Right, the only disagreement I have with that piece is this part: ”… once you start earning more than about $40,000 a year as an individual, any extra income won’t affect your happiness that much”
From my current understanding, extra income will continue to affect happiness quite a bit up to at least $115,000 / year (on average for college-educated people in Western Europe and North America, in terms of subjective evaluation of one’s life quality).
And achieving an income of $115,000 / year is much harder than achieving one of $40,000 / year.
I don’t know if it’s more or less reliable than past research suggesting a lower satiation point, but taking the paper Jebb et al. 2018 at face value, this is the effect of a 160% increase in income, from $40k to $105k:
In North America, life satisfaction goes from 7.63 to 8.0. Zero effect on positive affect (effects on positive affect/happiness are always lower and it’s the measure I think is more reliable, which is why we chose the term happiness in that quote). Negative affect-free goes from 0.7 to 0.74.
Effects in Western Europe are a touch smaller.
Whether this counts as “extra income continuing to affect happiness quite a bit” or “extra income not affecting happiness that much” I guess is for readers to judge.
For myself, I would regard those gains to be sufficiently small that I would think it irrational for an egoist to focus much of their attention on earning more money at that point, rather than fostering strong relationships, a sense of purpose, or improving their self-talk.
Personally, I also expect even those correlations are overestimates of the actual effect of higher income on happiness, because we know the reverse is also happening: for various reasons happiness itself causes people’s incomes to rise. On top of that, things like health also cause both happiness and higher incomes, increasing the correlation without increasing the causation. (Though as I describe in my income and happiness article, if you have a different causal diagram in mind, you could also try arguing that it’s an underestimate.)
Whether this counts as “extra income continuing to affect happiness quite a bit” or “extra income not affecting happiness that much” I guess is for readers to judge.
I notice I have some difficulty thinking through the implications of a 0.5 bump in life satisfaction on a 0.0 to 10.0 scale, especially when the 0.5 increase is in aggregate across an entire lifetime.
On one view, 0.5 doesn’t seem like that much. “7.5 instead of 8.0? That’s a negligible effect. Once you’re at 7.5 life-satisfaction-wise, time to focus on other things.”
On another view, the 0.5 bump is quite a lot. If 10.0 on the scale is “most satisfying life possible”, going from 7.5 to 8.0 could be a big frickin’ deal. Also could be a big deal if the 0.5 bump cashes out to something like “one less terrible day per month, for the rest of your life”.
This consideration is probably dominated by measurement problems though. When I subjectively assess my life satisfaction, I have trouble discerning the difference between a 7 and an 8 on a 0-10 scale (though I’m benchmarking on 10 being “best out of the ways my life has tended to go”, not “most satisfying life possible”).
I’ve started using a 0-5 scale because of this granularity consideration. It’s much easier for me to tell apart the difference between 3 and 4 on a 0-5 scale than it is to tell apart 7 and 8 on a 0-10 scale.
This is all to say that a 0.5 bump on a 0.0-10.0 scale might not be subjectively detectable at all to most people. (Though a 0.5 in-aggregate effect could still cash out to large subjective gains for many people.)
For myself, I would regard those gains to be sufficiently small that I would think it irrational for an egoist to focus much of their attention on earning more money at that point, rather than fostering strong relationships, a sense of purpose, or improving their self-talk.
I agree with this.
The main takeaway I’m pushing here is something like:
“After a certain point, making more money has severe diminishing returns re: your happiness, as does donating lots of money.
So don’t lean on making lots of money to make you happy, and don’t lean on giving away lots of money to make you happy.”
There’s a temptation to use “donate a lot of money to effective causes” to scratch the “sense of purpose” itch, which I don’t think works very well (due to the diminishing returns).
Right, the only disagreement I have with that piece is this part: ”… once you start earning more than about $40,000 a year as an individual, any extra income won’t affect your happiness that much”
From my current understanding, extra income will continue to affect happiness quite a bit up to at least $115,000 / year (on average for college-educated people in Western Europe and North America, in terms of subjective evaluation of one’s life quality).
And achieving an income of $115,000 / year is much harder than achieving one of $40,000 / year.
I don’t know if it’s more or less reliable than past research suggesting a lower satiation point, but taking the paper Jebb et al. 2018 at face value, this is the effect of a 160% increase in income, from $40k to $105k:
In North America, life satisfaction goes from 7.63 to 8.0. Zero effect on positive affect (effects on positive affect/happiness are always lower and it’s the measure I think is more reliable, which is why we chose the term happiness in that quote). Negative affect-free goes from 0.7 to 0.74.
Effects in Western Europe are a touch smaller.
Whether this counts as “extra income continuing to affect happiness quite a bit” or “extra income not affecting happiness that much” I guess is for readers to judge.
For myself, I would regard those gains to be sufficiently small that I would think it irrational for an egoist to focus much of their attention on earning more money at that point, rather than fostering strong relationships, a sense of purpose, or improving their self-talk.
Personally, I also expect even those correlations are overestimates of the actual effect of higher income on happiness, because we know the reverse is also happening: for various reasons happiness itself causes people’s incomes to rise. On top of that, things like health also cause both happiness and higher incomes, increasing the correlation without increasing the causation. (Though as I describe in my income and happiness article, if you have a different causal diagram in mind, you could also try arguing that it’s an underestimate.)
I notice I have some difficulty thinking through the implications of a 0.5 bump in life satisfaction on a 0.0 to 10.0 scale, especially when the 0.5 increase is in aggregate across an entire lifetime.
On one view, 0.5 doesn’t seem like that much. “7.5 instead of 8.0? That’s a negligible effect. Once you’re at 7.5 life-satisfaction-wise, time to focus on other things.”
On another view, the 0.5 bump is quite a lot. If 10.0 on the scale is “most satisfying life possible”, going from 7.5 to 8.0 could be a big frickin’ deal. Also could be a big deal if the 0.5 bump cashes out to something like “one less terrible day per month, for the rest of your life”.
This consideration is probably dominated by measurement problems though. When I subjectively assess my life satisfaction, I have trouble discerning the difference between a 7 and an 8 on a 0-10 scale (though I’m benchmarking on 10 being “best out of the ways my life has tended to go”, not “most satisfying life possible”).
I’ve started using a 0-5 scale because of this granularity consideration. It’s much easier for me to tell apart the difference between 3 and 4 on a 0-5 scale than it is to tell apart 7 and 8 on a 0-10 scale.
This is all to say that a 0.5 bump on a 0.0-10.0 scale might not be subjectively detectable at all to most people. (Though a 0.5 in-aggregate effect could still cash out to large subjective gains for many people.)
I agree with this.
The main takeaway I’m pushing here is something like:
“After a certain point, making more money has severe diminishing returns re: your happiness, as does donating lots of money.
So don’t lean on making lots of money to make you happy, and don’t lean on giving away lots of money to make you happy.”
There’s a temptation to use “donate a lot of money to effective causes” to scratch the “sense of purpose” itch, which I don’t think works very well (due to the diminishing returns).