From what I have read there is an important difference between perceptions of life satisfaction and well-being/âhappiness. Perception of life satisfaction continues to grow but actual affective well-being basically stops increasing after around $75,000. I have seen this a lot stemming back to this study. I did most of my research on this a few years ago so it might be outdated. Of course well being research is just really difficult and it is still unknown what exactly we should be measuring.
You might be interested in the latest study which seems to suggest that both life satisfaction and perceived well-being increases proportionally with log(income), though the former has larger correlation than the latter, at least for employed Americans in this large-scale study:
Data are from http://ââtrackyourhappiness.org (18), a large-scale project using the experience sampling method (19, 20), in which participantsâ smartphones were signaled at randomly timed moments during their waking hours and prompted to answer questions about their experience at the moment just before the signal. The present results are based on 1,725,994 reports of experienced well-being from 33,391 employed (emphasis mine), working-age adults (ages 18 to 65) living in the United States. Experienced well-being was measured with the question âHow do you feel right now?â on a continuous response scale with endpoints labeled âVery badâ and âVery good,â while evaluative well-being was measured with the question, âOverall, how satisfied are you with your life?â on a continuous response scale with endpoints labeled âNot at allâ and âExtremely.â
[...]
To formally assess whether experienced well-being plateaued around incomes of $75,000/ây, the association between income and experienced well-being was analyzed separately for incomes below and above $80,000/ây (the upper bound of the income band containing $75,000). Results showed that the slope of the association between log(income) and experienced well-being was virtually identical for incomes below and up to $80,000/ây (b = 0.109, P < 0.00001) as it was for incomes larger than $80,000/ây (b = 0.110, P < 0.00001). Although both forms of well-being rose linearly with log(income), the correlation was stronger for evaluative well-being (r = 0.17) than experienced well-being (r = 0.09, Pdifference < 0.00001).
The most recent worldwide study on income and subjective well-being is Jebb et al. (2018). FWIW they find there are âsatiationâ points for the effect of income on SWB, measures as happiness, positive affect, and negative affect, nearly everywhere but that itâs often higher than $75k.
BTW Jessica, the $75K figure from Kahnemanâs paper that you mentioned is from 2010. After adjusting for inflation, thatâs ~$90K in 2021 dollars (exact number depends on the inflation calculator you used).
From what I have read there is an important difference between perceptions of life satisfaction and well-being/âhappiness. Perception of life satisfaction continues to grow but actual affective well-being basically stops increasing after around $75,000. I have seen this a lot stemming back to this study. I did most of my research on this a few years ago so it might be outdated. Of course well being research is just really difficult and it is still unknown what exactly we should be measuring.
Hi Jessica,
You might be interested in the latest study which seems to suggest that both life satisfaction and perceived well-being increases proportionally with log(income), though the former has larger correlation than the latter, at least for employed Americans in this large-scale study:
From the paper:
The most recent worldwide study on income and subjective well-being is Jebb et al. (2018). FWIW they find there are âsatiationâ points for the effect of income on SWB, measures as happiness, positive affect, and negative affect, nearly everywhere but that itâs often higher than $75k.
BTW Jessica, the $75K figure from Kahnemanâs paper that you mentioned is from 2010. After adjusting for inflation, thatâs ~$90K in 2021 dollars (exact number depends on the inflation calculator you used).
Thanks a lot for the link, appreciate it!