It is said many times in public that money is not everything. It doesn’t make you happy, in fact, it’s just a problem with that – a lot of folk wisdom.
But as science currently stands, this is not the case.
In the face of early social and psychological studies, economists have repeatedly demonstrated that more money matters. But of course, the situation is not as simple as we might initially think.
What is happiness at all?
If we want to summarize in a rather simplified way what we know about this problem today, we need to take the following in turn. First of all, it doesn’t matter how we measure things. It is completely pointless to give someone 20,000 forints and then ask if they are happier. Studies of this type, operating with nominally defined rewards, almost all lead to erroneous results. We need to look at what happens when someone gets paid, say, 20 or 50 percent higher. To do this, it is worth examining the logarithm of income data, and it is already remarkable that a proportional increase in salary in proportion to our situation can really make us happier.
Another topic that must be understood in such research is the concept of happiness, which is difficult to understand. Science can do no better than design surveys in which it attempts to capture different aspects of our happiness. It then looks at these statistical methods to see if there are meaningful and consistent associations emerging from them.
emotional well-being…
Today’s methods tend to distinguish between at least two types of happiness, and there is no consensus on which one is more important. One deals with our current emotional state. Every day, for example, they ask us how we felt the day before, whether we had stress, sadness, or just something that made us smile a lot. It’s hard to internalize this with questions, but the studies so far suggest that there is something to be measured in this direction. Continuous surveys to this end show a consistent picture of us, showing a clear characteristic of each country and ethnic group. The results don’t bounce back, which means that something seems to be measured this way, even if we don’t have a definitive answer to what happiness is.
…and life satisfaction
But then comes a twist in the story: There is another side to our happiness which is basically It is about our general satisfaction with life. The two do not appear to be the same at all. For example, a wealthy, successful person may be especially happy with his life, yet his days are often upset, or worse, downright sad. So whether someone is happy in their life may not be happy in their daily life. But it is not easy to determine which is more important in our lives.
By the way, researchers also try to express our satisfaction with the type of questions that are based on self-statement. For example, they are asked to put ourselves on a scale of ten, where the tenth degree is the best life imaginable for us, and zero is the worst. But It can also be argued that these measurements produce consistent and analysable results, so they are not nonsense.
Now that we’ve cleared up the basics about measuring happiness, we can move on to related research.
What do 450,000 interviews say?
By the way, Angus Deaton and Daniel Kahneman – Nobel Prize laureates in economics – came up with this question.How do these two types of happiness, which we presented above, relate to income relationships. Gallup, one of the famous companies that conducted such surveys, recorded respondents’ marital status as well as questions about happiness. This is, among other things, how much he earns.
All this has already made it possible to answer this question using more serious statistical tools. Deaton and Kahneman 450 thousand Analyzed response 1000 It was created from daily interviews of a randomly selected American man. (This is the Gallup-Healthways Well-Being Indicator.)
The data provides a very interesting insight into the laws of human happiness. Research shows, for example, that two types of happiness — life satisfaction and our emotional state — are affected by very different things. If someone has a high level of education and is well-deserved, he will be more satisfied with his life, but our daily emotional state is already strongly influenced by our health, our loneliness, or whether we only smoke. And by the way, smoking is contrary to public opinion, it does not calm the nerves of man, these individuals suffer from many other things, according to the analysis. Although the direction of causation already arises here.
But the really interesting finding – highlighted by the study itself in its title – relates to income relationships. According to statistical studies, although our sense of satisfaction improves in proportion to the logarithm of income (that is, as a percentage change), our emotional state no longer does. It will get better to a certain point, but then it will stop.
Almost all of this $75,000 a year is happening.
What exactly does this mean and how do we look at this number with the eyes of today?
The explanation for the regression result is relatively simple: until someone earns that much money, their daily life is affected by their income status. So the low pay can be annoying even on a daily basis. For example, it greatly amplifies the experience of life-related afflictions such as illness or divorce. But if a person reaches an annual income of $75,000, then from now on, no matter how much he earns, his daily life will not be in a better mood (all other things being equal).
You will be happier with your life, but otherwise you will not be happier. This is a very powerful statement that brings a strange twist to the discourse about whether or not money is really happening now. The answer according to this is yes, you are happy, but only to a certain level. And then, even though you’ll be happier with your life, you won’t feel better about it because of it. It seems that a lot of money is enough for a healthy and happy life – at least this research suggests.
How much does happiness cost?
But what exactly is the amount of 75,000 US dollars, can it be translated into Hungarian mode and converted into forints? Well, we have to do at least two things to make the number explainable at home. First, we need to update because the research was done in 2010 and the sampling was in 2009. Since then, prices and wages have changed quite a bit. If we correct this, the difference between Hungary and the United States due to purchasing power parity still exists. But there is also data about this in the World Bank database, so it is actually possible to update what it means for annual income of $75,000 (self-declared, net) from surveys at that time in Hungary today and convert it into Hungarian forints.
According to our calculations, this is net 1.2 million The equivalent of a HUF monthly salary.
But let’s not forget that this number appeared in the American style, in American culture, and more than 10 years ago. At home, we do not know if people’s subjective feeling of happiness would react in the same way, because such research has not yet been conducted in Hungary.
So that 1.2 million cash cannot be taken yet. But the results of the research and the size of the salary are still thought-provoking. On the basis of this figure, it is possible to understand what an individual with such a procedure can and cannot afford. That’s roughly how much money you need for a happy life.
In Hungary, the net salary of 1.2 million is very high, and the average net salary is approx. Four times, but that’s not unattainable or rare in Budapest. There are many sectors in which this can be achieved as a middle manager or a more experienced professional.
If they are the ones reading this article now, maybe it’s time to rethink their lives and see if they want to rise in business. Everyone is calm because this research does not apply to him to see if he would be happier with it.
Cover image source: Getty Images
