Owned his own small plumbing business. Built a reputation of doing excellent, reliable, honest work and was certified to do unusual things, like medical gas in hospitals.
A friend operates a boat cleaning business. One harbor and all sizes. Last year he grossed $800k while netting $500k after paying out a floating crew of 5-10 guys, supplies etc.
Vastly under the radar yet a perfect fit for his boating interests.
Is this net income (after taxes, and possibly after 401k [or equivalent] savings)?
I would say that having no debt, or at least having manageable debt, along with knowing you are saving enough for retirement, and making enough that you don't have to second-guess if you can afford every purchase you make, is the real cutoff.
For example, if you don't have mortgage debt then you are probably renting. So I consider mortgage "manageable" debt, along with any short-term debt that you can pay off within a year.
The other thing to consider, is life is full of stress-inducing "things" (situations, people, material objects, etc). Often times throwing money at the stress makes the stress lower or go away. So if you make enough where you can throw money at most of your stress and not break the bank, then that would greatly impact your happiness.
well, I take "folding" to mean "putting away". Eg, putting your socks in a drawer (usually balled up together, but I guess you could just toss individuals in there).. hanging up tshirts and sweatshirts, putting away your jeans and workout clothes..
Some kind of organization is ideal, because I often live out of the clean laundry hamper and it's a chore to hunt for stuff every time you need clothes.
When I'm not living with others, this problem goes away. I start out with things in the wardrobe and drawers but as I get distracted by the things I actually want to do I gravitate towards a sort of inbox(clean)/outbox(dirty) 'floordrobe' system. It's surprisingly efficient.
Robots? Assuming you already have 7+ days worth of clothes simply hire a maid to come by once a week.
With a human you never have to worry about software upgrades, charging batteries, or wake up in a cold sweat in fear of your hired help violating Isaac Asimov's laws of robotics.
Automate doesn’t have to mean a machine is handling it. It means you don’t have to handle it. Human automation is a valid tool, in particular for things like housework.
Besides, the original question is totally boring if you allow human automation. Of course I can hire someone to do labour. No one needs that explained to them.
Why have kitchen/house/lawn/car at all when you don't actually enjoy using them?
The alternatives are not prohibitively expensive, on the contrary. You have restaurants, apartments, parks and public transport as alternatives.
It seems to me that quite some people here want to get rich to afford hiring people to manage things that they don't actually want to own. That's why I think more money doesn't make you more happy, as happiness comes from the sense of accomplishment, not from being able to command an army of workers to work on things you don't care about.
I suspect there is another level above that at financial independence, where you have enough wealth that you don't have to work. Where you can lose the fear of losing your job, or go off and work on what you want even if it doesn't make much or any money.
There might be a fine line there; humans need a sense of purpose, and for many people, purpose is tied up in our job.
If you no longer have to work, and you choose not to work because your current job isn't ideal, it can be hard to get the motivation to search for a new job. At the same time, without work, it can be hard to find purpose.
So you might be stuck in a situation where you aren't working and struggling to find meaning.
That seems like a cultural thing, though - many Western cultures wrap up personal identity in job description, but there's nothing biological to stop people from just laying out a purpose for themselves and pursuing it.
There are plenty of financial reasons, but isn't that what we're talking about? If you have enough money that you don't have to work for the rest of your life, you probably have enough money that you can spend your time on whatever act of creation you find fulfilling.
>That seems like a cultural thing, though - there's nothing biological to stop people from laying out a purpose for themselves and pursuing it.
Purpose without existential risk of failure is not usually perceived as genuine.
If you have enough money and only put a fraction of it to use, you might create things, but you're never really risking anything. I'd wager more people join the military for purpose than the local paintball team, not despite but because the former really puts your life at risk.
> Purpose without existential risk of failure is not usually perceived as genuine.
Says who? That may be associated with lutheran ethics of hard work, but doesn't look like an universal nor an essential requirement. Was Mother Theresa devoid of purpose because there's no way she could fail at taking care of people?
> many Western cultures wrap up personal identity in job description, but there's nothing biological to stop people from just laying out a purpose for themselves and pursuing it.
That's just as common in many other non-Western cultures, such as Japan, South Korea, China. All three are materialistic and work-centric. Japan has extreme work identity, South Korea is barely a notch lower than Japan on that. Both put the US - and the entire West - to shame on work-centric life (for better or worse depending on your views on such things). China today is one of the greatest materialistic work cultures that has ever existed. You see it in all of China's markets and businesses today, and the move from rural to urban to seek greater materialism and elevated work identity. It's an intense fever there, eg:
Indeed, after a point, working is not motivated by wealth - I know several cases of people that are wealthy and don't NEED to work, but they're in high-power positions and they don't want to leave that.
One of them was the president of an insurance company and he was ousted in a Machiavellian political maneuver, because he fully expected to hold that position until his health failed him or he died at the post.
You can see it in the current crop of 80-year old politicians in my country. One of them wants to go up for re-election and he would be in power until he was 90 years old...
Personally I have so many projects I want to work on (where the motivation is making a Good Thing rather than getting rich) that I'm pretty sure that wouldn't be the case for me. But I can see it being the case for others.
But just because you don't have to work doesn't mean you can't work.
If you have financial independence, you have the choice to work or not, and if you do work, to do whatever work you find most meaningful.
Without financial independence, you have no choice but to work, and for the vast majority of people without financial independence there isn't much choice of what kind of work to do either.
You can have as much purpose as a cat or you can build bridges, write poetry, study philosophy, invent new things, and help the poor. Your choice might not fit in with how you saw yourself but that's a higher level problem.
That's certainly the line that society wants people to believe. A lot of people want a job that gives them a sense of purpose, but I'd be surprised if as much as 2% of the workforce think their job gives them a sense of purpose right now. I think we're just lucky that the majority of people don't question whether or not their job is ultimately necessary, and choose not to bother when they realise it's a waste of time.
That's a level you can contribute to by being frugal. It's tough to get to but easier than you'd think. The barriers to moving to this level tend to be as much social and psychological as financial e.g. families, mortgages, need for security.
The next level above financial independence is financial freedom (you can just get whatever you want, from shoes to houses) - off the top of my head I would guess this is probably around the 0.01%, which would be about 32k people in the USA. As an example of freedom, these people can buy nationality and avoid immigration limitations (going rate is ~$1-5m).
