How Much is Enough? On Average, About $75,000 Per Year
Published on - September 16th, 2010 (by Sierra Black) This post is from staff writer Sierra Black. Sierra writes about frugality, sustainable living, and getting her kids to eat kale at Childwild.com.
A few weeks ago I wrote about how money really can buy happiness — if you spend it right. A big-screen TV isn’t a ticket to happiness, but a vacation might be. Giving your money away can boost your well-being, and so can investing it in time with your family.
A new study from Princeton hangs a price tag on that happiness: $75,000 [PDF summary]. That’s the annual household income that gives you the most joy for your buck. People with incomes below that magic number report less happiness, overall, than those at or above it.
The effect levels off after $75,000, though. As your income increases, your cheerfulness also increases, but the good cheer plateaus around $75,000. Another $25,000 a year — or even another $100,000 a year — will make you richer, but it won’t make you much happier.
The magic number?
It’s not that $75,000 is enough money to let you buy anything you want. Anyone supporting a family on that salary knows you still have plenty of careful budgeting to do. Rather, it’s that Stuff doesn’t make you happy. A bigger income buys you more Stuff, but the emotional satisfaction of having it wears off quickly.
Why $75,000? Because that’s the magic number at which most Americans can pay their basic living expenses and have a little something left over for the good things they want in life. Or, as the Nobel-prize winning research team who ran the study put it:
More money does not necessarily buy more happiness, but less money is associated with emotional pain. Perhaps 75,000 dollars is a threshold beyond which further increase in income no longer improve individuals’ ability to do what matters most to their emotional well-being, such as spending time with people they like, avoiding pain and disease, and enjoying leisure.
They’re talking about the sense of day to day joy that comes into your life when you have Enough. If you’ve read Your Money or Your Life, you surely recall their graph of how money affects our moods. From poverty up through plenty, they chart a curve. At the peak, you have Enough: your living expenses are covered, your future is secure, and you have some fun money to spend on the things you enjoy.
Beyond Enough, the curve dives downward into clutter, stress, competition and an array of other sorry outcomes.
Note: This is J.D.’s representation of the Fulfillment Curve from Your Money or Your Life.
This new study’s findings would seem to contradict this curve.
Sadly for us frugal types, the researchers didn’t find that to be true. Accruing more money won’t make you happier on a day-to-day basis, but the super-rich do score higher than the middle class on another axis of happiness.
Life assessment
The technical term for this one is “life assessment”, and it simply means how satisfied with your life you are overall. The wealthy see themselves as more successful than the middle class do even though their wealth doesn’t bring them joy.
Partly that’s because wealth allows them to achieve more of their dreams. I’d bet that part of it, too, is simply the high value our culture places on being rich. If everyone around you is striving to die with the biggest bank account, and you have it, you feel like a winner.
You don’t have to be super-rich to achieve your dreams and be satisfied with your life, though. Many people do that even on a fraction of the $75,000 it takes to get most of us to the Enough place.
They do it by knowing what they want, being disciplined with what they have, and celebrating their achievements. They’ve stepped far enough out of the cycle of consumption to stop wanting More More More all the time. They have Enough, at whatever salary they’re earning.
How do you find your own personal money Enough?
How much is Enough?
Knowing where you are is, as Your Money Or Your Life makes clear, essential. You need to know how much you earn, how much you have in assets and liabilities, and how much you’re likely to make during your career. You need to know this because without it, you can’t get clarity about what you want.
Knowing your net worth doesn’t automatically get you that clarity, though. You need to set an intention. For me, that process started with a brainstorming session with my partner. We laid out three categories of financial priorities:
- Laying a foundation. These are the essentials of good financial hygiene: being out of debt, providing for our future, covering all our basic living expenses.
- Quality of life. This category included things we value but don’t need to survive, like a good education for our children. We’d be unhappy if we couldn’t pay for our Quality of Life priorities, but not in danger of homelessness.
- Beyond the basics. This was the daydream category. It includes things like travel and giving to charity. All the things I love to do, but often can’t because I’m putting my dollars into those first two layers of financial life.
Once we’d created this blueprint for managing our money, we got real specific. We want to fund our retirement. Great. How much do we need to retire on? What resources do we have to create that nest egg? We want our kids to have a great education. Great. What kind of education? How much will that cost?
By being specific about what we wanted, we were able to put a price tag on each of our goals. An overall picture emerged of what Enough would mean for us. In the parlance of this research I’ve been discussing, we were able to see what it would cost to buy our vision of happiness.
