They say money can’t buy happiness, but those who have suffered from poverty know how it can contribute to intense personal hardship and unhappiness. So perhaps a more realistic adage would be “money only buys happiness up to certain point.” And of course how much a person needs to reach that threshold is partly determined by where they live, according to a new analysis by Doug Short, vice president of research at the investment group Advisor Perspectives.
Short’s research shows that if you live in a state like Hawaii, where costs of living are relatively steep, a household must bring in $122,175 per year before that extra money doesn’t really translate into greater happiness. While in Mississippi, the point at which more cash stops boosting happiness is significantly lower: $65,850 per year.
So how much does a household need to earn in each state before the money-happiness equation stops working? The Council for Community and Economic Research has created a map to show this.
Short drew from a 2010 Princeton study by Kahneman and Angus Deaton, showing that on the national level, earning over $75,000 a year won’t measurably enhance your baseline happiness.
To generate his state-by-state evaluation, Short adjusted this so-called national $75,000 “happiness benchmark” to indicate the cost of living for each state, using figures from the Council for Community and Economic Research.
According to the official Princeton study, our emotional well-being — or the pleasure we get from day-to-day experiences — doesn’t improve in any measurable way after household earnings reach about $75,000. Yet a factor known as “life evaluation” — or how we perceive our lives and overall accomplishments — can increase with greater income levels and education.
Of course, a multitude of additional factors such as number of dependent children, the amount of debt a household carries, the cost of living in one’s place of residence, will impact how income translates to day-to-day happiness.