The article is way off just comparing salaries. There are 3 social classes in terms of having a meaningful lifestyle distinction - those who have to work for someone else, those who don't, and those who have full freedom to decide where they go and what they do each day. All they did was compare a bunch of people in the same social class (somewhat shockingly the Romans considered this equivalent to a slave class).
Who is happier, the person who always wants, and always buys what they want? Or the one who learns to not want so much, and is therefore always satisfied?
Once you can afford something that was way out of reach before, you buy it and after the first few moments you realize it is not as great as you expected. Do this a few times, and you'll learn what is important. The more wealthy people I know do have a slightly above average car and house, but IME the biggest difference is that they have far more extreme - both in amount and in price - experiences, i.e. weekend trips, fine wining and dining etc.
Maybe financial independence isn't for you. It doesn't suit most people in fact - most choose the greater financial security and predictability of a decent job. This is very helpful if you are an entrepreneur as you can hire people much smarter and more able than yourself.
Higher earners tend to just upgrade and spend more (apartment, clothes, restaurants, hotels etc), and aren't really living that differently - that lifestyle can certainly soak up maximum income achievable in a salaried job.
I think this is what the article inadvertently pointed to, that the higher salaries could lead to a sense of frustration that nothing really changed.
>Is this net income (after taxes, and possibly after 401k [or equivalent] savings)?
No, it's before tax income.
Income Variables. Participants were asked to report monthly household income rather than yearly income to facilitate responding. Respondents were asked the question, “What is your total monthly household income in [local currency], before taxes? Please include income from wages and salaries, remittances from family members living elsewhere, farming, and all other sources.” Households were defined as a person’s home that had its own cooking facilities, which could have been anything ranging from a one-room flat to a single house.
It's also worth noting that it's normalized to household size -- income divided by sqrt(household size). So for a married couple with two children -- a number close to my own heart -- the 105k satiation point would be real dollars of 210k/year.
Dollars are also represented as International Dollars, which are adjusted for the local purchasing power, expressed in units equivalent to one USD in the US.
That makes sense. It's a lot and doesn't go very far in the Bay area but it makes things better than just 105k-120k for a family of 4 which can work but can be stressful.
Absolutely. Money saves time and stress. You can pay people to do other things for you. You can afford to take a vacation. You can also probably afford a temporary job loss (unless you are mortgaged to the hilt). You can afford to start a startup in some cases. Still I am pretty sure you can find people who make $250k that are miserable, possibly because of the working conditions.
On the other hand, you might have a stressful job to actually generate that $200k, and you might have to live somewhere like SF with very high cost of living, and your commute might be stressful, etc.
Congratulations! That is one of life's greatest milestones -- and yet we don't have a common term for it.
I'm my parents' last child and am soon to graduate Grad school and enter 'the working world'. I can definitely feel their relief in knowing decades of parental sacrifices and obligations have paid off and finally come to an end.
I would not be surprised if you were exactly right with this: I would say that having no debt, or at least having manageable debt, along with knowing you are saving enough for retirement, and making enough that you don't have to second-guess if you can afford every purchase you make, is the real cutoff.
Many people I have talked with about happiness are really talking about non-anxiety. Basically defining being 'happy' as having zero anxiety and being 'un-happy' as worrying about (anxious) one or more things.
In that model not having debt relieves future obligation anxiety, owning a house addresses 'where will I live' anxiety, savings address 'what if something comes up' anxiety etc.
If that model held true for the survey participants then once you had enough income to offset your anxieties you would not get any more 'happy'.
What a sad indictment of modern American life that our baseline for happiness is "not destitute". Really, I think that's telling, and as a millennial with lots of student loan debt and friends in a similar boat, it's not surprising one bit.
Because it can be. Because we’re the richest country in the world and yet for some reason we force people into bankruptcy because they didn’t have health insurance on the day they had a medical emergency.
I want:
1. People not to have to worry about seeing a doctor because they can’t afford it.
2. People not to have to worry about having shelter.
3. People not to have to worry about where their next meal will come from.
4. People to be able to provide a solid, basic, decent life for themselves and their families.
5. People to be able receive an education without it being onerously expensive.
Among other things.
I don’t think these are intractable problems for a civilization that sent people to the moon, perform open heart surgery, and deliver energy consistently and safely to millions of people.
You actually seem to be pretty much in agreement with the person you originally replied to. I only read you as calling out a few more specific examples of what causes anxiety but it’s completely possible they are encapsulated in quote “etc.”.
My point is that if those needs are met, then happiness becomes a question of what personally makes you happy and not just what you need to not be homeless.
Consider that maybe happiness isn't about "personal happiness". If all that one needs to be happy is to not have stress, why question that and desire more? By questioning it, you're undermining the happiness. The goal shouldn't be to raise the happiness bar, it should be to lower it so that more people can experience happiness. Why should only those with significant means beyond the bare necessities have access to happiness?
If you're always questioning if you're happy enough, you'll never truly reach happiness.
So one obtains shelter, and healthcare, and an education, and all those things you listed. And they're still not happy? If cake is the baseline, is more icing going to make that much better?
And that was exactly my point as well. Once you are no longer anxious about those things, then, to use your own words, happiness becomes a question of what personally makes you happy.
I have observed that people who reach that state aren't looking for "more money" so much as they are looking for something that is more fulfilling for them personally. And the article observes that as well.
Yeah, I don' think that statement holds up to scrutiny at all.
That said, I wouldn't be surprised if the median salary in the US was higher than the median salary in Luxembourg/Ireland/Singapore/Brunei/oil-rich-middle-east. Along with a lower tax burden resulting in higher net pay.
Epicurus, the Greek philosopher who lived ~3000 years ago, figured out that key to happiness was having somewhere to live, friends around you, someone to have sex with, and lots of food. He summed it up in a line: "Not what we have but what we enjoy, constitutes our abundance." The notion that baseline happiness is equivalent to 'not destitute' really isn't modern, or American.
I don't think it's just that that's our baseline, I think it's a ceiling. I think they're saying "if you're not destitute, more stuff won't make you happier". Overall, in the long term.
