An overwhelming majority (84 percent) of Affluent households said that to be rich in America means greater security, while one-third did say it meant they would be happier (though another third said being rich in American means more responsibility).
How much money would you need to consider yourself happy and rich in America?
Four years ago, psychologist Daniel Kahneman and economist Angus Deaton determined that an annual income of $75,000 was the benchmark after which no more amount of money would significantly yield more happiness despite whatever additional creature comforts one might accrue. Is it true, as the Tao proclaims, that “He who knows he has enough is rich?”
Kahneman and Deaton’s study made the distinction between emotional well-being and evaluation of life. Deaton said that income above $75,000 “is not going to do much for their daily mood…but it is going to make them feel they have a better life.”
Doug Short, vice president of research at investment group Advisor Perspectives, has revisited Kahneman and Deaton’s study to see if the benchmark holds. His study indexed the nationwide average of $75,000 and indexed it to reflect the cost of living state-by-state. Short found that residents in 29 states do not need as high a salary to reach the happiness benchmark.
At the low end of the salary spectrum is Mississippi, whose annual “happiness salary” is $65,850. At the highest end is Hawaii at $122,175. That’s a difference of $56,325.
Despite wild cards such as family size, debt level and cost of living, Short concludes that the $75,000 benchmark still “probably” holds. What do you think? Can money buy happiness? What does it mean to be rich in America?
As to the latter, a 2013 Spectrem’s Millionaire Corner survey of Affluent investors found that an overwhelming majority (84 percent) said that to be rich in America meant greater security, while one-third did say it meant they would be happier (though another third said being rich in American means more responsibility). Nearly three-in-ten said it means more fun.
Nearly three-fourths (73 percent) said that wealth level is the primary definer of being rich, while nearly half (48 percent) said it was lifestyle. Forty-four percent said it was income. The highest percentage (19 percent) said that $250,000 was the minimum annual household income it would take to be rich, while nearly 40 percent put the figure at $450,000 or more.
The survey also found that 27 percent consider the proverbial $1 million to be the minimum wealth level to be rich. That benchmark particularly impressed Affluent respondents under 40, 45 percent of which said that $1 million is the minimum wealth level at which they would consider themselves rich.
But the jury is out on where they stand on this whole “money can buy happiness” thing. Thirty-five percent are neutral on the question, while 44 percent said they either “disagreed” or “strongly disagreed.” And yet the wealthier respondents report significantly higher levels of satisfaction in every aspect of their life, including marriage, health and family.
Related story: The secret to happiness--Become a millionaire
Donald Liebenson writes news and features for Millionaire Corner. He has been published in the Chicago Tribune, The Chicago Sun-Times, The Los Angeles Times, Fiscal Times, Entertainment Weekly, Huffington Post, and other outlets. He has also served as a marketing writer for Chicago-based Questar Entertainment and distributor Baker & Taylor.
A graduate of the University of Southern California, he is married with a college-age son. He also writes extensively about entertainment.