The Cost of Happiness!

It even inspired one Chief executive officer to raise his employees salaries. But is it true? The, 000 figure stems from a 2010 analysis by Daniel Kahneman and Angus Deaton which examined 450, 000 answers to a Gallup poll conducted over 2 years.

The investigators were looking for a connection between happiness and income. To understand the results, however, we need to understand the several ways that investigators measure happiness. What's Happiness, Anyhow?

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The first step of happiness is called psychological wellbeing. This is the psychological quality of a people daily encounter the frequency and seriousness of experiences of joy, fascination, nervousness, sadness, anger, and affection which make ones life pleasant or disagreeable. For the purposes of the investigation, Kahneman and Deaton divide up these answers into positive feelings, despair, and stress, and quantified each category against income.

The second step of pleasure is called life assurance or life evaluation. This is quantified using something named Cantrils Self Anchoring Ladder. The pollster asks the respondent to consider their life and speed it on a scale of 1 to 10. It turns out that both measurements produce different outcomes when comparing happiness to income.

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The Results
The analysis includes some non-financial results which are intriguing! People have much more positive emotions and less anxiety on the weekends. College grads encounter a little bit much more positive emotion and marginally less sadness than non college grads. They're also considerably more stressed. Women have much more positive emotions, much more sadness, and much more anxiety. They also have a higher life rating than men. Religious Individuals have less stress, but the same amount of sadness. Older Individuals have more positive emotions and less anxiety. Smokers have fewer positive emotions and much more stress, even after controlling for education and earnings.

But you are here for the money analysis, so lets get to it.

First, higher income is related to reductions in stress, but the advantage tops out at $60, 000. Any income increases then don't correlate with reduced stress levels. Next, positive emotions increase and negative emotions decrease with increased earnings to a ceiling of $75, 000. This is the number that became well-known from this study. After $75, 000, extra income isn't correlated with increased positive emotions or decreased sadness. Low income seems to act as a multiplier on the effect of negative things which happen in your life. Divorce, loneliness, and illness all affect Individuals more negatively if they've lower income. Lastly, life assurance correlates with increased income with no ceiling.

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