I feel like there’s some Maslow’s heirarchy things going on here. Once you get over the non destitute thing you can spend your energy on being fulfilled.
>Many people I have talked with about happiness are really talking about non-anxiety.
This sums up pretty much.
It is not the Money ($) i need. But what I think is rather basic things to live.
A place called Home. It doesn't have to be free, it could be even be rented that I dont own it. But it should be affordable, without being anxious about Landlord kicking you out, or hike the rent to a ridiculous level so you cant continue to live. It shouldn't take your entire working life, 25 - 30 years of continuously working and giving 40% of your salary, what if you are sick in between this 30 years? What if you were fired? This whole living burden is what causes people anxious, and hence do not risk into taking another higher paid job and move up the ladder. The stagnation of wages.
I dont need a house, just a small flat, 150 Square Feet will do, with an open kitchen and a small toilet and shower. The whole flat is probably the size of many Americans's houses bath room. Hopefully along with Water pipes that doesn't include heavy metal like lead poisoning, hot water system that could shower longer then 3 min in Winter. Is that too much to ask for? I am not calling for free housing, but one that is affordable.
Food is Cheap, I used to live in UK with less then 1.5 pound budget per day. Good Quality clothes are actually not expensive in terms of production cost, most are rent, labour and marketing. And Medical is affordable if you have insurance.
So Food, Medical and Clothes are actually easily affordable in most developed countries. ( Name be one place that it isn't ) As long as you have a job. Any job in fact, even labour intensive job or lower end jobs could easily afford all of these.
So out of all the basic needs in Maslow thoery, shelter is the most expensive, most unaffordable, and also most anti competitive. But all government are very happy with that, as it is basically modern slavery.
depends on how that person got to making 500k or more ... they could be working like crazy, and taken out tons of loans to give their family a fancy life, thus being miserable and stressed out (golden handcuffs) ;)
If the debt is for a huge mortgage owning a 10 unit apartment building, but you are making a couple hundred bucks a month in net profit... then you do not feel pressure as compared to someone who took out a 30k loan to build a swimming pool.
These discussions about "income" are so skewed towards a certain type of income, namely wage income.
The people conducting these studies have their own biases: justifying taking other people's wealth via forceful means such as taxes.
They're skewed towards wage income, because that's how the majority of people in this country make their living, so it's automatically more relevant.
Just because 1-2% of people make their ends meet with their wealth working for them doesn't mean their presence requires them to be represented with equal weight in research.
Not sure how this isn't self-evident to you.
> The people conducting these studies have their own biases: justifying taking other people's wealth via forceful means such as taxes.
Uh-huh. Taxes are theft, government is bad? Are you sure you're not the one with the biases?
you can choose to denounce your citizenship and stop paying taxes. but your also need to leave the country, and live as a stateless Pirate. and any state enforced rules don't apply so you better arm yourself to the teeth and hide from any roaming military.
Having spent some time in about that bracket in an average cost-of-living area (earned slightly more, but I'd spent the previous few years being a broke grad student), I can attest that it felt amazingly rich - there were few things I would have done with more money. My life satisfaction came from my job, my relationships, and my hobbies.
There's a lot of evidence supporting the general conclusion that happiness is either logarithmic in income, or asymptotic after a point. Just blowing it off as "a joke" doesn't hold water. There's also considerable evidence that things like friendships, family, good relationships with neighbors, etc., are much more important contributors to happiness than income.
We're talking about human happiness, the capacity for love, freedom, and self actualization. Happiness.
We're not talking about buying overpriced liabilities such as fancy cars, furniture and clothes.
I make over 150k and it's awful working 160 hours a month.
Think about why this study is messed up:
Wage earners spend the Best part of day typically indoors, taking orders from another person.
Wage earners send their children to be taken care of by strangers.
Wage earners send their kids to the zombie factory (public schools)
The fact is that someone with a few million can:
- take care of their own children/babies
- educate their own children
- take care of their aging parents
- take care of sick relatives
- can explore the world
Don't tell me that having 2M in the bank will not make you, your family, and neighborhood FAR "happier" than someone making 300k in wage slavery.
I can tell you for a FACT that making that much money (millions) will objectively lead to higher quality of life for people and their families.
I'm personally working hard now to accumulate several investment properties and live free for life so that I can retire before 40 so that:
- I can raise my kids
- help parents, family, friends
- explore world and learn
- focus all my free time on healthy living
- get best medical treatments
You damn right it will make me happier to be able to do yoga 3 times a day, raising my kids and also building cool shit without Having to answer to a boss.
You know it's true that lots of money makes you immeasurably more fulfilled. Don't listen to socialist lies that you only need some bullshit 105k (<75k after tax)
I'm totally with you here. But we need to realize very feel people perceive/realize the world under these terms. Most people feel like they are destined for a job their entire lives and that extreme wealth are for the few lucky/extraordinary other ones. Even in an YC forum.
The perception does not matter in as much as it is actually aligned with reality. Which I suspect it actually is if you're not one of the initially rich.
Few can produce ground-breaking ideas or are lucky enough to actually earn a million dollars quickly (as opposed to stealing it).
I agree this study is BS. They have no one in their data who has $5 million+ in the bank and has F* you money... because those people are supposedly outliers.
I would be an order of magnitude happier if I could work on my own projects instead of working for someone else. There's a reason people do side-hustles and punish themselves trying to get something going outside of their normal $100k salary... it's for the hope of having true financial freedom. The study is correct that $100k vs $150k doesn't make much difference at all... but if I had $1 million in a bank it would be a huge difference.
well I have had all this opportunity (raise my kids, do charity, do yoga 3 times a day), but for me, a nice job (be it for my own company or for someone else) brings more happiness.
the first things become very boring, very fast. i am speaking for me.
if you look at most millionaires, they continue working full-time. it just needs to be a good job, of course
Socialists were the first and the main critics of Wage Slavery. More recently, you have the Situationist movement, which coined the slogan "Ne Travaillez Jamais!" (Never Work!) and has a body of work criticizing this model (both in capitalist and in marxist-leninist countries).
Anyone saying you "only need 105k" is not a socialist.
