What's the relationship between money and happiness after basic needs are met?
- It's a different story than before basic needs are met.
Most people ask similar questions would only focus on the relationship itself, without distinguishing whether it is before or after basic needs are met. That’s when much confusion arises.
The truth is, the relationship between money and happiness is very different before and after basic needs are met.
Before basic needs are met, the relationship is the most significant. Money will have a big emotional benefit when used to get those needs met. However, the benefit is not exactly on increasing happiness, it is more on reducing unhappiness/suffering (hunger, cold, stress, illnesses left untreated, etc). And reducing suffering is not the same as increasing happiness, as happiness is not the same as lack of suffering or sadness. See:
Now, after basic needs are met, that is, those stress and suffering have been eliminated at least at the basic level, we may start looking at whether money can increase happiness.
Research data point to that after basic needs are met, money still has a positive correlation to a certain extent (though the relationship tends not to be as strong) until it reaches a possible “threshold”, see more below.
We could understand that as, beyond basic needs, there are some things that provides us comforts and conveniences (therefore increase positive feelings) that is quite standard in a modern life, such as AC, common appliances, a car at places public transit is not convenient or sufficient; as well as certain services such as barber shops’, fitness centers, well-being coaching if I may add. These material comforts and services, while not luxurious, improve our quality of life. Therefore, having money to enjoy these may increase our life satisfaction and positive feelings, both of which are components of happiness.
However, money’s effect on happiness diminishes going further, and according to a large-scale research in the US, it levels off at $75,000 annual income.
The particular number might fluctuate in different countries and depending on inflation. But the principle might hold across time and culture, that there may be a “threshold” where money is no longer effective for increasing happiness. If so, that’s where our goals for “more money” should stop.
Thanks for this! I’ve often wondered about this. After all, we have the common phrase “money can’t buy happiness” but it does buy a lack of suffering, as you pointed out here. Appreciate it! 💙 and subscribing!