You may have seen a news story in the last few weeks, saying that in order to be happy in New Zealand, you need a household income of $193,000 (see Stuff here, or the New Zealand Herald here, or here). The problem is, that framing is a misrepresentation of what the original research actually found.
The $193,000 estimate comes from this blog post by S Money, which updated figures from this 2018 research article by Andrew Jebb, Louis Tay (both Purdue University), Ed Diener (university of Illinois, Urbana-Champaign), and Shigehiro Oishi (University of Virginia), published in the journal Nature (sorry, I don't see an ungated version online). However, that article isn't about the amount of income required to be happy, it is an estimate of the amount of income, beyond which additional income isn't associated with higher levels of happiness (or life satisfaction) - what the authors refer to as 'income satiation'.
So, if we take the S Money number at face value, at household incomes below $193,000, higher income is associated with more happiness, but at household incomes above $193,000, higher income is not associated with more happiness. That doesn't at all mean that you need a household income of $193,000 in order to be happy. S Money has completely misrepresented what the research is finding (their key findings mention the "cost of happiness" several times, even though that's not what this is about.
Let's take New Zealand as an example. S Money lists New Zealand in the "Countries with the highest cost of happiness", and writes that:
Meanwhile, New Zealand and Israel suffer a high cost of happiness despite not being among the top earners.
In fact, you could easily interpret this 'high cost of happiness' as positive for New Zealand, rather than negative. If you think of the relationship between income and happiness as causal (which is not established in the Jebb et al. paper - it is just a correlation), then in New Zealand, earning a higher income increases your happiness, and continues to increase your happiness all the way up to an income of US$114,597 (or about NZ$193,000). So, there is a good reason to earn more money, since it will make you happier. For other countries with a lower 'cost of happiness', happiness peaks much earlier, and the incentives to earn more disappear at a much lower income. It is little wonder that Sierra Leone remains a poor country, if earning any more than US$8,658 doesn't make you any happier. What a desperately awful place to live (sorry, Sierra Leone).
The S Money figures tell us the level of income at which income satiation occurs, but not the level of happiness (or life satisfaction) at which income satiation occurs. If happiness peaks at a fairly low level, then a low 'cost of happiness' is simply representing a very unhappy place to live. The level of happiness at income satiation isn't reported by S Money, and it isn't reported separately for New Zealand in the Jebb et al. paper. However, for Australia and New Zealand combined, life satisfaction peaks at about 8 (on a 1-10 scale), which is much higher than for any other world region. In Africa (including Sierra Leone), life satisfaction peaks at about 6 on the same 1-10 scale. The difference between 6 and 8 doesn't seem like much, but is actually very substantial (about 1.2 standard deviations). So, while the 'cost of happiness' is much lower in Sierra Leone than in New Zealand, the happiness that you would be 'buying' is much less.
Many of the news stories also breathlessly referred to the saying that 'money can't buy you happiness'. However, the original research actually finds evidence that supports exactly the opposite conclusion. Up to the point of 'income satiation', income is associated with greater happiness (again, that doesn't mean that higher income causes greater happiness, only that they are correlated with each other).
This news story is complete rubbish, and I didn't even have to get into the problems with life satisfaction measures (see here or here). It does no credit to the journalists who have simply repeated this story and the reported figures without considering what they really mean. Sadly, on the New Zealand Herald Front Page podcast, Robert MacCulloch (University of Auckland) looked at the general question of the relationship between income and happiness, and missed the real point, which is that this particular news story is trash.
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When you cite the first peer-reveiwed result... haha
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