About $80,000 a year. Since we live in a fairly high cost-of-living city, so this number is well within range of the $75,000 Princeton’s scientists came up with when looking at the whole country.
The number is beside the point, though. What matters is the exercise of understanding your priorities, and knowing what your dreams cost. Whether you do this and discover that your personal Enough is $30,000 or $300,000, you’ll be better off for having a clear sense of what you’re striving for, financially.
I distilled all that complex brainstorming and math into a single index card. I keep it on my desk. It says, “My money Enough” at the top, and then lists the goals I’m working towards. It’s an inspiration when I’m tempted to slack off on my saving or my career.
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As Grace from Graceful retirement pointed out, it is ironic that the Princeton professors who wrote the study are making a heck of a lot more than 75K/year. Maybe they’re just making 75K per person in their household.
Or maybe they just feel more successful. Or they’re above average in their enough.
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I found the study fascinating, but lacking. Although an increase in income is nice, accruing money in the bank deflects a ton of stress. I would love to see a study compare wealth amounts (millions of dollars in assets and so on) and fulfillment.
As far as happiness is concerned, provided that happiness is not the goal, one will be happy.
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That number probably changes according to the general wealth in society. In 1990 10,000 inflation-controlled dollars would have been more than enough.
Besides, the 75,000 is an average and most possibly varies between people. Some are satisfied with much less, while others need millions to be happy.
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I am pretty sure someone making $75,000 raising a family of 4 in a high cost of living local like San Francisco if far less “happy” with that number than a single person making the same amount in Iowa.
There are so very many variables in the discussion of money/happiness that I tend to disregard these sorts of studies as only marginally valuable. They bring up interesting points for discussion but the numbers they come up with really mean very little when applied across the board to a large, diverse population.
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“It’s not that $75,000 is enough money to let you buy anything you want. Anyone supporting a family on that salary knows you still have plenty of careful budgeting to do.”
Do you really?
I find it incredible that you’re even discussing whether $75,000 is really that much. Heck, my annual white-collar salary (without taxes) is around $30,000, I support a husband and kids on that amount and that, I’d say, requires ‘careful budgeting’.
I simply cannot imagine the careful budgeting supposedly required of a similar family on $75,000. Unless you buy a limo and a polo pony for all the kids and an olympic-size swimming pool for yourself, of course.
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Does the $75,000 include a mortgage? Is it in a coastal city or middle America? How many children and what ages? Cars paid off? Homebody? Public schools good? Family in the area?
I don’t like “studies” like this. They are pretty bogus.
On the other hand YOUR financial priorities and the idea of a card to remind you are the wealth of this posting. Nice job!
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I wonder if the fact that these are two-income households also slants the research? Right now, some extra income would make my life easier, but perhaps not happier. Finding a partner and having a family would make me happier than money.
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Back when I was married, our joint annual income was right around $75k. We lived in a nice little Cape Cod in a good town with our daughter, and yes, we had “breathing room” so to speak, financially, which allowed us to pursue hobbies and leisure that gave us happiness. The fact is, we were pretty miserable, though, because it was not a good marriage.
Now it’s just me and my daughter, living on my $30k salary, and we are much, MUCH happier than we ever were before. Yes, it would be nice to be able to afford some of the things we had before, but the trade off has been infinitely worth it.
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I was making over $200K a year (wife, 1 child, 2 dogs, nice house, not “keeping up with the Jonses”). I thought that an easier job( less money…$115K) would be less stressful, making me happier. Wrong. I enjoy my extra “freedom”, but $75K/yr (or $115K) is NOT enough for my small family to live comfortably and fully fund retirement. Too many variables in these types of studies.
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Very interesting post/article. The number of 75k does make sense from the standpoint of being able to pay the bills, “Live a Little” etc. I think it’s different for single vs. married with kids, but the point is well made.
I think there is also a level of happiness or what I’d call peace of mind once a certain amount of living expenses are put aside. This can be referred to as an emergency fund, or simply savings. This is because you know you’re okay no matter what the economy brings.
It’s important to know what makes you content and focus on getting there.
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I think it is all relative to who you are. For me, 75000 would be harder because of my saving hang-ups, not because of my spending patterns. I feel content and happy when I am able to max out my retirement savings, contribute to the 529 plans for my kids, and pay extra on my mortgage. I don’t care about having an iphone or whatever. I just want my mortgage gone.
I think most could live on 75,000. However, many people are used to a certain lifestyle, so it could be a huge adjustment for some. For others, it probably seems like a huge amount of money, and people in that category probably just shake their heads wondering why people would struggle when they make so much.