I did - seriously. Think about it: Single, living in Pittsburgh (reasonable CoL area). I had a cute apartment that I enjoyed coming home to, went running in gorgeous parks or cycling in lovely outlying hills almost every day, worked my butt off at a job that was challenging as hell that I enjoyed, and was putting away enough in savings that it was clear I was on a good trajectory for long-term FI. It was great.
Oh, and the better kicker: I was even happier in grad school when I was earning $24k/year. One of the happiest times of my life. That doesn't apply to everyone's grad school experience, but for me, it was awesome. Lived in a shitty apartment above central square in one of the more expensive regions of the country (hi, Cambridge, still love you but glad I don't have to deal with your housing market). My roommates and officemates at work have become life-long friends.
I will indeed tell you that having 2M in the bank has been a much smaller factor in my happiness than almost anything else, particularly the effect of the people in my life. My day-to-day happiness is much more affected by whether I got a good night's sleep, whether my children are healthy, whether my wife and I are communicating well, whether I'm healthy and able to do the things I like or whether I've once again managed to injure myself pretending I'm 24 instead of 42. :-)
(I'm not unsympathetic to the desire for FI, btw -- quite the opposite. But I've noticed that I want it primarily in a theoretical way, for the comfort in knowing I could quit, not because I actually want to quit. Yes, I'm lucky that I have .. multiple .. jobs that I absolutely love, but I've also chosen to accept a 66% paycut to work in a job I love instead of blasting to FI in industry, and I'm good with that. Sometimes it annoys me and I go do some consulting or bitcoin mining to help make up the difference. :-)
This cutoff where more money doesn't bring any more happiness ... maybe it's true, maybe it's not. Personally, I would like to do the experiment and then find out.
The numbers are reported as total income / sqrt(household size) (from the supplementary material -- i.e., from the actual paper, since the main paper is a relatively short letter).
Kind of makes sense to me, once you get to a point where you're set. That is you can easily afford the main things (housing, food), plus the extras (electronics, vacations, hobbies) you need a much larger income to "move the needle" so to speak.
You still need to work 40 hours a week or whatever, and only get X weeks of vacation. Having a 180K salary instead of 150K doesn't change any of these obligations, or change your life in any significant way, you just put away more money into the bank.
Of course, stepping from 40K to 100K in salary is practically life altering. Unless you absolutely suck at budgets you can easily get out of debt and start having real vacations. You can afford hobbies, etc.
That's one thing I've always wondered. Unless you can reach super high incomes, the "buy/rent a jet" incomes, your life isn't that different from "all the rest." You still commute to work daily, have a house, etc. I mean sure, the house and car may have higher price points, but the lifestyle is still the same. Maybe I'm wrong and all those luxury brand commercials are right, spending 30 minutes (or however long) per day in a 80K car is so much more rewarding than spending those 30 minutes in a 40K car.
There are still lots of QOL improvements to be made above, say, $150k. It may depend a lot on if you have kids and where you live. This is especially true when compounded with typical retirement savings and kid expenses.
For example:
- Housekeepers who come often
- Paying someone to manage the yard
- Private school and college funds for kids
- International vacations for the whole family
- Paying for family to visit you if you are working adults
Definitely depends heavily on region and your family situation. Using just actual dollar values makes this discussion difficult. A $150k lifestyle in the Bay Area with a spouse and 2 kids is vastly vastly different standard of living than $150k as a single dude in an apartment in a suburb of Atlanta. In the Bay Area for example, you’re not doing ANY of those things you listed making just $150k.
I've brought this up multiple times before, but even on 150k in the bay area, you're still living well. After tax, and rent at 4k/month, your remaining pay is greater than the gross income of most mid level software engineers in Europe. If you can't manage to survive on that, you're doing soemthign wrong.
The normal explanation is that the happiness derived per dollar decreases with every dollar.
The idea being that a couple making $200k jointly per year spending $800/mo on a maid gives them far, far less happiness than a homeless person getting their first warm meal and shower this month.
A working couple with young kids getting a regular maid for the first time can be life changing. It's not the same as your homeless example, but may be easy to underestimate or trivialize.
I second the housekeeper. I spent $40K on mine last year, and it was the best thing I have ever spent money on. I've done dishes once in the past year, and I generally come home to a made bed. Imagine getting all of that, but then know that you are providing a near livable wage with flexible schedule. She can be a good mom and make money.
There is also a huge difference between $150k with no/manageable debt, and $150k with a lot of debt. Some people can't figure out how to budget even with a high income. "I deserve this, I make good money/work hard/whatever" is a dangerous statement.
Just one thing: you don't need a "buy/rent a jet" income to not have to commute to work daily. Retiring early appears to be surprisingly easy with decent income and good spending habits. Taking a year or two off even more so. Eg with the 80k (the more expensive car you mentioned), you can live handsomely for 4+ years in South-East Asia or Eastern Europe.
>Just one thing: you don't need a "buy/rent a jet" income to not have to commute to work daily
$3mil let's you live on $50k/year for 60 years. And realistically, more than that due to interest - 2% of 3mil is 60k, so if you have it well-invested you could live off it with $50k/yr indefinitely.
The amount of principle required to sustain $1 of annual real consumption in perpetuity costs between $25 and $35. $50 is far beyond enough - you'll die with far more money than you started with.
That is presuming you weren't essentially forced to pay this early to help your kids in the first place. Say, housing, education (incl. extracurricular), incidentals.
The truth is, most people can barely afford to save due to aforementioned high costs.
With that kind of money (i.e., so much money you can risk not earning anything for 10 years straight) you can open yourself up to a higher risk-profile.
Stocks for example have averaged, inflation adjusted, about 6% in the past 50 years. 6.6% in the past 60 years and 8.2% in the past 40 years, for comparison. So let's say 6%. This is inflation adjusted, and dividends reinvested.
At that point you're earning $180k a year. Even if you spend $100k, you'll be accruing money over time while maintaining purchasing power. In 50 years, you'd add another $4m of inflation-adjusted wealth for example, but that's wildly underestimating reality as that doesn't figure in the compound effects of adding $80 to your wealth each year.
> Of course, stepping from 40K to 100K in salary is practically life altering. Unless you absolutely suck at budgets you can easily get out of debt and start having real vacations. You can afford hobbies, etc.
I live in the Netherlands where 40K is quite a reasonable income. I really dont get why you would need 100k to do the things you need. Perhaps people need to become a bit more frugal?
