Is There An Optimal Income For Happiness?

How much is enough?

Some believe there is no such thing. John Bogle, founder and former CEO of The Vanguard Group, believes otherwise. In his book, Enough: True Measures of Money, Business, and Life, Bogle explores how much wealth and power one actually needs to live a fulfilled life.

Bogle describes a sign in Albert Einstein’s office that read, “There are some things that count that can’t be counted and some things that can be counted that don’t count.” According to Bogle, our society is obsessed with counting—we think we can count everything that is important. He notes, however, how difficult it can be to measure the things that matter most to society, like character, integrity and moral conduct.

At what point does “counting” make you happier?

It turns out you can count on money to buy happiness–but only up to a point. A study conducted in 2010 by Princeton University found a salary of roughly $75,000 per year translated into a high sense of emotional well-being. Above an annual income of $75,000, personal contentment corresponded much more with an individual’s disposition and circumstances than additional income. As incomes fell below this level, subjects reported increasing levels of unhappiness and stress.

Interestingly, while higher income did not automatically change a person’s emotional well-being, it did make them think their life was more successful. Across all income levels, individual life evaluations tended to rise along with income.

Why does additional income brighten a person’s overall life evaluation, but not their emotional well-being? The researchers suspect this equates to a diminishing appreciation for life’s true pleasures, because with additional income people are able to indulge more.

As the Nobel-prize winning team who ran the Princeton study put it, “Perhaps $75,000 is a threshold beyond which further increases in income no longer improve individuals’ ability to do what matters most to their emotional well-being, such as spending time with people they like, avoiding pain and disease, and enjoying leisure.”

So, regardless of your income, how can you improve your happiness and emotional well-being? Regularly reminding yourself of what is truly important—like relationships and health—can only help your sense of fulfillment and satisfaction. And don’t underestimate the power of simple pleasures. Identify the little things you enjoy doing and make them a part of your regular routine. As the old saying goes, happiness isn’t getting what you want, but wanting what you get.

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