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Single, make under $25,000. Divorced for about 8 years. Extremely happy!
Like some of the others, I think the important thing is not how much you have coming in, it’s how much you have tucked away for unseen things.
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That’s really interesting… I’ll settle for higher… but it’s still interesting to know.
Maybe 75000 just keeps you interested in terms of being able to pay the bills and “live” once in a while. Less frequent but more enjoyable.
Whereas at a salary of 150,000 I might “live” more often. More frequent less enjoyable.
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I agree with many of the posters so far: It all depends. Our dual-gross income is slightly above that but we don’t have much more than when we made less because we had to move to a higher cost of living area just to have jobs after my husband was out of work for about a year. BUT, if we had ALL of our debt gone and still making the same now we would be in heaven
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What kind of job do I need to earn $75,000? I’d like to be happy.
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Lots of commissioned sales jobs where you can earn $75000+, but remember, you have to produce. No sales = no income, that means if you take a vacation or weekends off, you earn 0 for that time, if you goof off and waste time at work, you earn 0. The money can be good but you have to produce every day or you get 0, puts a lot of pressure on each day. No paid vacation, holidays, sick days, personal days off, etc. There can be times when you go weeks with a blank pay check every week, so you have to be a self starter, but the money is there if you work hard at it and don’t think that 40 hours is a full work week !
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Hey, enough with the (quote) “bigs-creen TV” bashing.
You claim “the emotional satisfaction of having [stuff] wears off quickly.” and recommend spending on holidays and such.
For some people the emotional satisfaction of a holiday might wear out the day after they return to work. Whereas well researched stuff-purchases can continue to spread happiness over the years. It just depends on the person.
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Having trouble wrapping my head around this one. “$75,000″ is a variable figure that means two very different things depending on the zip code where you live. Would be interesting if the researchers included an “average” income city so people could use a cost-of-living calculator to see where they fall.
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The article states “$75,000…the annual household income that gives you the most joy for your buck” — but this is incorrect, according to the summary PDF. It’s actually $75k PER PERSON.
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Reports of studies like this should be accompanied by a box labeled ASSUMPTIONS to give the core stat some context.
As some of the previous comments prove, people don’t automatically understand that almost all such core findings come with similar assumptions which allow people to calibrate the findings for their own lives.
The big flaw in the study, for me, is that it relies on self-reported happiness. What people say about themselves is often completely at odds from what others say about them; I’ve seen the most miserable-looking mofos describe themselves as basically happy.
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Vanessa — go into information technology and pick the right specialties. If demand for your specialty starts to wane, learn a new specialty. Just my 2 cents!!
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It certainly depends on your baseline: if you want to send your kids to private school; if you want to travel; etc. $70k won’t touch the sides
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As a person who budgets and lives frugally I agree with the magic “75,000″ number. It is not because I have spending problems nor am I buying a limo.
My family spends thousands of dollars a year on health care due to a pre-existing condition. Similarly my area is very high for grocery prices. Though we do put money toward retirement it is no where close to the recommended amount which is where I would like to be. Likewise I would love to add more to my son’s 529 plan. I would love to have more than 3 months emergency expenses which is where our emergency fund has sat for a year due to an addition to our family.
I believe $75,000 is a good number to be able to do everything the money advisers tell you to do without much compromise.
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I’m in the “Beyond the basics” category. Just booked the family on a cruise to Dominician Republic—woot!
Can’t wait
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The commenters should try to keep in mind that $75000 is an average – that means average family size, average cost of living, etc. If you live in a higher- or lower- cost of living area, your number will be different. If you’re single or have 10 kids, your number will be different.
Nitpick: The graph you display doesn’t appear to be a normal distribution (“bell curve”). It’s lacking the characteristic “tails” that normal distributions display.
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The interesting part to me is that in 2004, $40,000/year was all we needed to cover the basics (http://blog.penelopetrunk.com/2004/08/01/you-only-need-40000-to-be-happy/) according to research done at Harvard by Daniel Gilbert. I’m wondering what has increased so dramatically in the last 6 years to bring us to $75k? Housing, health care, childcare, food, transportation? Seems like an exponential increase which could mean soon no one will be happy!
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What I find most interesting about studies like this is that they attempt to quantify happiness. I prefer to aim at “enough” as well. I think Ben Franklin points out the two ways of doing that best: “There are two ways of being happy: We must either diminish our wants or augment our means – either may do – the result is the same and it is for each man to decide for himself and to do that which happens to be easier.”