People here in general don't have any debt (except for mortgages) and a vacation to an Asian country is 1-2k/month'(yes people sometimes do take 2 months vacations here). Even a month of Australia is only 3-4k. Hobbies? I don't know what kind of exotic hobbies people have in the bay area but even flying drones (relative expensive) is relative affordable if you get started with a cheap Chinese drone before you buy an Expensive one.
Rent, family size, location, etc probably makes a huge difference but I really don't think 100k is the magical number that you need to become happy.
I guess that is the whole point? I.e., you stop needing to be frugal and/or don’t have to count € when spending money on basic things like food or transportation. Also, more things become ‘basic’.
Another point that makes a difference is that if you ever want to get a mortgage and buy a house, the maximum the banks will give you is a constant multiplier times your annual salary. In Ireland it’s 3.5x — good luck trying to buy a house on a €140k budget in Dublin.
In my case, my total effective comp increased about 8x in the last 5 years after being corrected for taxes and CPIs of the countries I lived in, and I kind of concur with the OP in that it’s more of a log curve than linear. Things get progressively ‘easier’ but less lifestyle-changing over time.
> the maximum the banks will give you is a constant multiplier times your annual salary.
The multiplier isn't constant or fixed but dependent on interest rates. So there are certainly multipliers that work in certain periods, like about 4x now in the Netherlands. But that'll go down once rates rise, it's only a constant insofar as the long-term interest rates appear somewhat constant (or rather, sticky) in a given period of time. At the end of the day they look at ability-to-pay, and interest rates factor in to that, which are variable.
A month in Australia for 3-4k? I want a cost breakdown for this. Say you get a deal and airfare is $500, that leaves about $100/day for the month. You could probably find a hotel at that rate, but then you're left with nothing to spend on food and activities. What am I missing? Friends and relatives who'll let you stay with them?
I believe it would only be possible to maintain yourself as a backpacker on $100 per day. This might be lower in the bush but true in most urban locations in Australia.
Van rental is $40/day. Leaves a budget of $60/day for fuel, food and fun. Quite easy if you prepare most meals yourself and limit purchases that are prohibitively expensive in Australia, e.g. alcohol, cigarettes, taxis, restaurants, etc.
Exactly, AUS is an overpriced polished turd. It's called "land of plenty" for a reason... plenty of sheep happy to get ripped off. So why not milk them for their cash...
student loan debt. there are many that graduate with $20k-$100k+ of debt. I'm frugal/cheap, got by with 30k salary in big city a year out of school was tough. Many coworkers that were more normal in spending habits were breaking even or using savings to make ends meet.
At 30k salary, I was able to save $400-$500/month in Boston. It would have been near zero if I had student debt (6%+ interest). Frightening thinking back, but I was always one major repair on my car or mid level health issue away from spending an entire years worth of savings.
The obvious fix is that graduating shouldn't require someone to go into 100k+ debts.
The entire cost for my graduation is probably come in under 1000€ total, 800€ will be tuition and the rest directly university related spending. (There is an additional 2k€ spending on stuff like a new laptop, software, etc. that wasn't necessarily required but made things easier).
Fixes are obvious, implementing it is the hard part. The propaganda for everyone to get a college degree is ingrained into the system. This sprouted countless for profit colleges charging obscene rates of $20k-$30k per year.
Another obvious fix would be to spread good jobs around the country so we don’t have such concentrated HCOL cities. That’s as easily done as the suggestion of lowering cost of graduation to your sugessted price point. We have an entire political party against free or near free education, which means more taxes to pay for it. I don’t fully disagree with some of their stances. Many degrees don’t provide financial value, and can be learned online or have meet ups to discuss topics. A college degree for a college degree sake is what’s happening to much of the populous.
Obviously it wouldn't be easy. The US education and employment system would have to ease of college degrees. Where I live, about 80% of my class had a job by the time they graduated secondary school. 20% went on for a higher education afterwards, of which only about 30% (or 6% of the original class) moved into College/University (the difference is muddy here).
And at every step, people jumped straight into employment from school.
US High School should focus on that. If a student graduates they should already have a job offer signed, that should be their primary target. If they don't they should be moving into higher education. College and other Institutions should have the same goal.
> I live in the Netherlands where 40K is quite a reasonable income. I really dont get why you would need 100k to do the things you need. Perhaps people need to become a bit more frugal?
What I have found is that the majority of "happiness from money" comes from the financial security, not actually spending the money. The reduction in stress going from a chronically broke PhD student to having 5 years of living expenses in savings is huge.
It's the knowledge that you can immediately solve almost every problem that pops up with a bit of money, and figure out the details later. Missed your flight? Book another one. Car trouble? Call assistance and take an uber. Lost your job? Take a short vacation and then hit up your network on LinkedIn.
And in most countries in Europe, you can feel secure with a lot less in income/savings than in the US. You don't need to worry about what your health insurance does not cover, probably don't have any student loan debt - and probably don't need to worry about a college fund for kids, can commute by public transport in cities, have better unemployment protections, and so on.
> It's the knowledge that you can immediately solve almost every problem that pops up with a bit of money, and figure out the details later. Missed your flight? Book another one. Car trouble? Call assistance and take an uber. Lost your job? Take a short vacation and then hit up your network on LinkedIn.
And then your expectations shift, you require more expensive things to acquire that base level of prosperity and satisfaction, and you have a whole new set of problems which feel just as stressful, relatively speaking.
This is probably not true based on what I have read. Of course some people get stuck on a hedonistic treadmill, but most people don't. I think when you can take time off from work and afford safe living and food is no longer a concern, indulge in hobbies, that is enough for most people to be happy. Studies I read say that experiences will provide longer term happiness over "stuff". You can always jump off the treadmill of needing the next better possession.
I agree except with the "most". I see far too many people driving new BMWs and Mercedes that I know on average make sub $100k salaries. I'd say most are in the treadmill, but definitely "many" are happy living within their means.
Just an edit: I think it goes back to our shortening attention spans and modern conveniences quite a lot. Being bored and comfortable with it at some level is an important life skill.
This seems to be a common assumption but I have not found it to be true in my experience at all. My spending habits appear stagnant and mostly rooted in my childhood experiences, and it's a continual battle to spend more.
