The price of happiness? £50,000pa

Research shows that happiness increases with earnings – up to a point

Money can't buy you love, but it can make you happier if you are not a high earner, according to a Nobel prizewinning psychologist.

A survey of 1,000 Americans found that happiness rose in line with salary, but only until people earned $75,000 a year, the equivalent of around £50,000.

Earning more than this did nothing to boost how happy people were, according to Daniel Kahneman, a psychologist at Princeton University in New Jersey, who won the Nobel prize for economics in 2002.
Kahneman teamed up with Angus Deaton, an economist at Princeton, to analyse 450,000 responses to a daily survey on happiness and life satisfaction run by Gallup in 2008 and 2009.

The survey asked people to rate how happy they felt each day, based on their experiences of emotions such as joy, worry, sadness and fascination. They were then asked to rate their overall satisfaction with life, on a scale where zero was the worst they could imagine life to be and 10 being the best.

The researchers found that life satisfaction rose steadily the more people were paid. Happiness rose with income too, but plateaued when people reached an annual salary of $75,000. For those on more, happiness appeared to depend on other factors.

Describing their research in the journal, Proceedings of the National Academy of Sciences, the authors write: "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."

The figure will make grim reading for the majority of people who work in Britain. According to the Office of National Statistics' annual survey of hours and earnings, half of people in full time jobs in 2009 earned less than £25,816. Some 90% earned less than £46,278 a year.

The researchers warn that the emotional strain of negative experiences, such as getting divorced or being ill, appear to be exacerbated by being poor. "More money does not necessarily buy more happiness, but less money is associated with emotional pain," they write.

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