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Nope, that would not be enough to make me happy. Especially since I know that others doing the same job as me would be making much more.
Garbage study.
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Argh! That “bigs-creen TV” thing was my fault, and it was awful. Sierra had it as “bigscreen TV”. Yesterday, just as I was finishing my edits, I put the hyphen in there, but I just clicked save and didn’t bother to verify I’d done it correctly. I mean, why would I? It’s a simple edit, right?
sigh
How embarrassing.
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@Chickybeth (#24)
Oh. Interesting. That’s a good find.
Like many of you, I tend to furrow my brow at studies like this. What good is knowing the “average” number for happiness? It’s so subjective.
As many commenters have noted, the individual variation is huge, and is dependent on cost-of-living, the income of your peers, and your own financial blueprint.
I just had dinner the other night with a woman whose income is much smaller than $75,000 a year, but she’s very happy. In fact, she and her husband are striving for early retirement, and they think they can do it because despite having a small income, they have even smaller expenditures. On the other hand, I know a family — in the same city — that used to make $150,000 a year and was never happy. They never had Enough. In fact, they went bankrupt. (And now they’re more unhappy than ever!)
So, while studies like this are interesting because they make us think about our own situation, and they provoke discussion, I’m not sure they actually add anything material to what we know about money or about happiness.
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My wife and I make $78,000 combined before taxes, healthcare, retirement funding etc. After all the deductions take place, we take ho0me a shade under $55,000.
At this number, our needs are met, we have a reasonable amount of luxuries (we eat out once a week or so, go to fun events when they come up etc), have the money to do a major splurge every few years, and still put away roughly $20,000 a year into savings.
Do we still stress about money? You bet we do. We still try to budget, buy bargains and manage our funds carefully. But we’re definitely near the peak on the money vs happiness scale. In the next 2-3 years we’ll be in the enviable position of deciding what to do with “excess” money.
I think the 75k figure is pretty reasonable given my family income, expenses and our goals. The money covers base costs, gives us some nice “every day” luxuries, and lets us do fun things like travel once every 2 or so years.
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I think it makes a big difference where you live. $75-80K in NYC/NY wont get even a frugal type very far if you have a family/children and own or aspire to own a home.
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@24 Ha!
Or Princeton economists just use different methodology than Harvard psychologists… there’s probably a range of numbers that people come up with. No doubt a cottage industry of papers estimating “the number” will rise up.
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@23 You are right, it’s a parabola, not a bell curve. (maybe y = enough_fullfillment – (x – enough_money_spent)^2)
It’s really interesting to me that someone making $30K thinks that $75Kers don’t have to budget, or are buying ponies, and someone making $150K thinks they would be unhappy if they made $75K. That is definitely interesting information.
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Why is there a giant graph in the middle of the article that’s just plain wrong? The article even says it’s wrong.
1) The article claims the graph shows a bell curve. It doesn’t. It’s a parabola. Yes, these are different.
2) The article describes a logarithmic curve as the actual model for mapping income to happiness. Here’s what a logarithmic growth curve looks like: http://en.wikipedia.org/wiki/Logarithmic_growth
Note that it looks *a lot different* from what the picture shows.
I know that the article mentions that the giant graph in the middle is wrong, but just having it there is a bit like having a wikipedia article on John F Kennedy with a picture of Richard Nixon at the top, and then putting a caption under the picture that says “This isn’t John F. Kennedy”. How many kids doing school reports do you think are going to be confused by that?
Anyway, I can’t think of any useful action to take based on this study — you get diminishing returns in happiness once you surpass $75,000/year, or some locality-based adjustment based on that. Well, then what? Say you’re making $75,000/year right now. Are you not going to ask for a raise next year because you only get a *little* bit more happiness out of it?
If you get 100 happiness points at $75,000/year, 120 happiness points at $100,000/year, and 130 happiness points at $150,000/year, you’re still happier with the higher salary, so you might as well take it.
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The chart in this article is misleading from what research shows. The research didn’t suggest that making /more/ money resulted in less happiness. It’s just that there was a point where there were only negligible gains in the indices used to measure happiness.
Additionally, a lot of commenters are submitting their own contradictory anecdotes. The study is a statistical study of 450,000 people. It’s an average. There are bound to be thousands of people in the sample alone who deviate from the model.