There's that idea that giving poor people money will have them just spend it gambling or buying drugs, doesn't seem to be true, either.
A lot of these just sound like justifications to pay people less, or an odd way to shame people for wanting something material. Money is power, and power is always valuable.
I am speaking about spending habits, you seem to be talking about relative cost of life events. I don't have kids but kids are usually not what people are referring to since kids are a cost increase for all parties, rich and poor.
Basically, if I usually buy a certain Ikea table if I need a table, I still buy that Ikea table, and it still feels too expensive to me, regardless of the fact that I earn a lot more now. If I get an apartment that I like, I don't have any desire to get a more expensive one. I only want a more expensive one if the current one is really bothering me for some reason. I'm still uncomfortable with purchases of certain amounts, or buying things for myself in general (particularly, clothes and furniture). It's physically painful to spend certain amounts of money.
There's a set point in my brain for how things are supposed to cost, and that point is very hard to move. I.e., it takes actual effort to explain to my brain that I can spend more now. There's nothing automatic like the general wisdom suggests.
Getting to that point of equilibrium takes some spending, however. Lots of college debt, rent, moving expenses to get where you want your career to be, etc.
I don't know how health care works anywhere else, but health expenses can range from $250 for a standard checkup, which I just got (note: it's supposed to be covered for free, but apparently insurance companies are now rejecting claims willy nilly in order to save money) to $10,000 for delivering a baby, to astronomical numbers for anything else.
It really leads to a persistent feeling of danger, so yes, making 100k instead of 40k could literally save your life, or at least keep you from being an indebted loan shark victim for the rest of your life.
> It really leads to a persistent feeling of danger, so yes, making 100k instead of 40k could literally save your life, or at least keep you from being an indebted loan shark victim for the rest of your life.
Right, that problem just doesn't exist in the Netherlands.
Basically everyone pays, I would guess, around $150 a month median for insurance, with a standard deviation of probably around $25. That covers anything life threatening and quite a bit more.
There's a bit of co-pay on things like dental and there's a mandatory own-risk of about $500 a year on certain procedures.
If you're about 10% below the median income in the Netherlands you get an insurance subsidy which tops out slightly above $100 a month.
And also, most importantly, even if you lose your job you are still 100% covered. If you get some weird condition that requires a dozen operations and expensive medicine, it won't have any effect on your payments either. There's no such thing as denied coverage due to preexisting condition or anything silly like that - essentially if you are a lawful resident you can just go to hospital and get treated for free, regardless of your financial status.
The point I'm trying to make here though, which I lightly implied, is that regressive tax systems and distributive justice lead to overal higher happiness.
i.e., if there are diminishing marginal returns of happiness from money, it makes sense that Total Happiness in a country is optimised through a substantially regressive system. That's one of the interesting things about it.
> regressive tax systems and distributive justice lead to overal higher happiness.
I suspect by "regressive tax" you mean "a tax rate that increases as the amount subject to taxation increases" . Wikipedia defines "regressive tax" to be the opposite one- where the tax rate decreases as the amount subject to taxation increases.
Or you're making a fairly non-obvious and interesting claim!
I wrote that comment a bit carelessly. the income tax itself is progressive, but things like VAT are regressive and ultimately make up a far greater share of tax collected.
the EU as a whole actually has a more regressive tax system than the united states (although they spend the proceeds very differently), but in the netherlands, the regressive and progressive taxes essentially cancel out so that overall taxes are flat.
I looked into the Dutch case. It indeed appears that there's no progressive effective tax, but rather a flat tax. Each group pays about an equal share of the tax burden as their share of the income.
The study published in EBS is a great start, but it is omitting some important elements. Taxation of cars is left out, despite them being a luxury good whose costs are carried by the more affluent class. Transaction tax on real estate, same thing, omitted and mostly a rich-people thing. Real estate taxes, same thing. Nor are capital gains taxes or company's income taxes included, thereby omitting income effects from entrepreneurship and ownership in companies, these capital effects and its taxes of course scale with affluence.
What it does include on the other hand, are various insurances. e.g. insurance to unemployment (including the 'final unemployment': pensions) and sickness. These aren't really taxes per se, but rather individual insurances earmarked per person.
Finally, it hints at combining tax rates with redistribution. For example, healthcare subsidies get deducted from medical insurance premiums in the study. But it's only one of many different forms of redistribution. They don't make similar deductions for rent subsidies (which are quite substantial). I felt that was lacking, either include it all or nothing at all.
Which brings in perspectives... this study essentially adds sales tax to the traditional income tax as a way of determining collective burdens, which is super interesting. But the authors do not change the denominator from income to something else that's related to sales tax. So it's a claim about income+expense tax, as a percentage of income. Rather than say taking all your taxes, including those related to expenses, as a percentage of total expenses. If you did this, you'd see tax systems become progressive again, as rich people have a higher savings rate (i.e., income that's not spent, and thus not hit with sales tax). The authors do mention in the beginning of the article, but don't discuss the implications after. If you wanted, you could see this as a form of deferred taxes.After all, un-spent after-tax income isn't taxed with sales-tax, until it's spent. When its spent, it's taxed, removing the regressive element. And if it's not spent but saved/invested instead, you don't pay sales tax, but you do have to pay tax on capital in the Netherlands. Which is exactly the tax that this study left out!
So, extremely interesting and it's definitely the case that we can't blatantly call the Netherlands progressive without sales tax context. But to make the opposite claim, to say the Netherlands is regressive or flat, probably can't be made as easily either. It really depends on your perspectives.
This is the big mistake people always make: focusing on the tax rate. Wake up. The tax rate does not matter. At all! What matters is the end result: your buying power. How much good stuff (goods and services) are you getting in return for the time you spend working? THAT is what matters.
Only if you plan to live in that country for the rest of your life, and you're absolutely sure that the economy will never change, so your buying power always stays the same.
Had to get a TB test prior to starting a new job. Everything was covered for me but there's the cost of health care itself in the US plus the little cuts that add up to. If can't get validation, parking is expensive. A little sign above the check-in desk said that there would be a $25 charge to fill out worker's comp forms.
At least they had movies on and weren't blasting Fox News.
It's probably important to note the Netherlands has a high degree of decommodification (i.e. a lot of state provisions), with the US having some of the lowest in the developed world.
