Okay, so am going to moan about money and happiness - again! Why? Because people drive me mad with their judgement. "Oh, how can you be spiritual and think money is important?" or the classic "Money doesn't buy happiness" or "You don't need more than $70k a year to be happy"... in fact the last camp sends links like this from the Time Magazine.
You see, I HATE it when people have no idea what they're talking about. And when they talk about Economics like this, it makes me livid. I was warned the first day when I attended uni that after I finish the degree, people will drive me mad... the people with opinions but lack of knowledge. So I should have been prepared... but then if we Economists don't speak up, the bull shit analysis continues to prevail and you get TIME magazine articles instead of the real paper.
The paper was titled - High income improves evaluation of life but not emotional well-being and written by Dan Kahneman who won the Nobel Prize in Economics in 2002. However, Time Magazine put up the title to be: Do We Need $75,000 a Year to Be Happy?
A new study by Princeton University researchers puts a figure on happiness: $75,000 a year. Do you see the difference?
Before falling prey to what the popular media stories and misleading titles, my wish is that people think for themselves. There are several things going on here:
Though the title is misleading, the article is quite thorough. But most people read the headlines on "reliable" press and claim "I told you so"
Even though the press article is quite good in this case, especially in today's age of the internet when you can quote an article from 2012 (paper published 2010 - research done in 2008-09), in 2020, you have to realise the changing socio-political landscape of a decade.
Both the study and paper say that the research was based on responses from Americans. Now if Indians or Keneyans living in their home country take that study and claim $75k to be the magic number, we're in trouble.
This is my favourite - they say that the marginal utility diminishes after you hit around $75k-$80k. But it no where says that it becomes flat or disappears. For those of you who're technical minded, you'll notice this really depends on each person's own "utility curve" so to speak. Above $75k most people have their basic needs satisfied but I might get immense pleasure from a trip to Norway or donating money to the needy. Going over $75k lets us fulfill those pleasures.
So when people tell you about money and happiness, take it with a pinch of salt because most people read just headlines. Now I want to hear from you - what's your take on money vs happiness? It doesn't have to be the same as mine, but as someone hugely inspired by Dan Kahneman, I am curious to know. Do you think $75k is enough to be happy in your country?