The study also controlled for a lot of known variables to affect well-being. Note that being lonely was by far the biggest (negative) impact on well-being… a person who makes $100k but is lonely is more likely to be unhappy than someone who makes $30k but has good friends and relationships. It suggests to me that “love is [nearly] all you need”. =)
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I dislike articles like this because I feel like it is all relative. My parents raised a family on far less than this magic number in Chicago. If you are good at making money stretch, you can do anything you want. I never felt lacking of anything because my parents raised me to not want much.
However, in Seattle, i’ve found that a similar salary as my parents had does not allow me to purchase a house.
Thus, it is all relative depending on where you live and your lifestyle.
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We live on a scale, and by that I mean once we have the core needs meet and we max out our 401Ks, Roths and 529s, we tend to go spend more on vacations and things that would make our life more enjoyable and fun!
We try to keep a conservative balance. By that I means we will save more as our household income increases, and at the same time increase our spending, but we will increase our spending at a lower percentage than our savings percentage increase.
So, if I earned 1 millionnnnn dollars a year, I’d be pretty happy!
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I think this is no different from Maslow hierarchy of needs, you can’t attain “fulfillment” or happiness until your basic needs are met. This study simply tries to quantify at what income level are your basic needs met. Got to love how these “new” studies recycle old ideas; like they say nothing new under the sun.
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I remember that 2004 study, too, ChickyBeth.
This new study makes me feel very poor when actually I thought I was doing all right. Right now my husband make about 43K a year combined. We live in Chicago (not the most expensive country in the U.S. but certainly not the cheapest. We do definitely have to live on a budget but we have a lovely apartment, all the things we need, are able to save and even take a modest vacation (to say Michigan) each year. We are no way deprived and though I certainly wouldn’t mind a little extra money I find $75K a year per person a ridiculously large number. I understand whether or not you have kids and where you live factor in as well but are they making two SUVs, a state of the art home theater system and yearly family vacations to the Carribean requirements for “happiness” or something?
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I thought the study was interesting, but perhaps flawed/skewed if, like me (and a lot of us reading GRS), you are already simplifying.
I’d actually expect the study to come up with a “high” number (vs my outlook) since the data/survey info was based on the ‘average’ (okay, no such thing, but you get the idea) American – and the average American is not necessarily focused on financial independence, simplicity, etc. in quite the same way.
I figure it’s a *good* thing that my “enough” number may be significantly less. Also, as many have noted, this IS a US-wide figure. Can’t find it quickly at the moment, but one article on the study that I saw translated the US-avg-$75k by cost-of-living for different areas, I think some town in the Midwest was $60-something-k and NYC region was $130-something-k or so. Will post direct link if I figure out where I read it!
LOVE the graph Sierra
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Maybe they ought do a “happiness” study where the main parameter is Income vs. Expenses ratio. If you make a million bucks a year but have 1.5 million in expenses, that probably eguals unhappiness. If you make 25k but have 15k in expenses you’re probably pretty happy.
I make about $75k and my wife took a job making about 50k. She also had to get a car + insurance, she had a soul-sucking commute, left the house early, came home late, plus didn’t get to spend time with the kids and friends like she could before. It all added up to unhappiness for her, and by proxy, the rest of us.
@ 33 Teresa. I have a house for sale cheap in Seattle if interested. Selling it would make me very happy indeed.
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I know immigrants that buy a house on $50,000/year and I know others that make #120,000 and cannot afford a home.
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As a positive psychology practitioner, these studies, and the media’s spin of them, drive me crazy. Kahneman is without a doubt a leading thinker/researcher in this area, having won a nobel prize. Daniel Gilbert (pointed out by Chickybeth #24) is also a very distinguished academic.
But, the problem with the media’s spin on these findings is that they often fail to highlight the most critical reason for why people feel they need a certain amount of money to be happy, namely referencing (i.e. comparison with others in society).
As JD has pointed out numerous times in this blog, referencing is a detrimental to your psychological health, and has a negative impact on happiness. I think the reason people feel they need an average of $75,000 today, when it was closer to $40,000-$50,000 a few years ago, is that people compare themselves with images and lifestyles seen in the media. An interesting study done a few years ago compared TV character lifestyles with real American lifestyles and found a very severe discrepency. The bottom line is that people appear to have more money than you, thus putting downward pressure on your reported happiness. What do you do? Disconnect from the advertising machine. It is working against your feeling of happiness.
Finally, the average household income in the US is roughly $62,000 (the median, which is most quoted in the media, is much less, around $40,000). If income were more equally distributed, Americans would be much happier. This is the reason why people in many European countries report being happier than Americans. Comparisons with the uber-rich will kill your sense of happiness and self-worth, particularly in a society that honors wealth even if it is acquired through greed.
