Finally, we have the answer. According to the latest research, once you have about $75,000 a year, earning more doesn’t really help.
Not surprisingly, people with a comfortable living standard are happier than people living in poverty. So, this magic number defines a “comfortable standard” and varies across individuals and countries, but in the United States Gallup data collected from half a million Americans found that the benefits, other than a slightly better mood on a daily basis – taper off entirely after the $75,000 mark.
So, why do many continue to bother to work so hard long after we have reached an income level sufficient to make most of us happy? Because we anticipate that doubling our income will double our happiness plus the fact there’s a kind of high connected with being upwardly mobile. Don’t be in denial, your adrenaline will surge and you’ll like how you look in that Lexus if you aren’t zipping around in one now.
But, twice as much money, twice as much happiness? Not so. If this belief drives your time and energy, get ready for a letdown. You’ll have about 9 percent more satisfaction your efforts to double that income. While that’s more than a zero return it is NOT the return most of us believe we’ll get. While extra income will allow you to buy more and more stuff that you will like – from designer clothes to a luxury car to eating out at fancy-chmancy restaurants – it will be ineffective in making you happier.
That’s not to say money won’t buy happiness. It will. The authors of a forthcoming book, “Happy Money: The Science of Spending” by Elizabeth Dunn, an associate professor of psychology at the University of British Columbia and Michael Norton, an associate professor of business administration at Harvard Business School, present new data that supports a decade of research that says your life satisfaction is substantially increased when you do two things with your money – spend it on experiences for yourself or give it away.
It’s all pretty simple. If you seek happiness but are not making the base line of $75,000 to provide the “comfortable standard” you can work harder and harder, buy lottery tickets or move to Nicaragua where you’ll find comfort on much, much less.
If the magic number of $75,000 is already on your tax returns or you’re close, give up amassing money enough to quit your job so you can just buy more stuff. Instead, boost your happiness for the long run now by successfully, negotiating some time out from work and buy yourself an experience. Note: This is not more vacation time where you go off to wonder what’s going on at the office, check your email constantly and never let your team truly be on their own so they can learn new skills and grow into larger roles for the company.
Rather this is time out for an experience you’re vested in, plan for, arrange carefully for your work to continue and disconnect fully from work. What we’d call a smart move for career longevity, productivity along with this happiness benefit.
Not going to do that but still want to be happy? Then, open your wallet and give that money away. According to Dunn and Norton in The New York Times, it’s another scientifically validated means of increasing happiness with money.
You have choices. Just don’t say your happiness is out of your control. It’s such a cop out.
“Happy Money: The Science of Spending,” written by Elizabeth Dunn and Michael Norton is available for pre-order at Amazon. Published by Simon and Schuster, the release date is May 14, 2013.
Elizabeth Dunn is an associate professor of psychology at the University of British Columbia in Vancouver, Canada. At age twenty-six, she was featured as one of the “rising stars” across all of academia by the Chronicle of Higher Education.
Michael Norton is an associate professor of marketing at the Harvard Business School. His research has twice been featured in The New York Times Magazine Year in Ideas issue. In 2012, he was selected for Wired magazine’s Smart List as one of “50 People Who Will Change the World.”