between $60,000 and $75,000.
But again, this is just a measure of how much income is associated with the highest levels of day-to-day happiness. For the first time, the Purdue study also attempted to capture what income level provides the highest level of life evaluation or life satisfaction, which is more of an overall assessment of how one is doing over the long-term.
Turns out this higher level of overall satisfaction is a little more expensive. In Canada and the United States, an income of $105,000 provides the most life satisfaction, while globally the ideal average income is $95,000.
The study found that exceeding these income thresholds actually seems to reduce levels of happiness and satisfaction.This could be because higher income earners are more driven by material gains and social comparisons that can ironically lower those levels.
"The small decline puts one's level of well-being closer to individuals who make slightly lower incomes, perhaps due to the costs that come with the highest incomes," Jebb explained. These findings speak to a broader issue of money and happiness across cultures. Money is only a part of what really makes us happy, and we're learning more about the limits of money."