The result of that is that distributive justice is a lot stronger, and the impact of a regressive tax system is magnified. A median salary in the US might generate unsatisfactory, whereas in the Netherlands even a below-median salary has quite good outcomes because of this.
For example, the median healthcare insurance expenditure in the Netherlands is about $1.5k a year, and healthcare outcomes are quite good. Tuition fees in university for undergrad and graduate degrees are about $2.5k a year across the board, with a tiny fraction of students being the exception like dental or piloting schools. Student loans are currently at 0% and set to go to 1% next year. Tuition-waving subsidies exist for children of poor parents. Childcare is heavily subsidised. Traffic policy and public infrastructure is such that a car is not necessary, and employers tend to reimburse all public transportation costs for most employees. Lastly, it just feels like culturally the Netherlands is slightly more sensible with its consumerism and interest in toys. Most seems to be spent on things with higher lifetime values, meaning the effective value of money seems to do a bit better, but that's just intuition from anecdotes.
In short, when you get your after-tax income, you tend to be able to spend a very large portion of it on things you don't really need, but just enjoy. Nice food, vacations, hobbies. There just isn't an need for a $100k salary for your kids to go to a nice school, have childcare or a good insurance, or a car to get your family places. Nor do you need $100k to cover interest payments + principal on 6% student debt of $100k.
That having been said, your numbers on Asian/Australian vacations definitely cater to a certain tourist. I've done a month in Asia on 1k, but I was 19. Similarly I could do 3k in Australia, but I'd be a certain kind of vacation. You AirBnb and eat some simple Asian takeaway like food and travel by bus. That's not everyones idea of a holiday. It's a different vacation from getting taxis to hotels and eating in restaurants.
Those numbers are not true at all if you have family, or even 2 people where one earns little.
Vacation in Australia? For 4 people it's impossible to spend less than 5000 euro on just flight tickets alone. Expect to spend another 1500/week if you do it very, very frugally. And that's exactly what you should do - travel half around the world to have a mediocre vacation just to save a bit of cash on site.
To explain - I am backpacker, will never travel any other way (family or not), avoid any luxury on purpose (reduces the intensity of whole experience) and surviving with 500 USD/month in India for months was a breeze for me. But your numbers are just plainly wrong. You need tons of cash if you want to travel to exotic places, even really cheap ones (ie remote Indonesia).
Travelling properly is great but needs quite a lot of cash, unless you can afford to spend months doing it every year, which is unrealistic for most of us. Plus many of us prefer to have 3-4 shorter vacations per year, but still travel quite far and have intense experiences.
Then you have sports - I am not into snobbish activities, but I also don't chose sport based on price of equipment. Paragliding? More than 3000 euro for a started pack of used equipment (new would be more like 4k). Ski alpinism? Maybe 2500 euro for skis, boots, avalanche airbag. Not even going into clothing. And those numbers are for a single person.
Oh, and you want to support your parents because they live in a EU country where 500 eur is quite OK salary? You need cash.
You want to save for the pension, create a cushion for rainy days, retire early, invest, whatever? You got it, you need cash, the more the better. I have not met a single person who wouldn't like to do that if they could.
Simple, sad fact is, exciting life in many cases costs quite a bit. One should optimize since plenty of things can be experienced almost for free, but this strategy will get you only that far. If you are happy with little, great for you. I have certain plans and expectations from life, and they require cash, tons of it.
I also live in the Netherlands and feel the same. I make less than 2k a month and already don't know what to do with my money. That being said, it probably helps if you have a reasonable healthcare system. If you get ill in the US, you're basically screwed.
Just a house for your family will eat up all of that 40k here in Toronto (that’s basically interest-only on the average $1m house in the suburbs). You’d have nothing left.
Although we still live very well in absolute terms, a lot of people I know have and will have a worse quality of life than their parents did, despite being more successful and earning more money! It’s kind of depressing.
So, I think a difficult aspect of frugality is that is borders close with cheapness. Cheapness is a problem, and imagine if all your customers became cheaper and you lost a few. Well, you would have to become more frugal which means firing providers of services. It becomes a negative trend.
I live near Seattle where $100K is probably a reasonable income (give or take $30K).
Now, I make more than that by a large margin where my cash target side of the house is roughly $300K not including stocks. I live pretty well, so what do I do with the extra money?
Well, I trickle down. I have four employees for my house and land. When you not only provide for yourself, but you provide for others then I claim that there is extra happiness to be had. My house keeper, for instance, makes $40K with an average of 20 hours of week, flexible timing, and a monthly stipend for benefits.
You can buy happiness, but only if you spend it on people rather than things.
>I really dont get why you would need 100k to do the things you need. Perhaps people need to become a bit more frugal?
No one said you need it. They're saying at that income a lot of pain points go away. As others pointed out, much of it has to do with a reduction of stress. A lot of small problems can be solved with money. It doesn't mean that people will solve them with money - but knowing that you can eases the brain quite a bit.
And then of course, there's health care. With good employer paid insurance, the deductible for a couple is about $3300. So if you have any kind of chronic medical condition, you'll pay that much each year at least. If your employer did not pay and you had to purchase it (e.g. you are self-employed), it'll cost perhaps $500/mo for the premium, with a deductible anywhere from $6000 to $10K.
>Perhaps people need to become a bit more frugal?
There is that as well. People here tend to change their smartphone every 2 years, and always buy a brand new expensive one. They'll pay a pretty high fee for cable TV. They'll insist on 50-100 Mb/s Internet, when, in my experience, 15Mb/s was fine for a couple (no degradation in quality for services like Netflix). They'll generally pay $15-30K for new or recently new cars. And many people change cars too often.
It's cultural, I think. In the US, we are very consumer driven. We are bombarded with propaganda constantly telling us that the one thing missing from our lives is whatever that person is selling. Some of those people are selling credit. That wouldn't be so bad, except that Americans are also highly competitive. We hate losing, and someone else having more stuff than us is losing. Our entire measure of the value of a human being is their wealth.
Consequently, many Americans spend nearly everything they make on stuff that ultimately contributes very little, if anything, to their contentment. Since buying those things didn't actually make them happy, they figure they need more money, and more debt, to buy more things. It's a trap we've created for ourselves.