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Well, I don’t know about $75,000, but here’s how I see it:
Say you buy a couch. It’s a good quality couch and you managed to buy it at about $500. Several years down the road, you have more money. You spend it on a fancier couch that’s, say, $1,500. Do you get more pleasure from this new couch that you bought? Not really. It’s as comfortable as the last couch. It even has the same features as the last couch. It’s just fancier and you had more money to spend on it.
That’s why I agree that you aren’t any more happier with more money than you are with “enough” money (whatever that might be according to your circumstances). You can buy pretty much the same things, but the things you buy might be a tad more expensive than what you could afford to buy previously.
As for entertainment, you might be able to travel farther away or go to 5 star hotels (if you wanted to squander money in that fashion) with more money, but you’d really have the same amount of enjoyment as you would have if you traveled to somewhere closer or went to a 3 star hotel. It might be less glamorous, but you’d still be happy (most of the time).
Others may disagree with me, but that’s how I see it.
Christina
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@DC Portland #42: I really like your take on this. I think around 2005-6 is when the shows on MTV like “Sweet 16″ and other garbage started which would definitely explain why people were happier with less before then. Instead of comparing my income to others, I try to remember what it felt like to be extremely poor. Anything is better than it was before!
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Why does the ‘big-screen TV’ always come up as an example of overspending? Nowadays a big-screen TV can be purchased for less than $800. Say you get 6 years of use from it that amounts to $10/month. Not really a big deal compared to cable bills of $80-$100/month!
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As everyone points out, there are too many other variables to take into account. I’m single, 25, and make just under 75K. You’d think I would be swimming in money! Well it’s quite the opposite. After taxes, paying my multiple school loans, my car loan, my rental payment, cell phone bill, city parking, groceries, insurance, etc. etc. etc. I have VERY little left over. If I had zero loans and lived in a cheaper city, well that would be a different story.
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Interesting. I heard a story based off the same study yesterday on NPR here in NYC:
http://beta.wnyc.org/shows/bl/2010/sep/15/will-75k-make-you-happy/
When adjusted for NYC style costs the number was closer to $160,000-ish. Its an interesting story, if you have time to listen to it.
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My husband and I went from around $50K combined to around $220K combined in a 3-year period, and there’s no question that our happiness level has increased with the change. We still spend money the same way we did when we didn’t have as much to spend, we aren’t interested in “luxuries” beyond what we indulged in when we were younger (eating out, two cars, buying a modest home), but now we have almost complete freedom to do whatever we like with our lives. If we want to fly out to visit family, we can do so without stressing about the cost, and we can rent a car instead of relying on people to pick us up. If my job is making me unhappy, I’m free to leave any time I’d like. I’m amazed by and grateful for all the freedom this income has given us to focus on the things that actually make us happy… time spent with family and friends, time spent exploring the outdoors, time spent learning new things.
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I dislike this article. It appears to badly misinterpret the underlying study. Fig. 1 of the Princeton article DOES NOT look like the bell curve provided above. Instead, Fig. 1 of the Princeton article shows an approximate plateau beyond 75K.
The underlying Princton abstract said “life-evaluation” rises steadily (it did not say it comes down as income rises). As such, a bell-curve is not the appropriate graphic for “life evaluation.” As for “emotional well being” (which was evaluated separately), the research indicated “there is no further progress beyond an annual income of 75K.” Thus, again, it not be a bell curve. The research article instead shows a plateau.
Does it matter? Yes, because the poster seems to be extrapolitng what it means at higher incomes, which is unsupported.
To quote the original poster, “Another $25,000 a year — or even another $100,000 a year — will make you richer, but it won’t make you much happier.” Actually, earning 25K more a year might make you have a higher “life evaluation” according to the underlying research, but it doesn’t seem to have much of an effect either way on “emotional well being.” To cite the underlying article, “As this example
illustrates, the statement that “money does not buy happiness” may be inferred from a careless reading of a plot of life evaluation against raw income—an error avoided by using the logarithm of income. In the present study, we confirm the contribution of higher income to improving individuals’ life evaluation, even among those who are
already well off.”
This was also pointed out in comments #33 and #34 by Tyler and Jesse. Extrapolating this study to Your Money or Your Life seems mistaken and/or forced.
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It’s all in your perspective. I make a lot less that $75000. But I have the type of job I want, doing the things that I like to do. I own a house and buy the things that are important to me. I live the way I want to and often think that I have too much. So what it takes to be happy seems to be based on individual needs.
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