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How Much Money Do You Need to Be Happy?

Probably a lot less than you think.
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(Photo: JK1991/Shutterstock)

(Photo: JK1991/Shutterstock)

Generation Basic Income is an activist group in Switzerland that wants to guarantee every member of their country an income of at least $33,000 every year, whether the money’s recipients work or not. The law the group is proposing through a nationwide petition doesn’t mean actively redistributing wealth or forcing every citizen to subsist on just $33,000 (those already earning more would not receive any extra money), but it would guarantee Swiss a baseline amount of money to survive on.

The purpose of the money is to augment the state’s pre-existing welfare system, giving those on the lower end of the income spectrum an opportunity to seek a better lifestyle. “What amount allows a life in dignity?” asked Enno Schmidt, a founder of Generation Basic Income. Under the proposed law, “Income from labor will be renegotiated. With a basic income, I can say no to a bad deal. And yes to what I really want.”

Schmidt hopes that with guaranteed income, not having to depend on menial, badly compensated work to subsist will make people more content. In the United States, where the pursuit of happiness is enshrined in the constitution, the idea of providing $33,000 for the simple sake of contentedness might sound extreme, but it turns out we may not need much more than that to be happy.

A 2012 poll found a stark difference in responses from Americans earning above and below $50,000. Twenty-five percent of those bringing home less than $50,000 called themselves “very happy,” while 34 percent of those who made more did.

A report released this month from Vox found that life satisfaction hits its “bliss point” at a national per capita GDP, also known as per capita income, of $33,000 (balanced for purchasing power parity). The economists charted the relationship between per capita GDP and income across the entire world, and the resulting graph isn’t the continuous upward incline you might expect. While life satisfaction does increase as the GDP metric rises (more money equals more happiness), the increase after $33,000 is negligible when compared to the increase before.

Between $33,000 and $54,000 per capita GDP (the U.S. sits at around $50,000), “the probability of reporting the highest level of life satisfaction changes by no more than two percent,” the report finds. “Countries with GDP per capita over $20,000 see a much less obvious link between GDP and happiness.”

To compensate for other variables between countries—access to resources, regional stability, political context—Vox also measured satisfaction and income within Europe alone, and came out with the same surprising result: $30,000-$33,000 produced the happiness bliss point.

But there are about as many answers to the question of how much money we need to be happy as there are ways to attain happiness. Since it measures an average, per capita GDP doesn’t reflect income inequality within a country. Other studies of happiness and income focus in on the United States specifically.

A 2012 Marist poll found a stark difference in responses from Americans earning above and below $50,000. Twenty-five percent of those bringing home less than $50,000 called themselves “very happy,” while 34 percent of those who made more did. Those with less income were also less likely to feel that “the best is yet to come” than people earning over $50,000: 73 percent versus 82 percent.

In 2010, Princeton’s Center for Health and Well-Being found that “life evaluation,” a measurement of an individual’s level of personal fulfillment, rises steadily with income. Yet they also discovered that there was no improvement in “emotional well-being,” a day-to-day reflection of life in the short term, after reaching an annual income of $75,000, what they call a satiation point.

In response to the eternal question of whether money can purchase happiness, the Princeton study offers this pithy answer: “high income buys life satisfaction but not happiness, and low income is associated both with low life evaluation and low emotional well-being.” Perhaps this could be an argument for a guaranteed basic income, thinking in terms of optimizing quality of life. Poor people gain more in terms of happiness than the already rich do with the same increase in income.

Skandia performed a 2012 global survey asking participants how much money they thought they would need to be “really happy” and found an international average of $161,000. (It’s important to note that this is a self-report study and reflects perceptions rather than the conditions of reality.) The difference in averages for various countries is fascinating. Germans feel they need $85,000 to be happy, while residents of Dubai and Singapore, the two highest data points, require over $200,000. The Skandia study is more about wealth than happiness, however. The results show a keeping-up-with-the-Joneses mentality that belies the fact that many would likely be just as happy with less, as other studies found.

But the Skandia report points to an underlying truth that stands in the way of measures like Switzerland’s basic income plan: we try to obtain as much as we believe we need, and we believe we need far more than we actually do. The path forward is changing that mentality and optimizing happiness for everyone in the process.