Money, happiness and the connection between the two 

Nobel Prize winning behavioural economist Daniel Kahneman led a famous study which concluded that happiness increases with income until it plateaus at $75,000 a year

At the turn of the century, a friend, an India cricketer, told me, “If you can make around eight and a half lakh rupees a year, you can be happy.” That’s about 22 lakh today. 

Having been told virtually from the cradle that money can’t buy happiness, I found his choice of words interesting (he was a batter, do bowlers have a different viewpoint?). Those who don’t have a lot of it, I figured, are the ones who console themselves with the thought that the rich are never happy. The happy, of course, are always rich. 

Back in 2010, the Nobel Prize winning behavioural economist Daniel Kahneman led a famous study which concluded that happiness increases with income until it plateaus at $75,000 a year. Beyond that, more money does not equal more happiness. 

Perhaps it is with the staff’s best interests at heart therefore that employers pay them less than they are worth. Why encourage the levelling off of happiness through large wages? 

The survey involved about half a million Americans, and may not be relevant to Papua New Guinea, for example. The figure will be different for India too. But the idea that you could place a price on happiness was interesting. 

However, the essential question remains: why struggle, save and invest beyond the magic figure? If you ever get to it, that is. It is roughly 91 lakh rupees a year today, adjusting for inflation. Luckily for our back-breaking selves, a Wharton researcher, Matthew Killingsworth found in 2021 that more money does indeed buy more happiness. He concluded that the positive connection “continues far up the economic ladder.” 

I love research that come to contradictory conclusions and may be used depending on your temperament (and salary level). 

Kahneman and Killingsworth came together last year, checked the figures again and concluded more money is associated  with more happiness but not for everybody. There is too how “happiness” is defined. For some 80% of people, happiness rises with income over $75,000, but for the rest unhappiness decreases till about $100,000 (roughly the same as $75,000 today). In short, if you are rich and miserable  - a sort of Scrooge in fact – more money won’t help. 

They also found that the ‘happiness gap’ between wealthy and middle-income people was in fact wider than between middle and low-income group. 

So there you have it, the grand unification theory, involving not just money and happiness, but sunniness or otherwise of temperament. 

The comedian Spike Milligan got it right without the aid of any research when he said, “Money can’t buy you happiness but it does bring you a more pleasant form of misery.” Money can’t buy happiness, but neither can poverty. 

Recently, another cricketer (cricket and cricketers have taught me so much) introduced me to a poem with the line,  “Celebration of life left…”, which is a wonderful concept. The poet, however, does not tell us how much money is needed to celebrate life left. We await an economist who can tell us that. 

Published - October 26, 2024 08:18 pm IST