Oh, and our health care system is ridiculously expensive.
> but I really don't think 100k is the magical number that you need to become happy.
-> Most thorough study yet about the subject comes out, says 100k is the magical number.
You: Well I'll keep believing my thoughtless, data less opinion anyway.
Me: Rolls Eyes
Sure, you can be skeptic, but at this point, if you needed to take a decision based on this, you'd do better go with the 100k magic number, the odds are definitly more in its favor then your belief.
if you have $10mil, you're not burning much more than ~$400k a year if you're smart. a charter flight across the continental US costs at least $6k. so you could definitely do that from time to time, but if you do it even once a month you are blowing almost a fifth of your yearly budget on transportation. you are probably gonna feel that.
edit: the figure I used is just the cheapest possible aircraft you can rent. if you actually want a jet, you are looking at $10,500 and up, which would make your monthly flight eat more like 32% of your budget. most people are going to find this untenable.
I've seen it suggested elsewhere that there is no saturation point, it's just that the relationship is logarithmic, and truncated logarithmic datasets look asymptotic.
...which by the way I find extremely plausible, just judging by the fact that most of our senses (hearing volume & frequency, light intensity, etc.) are perceived in a logarithmic way.
That being said, my personal opinion is that money does not make people happy, but it definitely prevents a lot of causes of unhappiness.
> That being said, my personal opinion is that money does not make people happy, but it definitely prevents a lot of causes of unhappiness.
I generally have found this to be a tautology. Being less unhappy means being more happy. In fact, I've found that being content with things has improved my happiness significantly.
It's not just about maximizing every positive experience, but minifying the negatives as well.
> I've seen it suggested elsewhere that there is no saturation point, it's just that the relationship is logarithmic, and truncated logarithmic datasets look asymptotic.
If it's truly a logarithmic relationship (rather than asymptotic), this would imply that billionaires are an order of magnitude happier than everyone else.
The base of the logarithm does matter, but assuming base 10, a billionaire with an income of say $100M dollars would be 4 times happier than someone with $10k per year income which is pretty close to the floor in the US.
I always feel compelled to introduce people to the sage words of that great philosopher, Arnold Schwarzenegger, on this topic: "Money doesn't make you happy. I now have $50 million but I was just as happy when I had $48 million."
Years ago a real estate agent driving me around to look at property relayed a somewhat pessimistic aphorism he'd picked up from his father: Life's a shit sandwich, the more bread you have the less it tastes like shit.
I feel like that would be better paired with the "dough" double meaning instead of bread. "Life's a shit pizza, the more dough you have the less it tastes like shit."
> Slang meaning "money" dates from 1940s, but compare breadwinner, and bread as "one's livelihood" dates to 1719. Bread and circuses (1914) is from Latin, in reference to food and entertainment provided by the government to keep the populace content. "Duas tantum res anxius optat, Panem et circenses" [Juvenal, Sat. x.80].
The real test for me is: Do I have sufficient assets to quit my job and still maintain my current standard of living and spending habits? It has nothing to do with wage income.
This is a little higher than I remember from a few years ago, but inflation is also a thing.
Many will quip that money doesn't buy happiness, but it certainly helps or some variant of this pithy phrase. Here's the real interpretation of these results: people need their fundamental goods satisfied, beyond that all you can buy are toys.
Fundamental needs are housing, food, education, a social life, a sense of purpose, a sense of control, and healthcare. Notice that nowhere in this is money mentioned. That means that society can in theory be organized around principles of universally delivering these foundational goods and values without needing to produce toys for the rich and we might all be happier for it.
I feel like this is basic economics... money, like most things, has diminishing marginal utility.
From a common sense standpoint, it's not so much that having money makes you happy, but having to worry about money definitely can make you unhappy.
Probably bad analogy: Eating a meal that I'd rate 9/10 doesn't make me much happier than a meal that's 8/10, but having to worry about whether I'm going to be able to eat today at all would definitely make me sad.
I think people vastly underestimate the happiness potential that convenience offers. Time is our scarcest asset, and wasting it is extremely distressing. Stress is a big factor in perceived happiness. So yeah, spending money to save time can have a large impact on how happy you are.
Does anyone think this may be related to the fact that you don't have a hard goal to seek for the money you are working?
For example; I want a new PC, so I work for 6 months working and thinking on that new pc. Then finally, when I have enough money to buy it and do it, I love it. The effort that cost me gives it an extra value to me. Exactly like when you worked as a kid for the game you really wanted to have. Didn't matter if the game ended being horrible, for you that game was special, and also you could continue playing it after some years with nostalgia feelings.
If I have enough money, this effort is allmost zero. At the moment i get a new need i could satisfy it.
Of course, this is just another hypothesis, and could explain why some people says aren't happier with more money, probably they want something harder to get and still achievable with money/work.
> the psychologists who conducted the study find that the one making $200,000 is probably no happier than the one making $120,000. This is because both the $120,000 and $200,000 women have incomes above $105,000, which according to their research is the point at which greater household income in the US is not associated with greater happiness. The technical term for this cutoff is the income “satiation point.”
Sounds like satiation point is where the lower levels of Maslow's hierarchy have been satisfied.
This article [0] makes the point that mastery, belonging, and autonomy contribute to happiness, as well as the worldview of abundance vs one of scarcity.
Exactly, incomplete results being similar to Odds Ratios in medicine not based on endpoint mortality, morbidity and ratings.
Not to mention subject to massive binning effect. You might have binned single people with married couples with kids, both of which have different requirements.
tl;dr - A new study finds that $105,000 is the income level at which people no longer feel happier earning more money. This updates the previous number, $75,000, from a 2010 study.
Personally, I’m deeply skeptical of any psychology or sociology research that relies on magic numbers like “105,000”. As far as I can tell, the study doesn’t even account for cost of living.
I've never understood the absolute premise of: money can't buy happiness.
It very obviously can. I'm happy when I'm not living in a ditch. When I'm warm in Winter. When I have food and I'm not afraid of starving to death. When I can afford to pay my rent or mortgage. And those are the primitives. I'm extremely happy when I can spend a month at the beach (say I live in the mountains or midwest), or hop on a plane and enjoy the glorious creations of cultures from Paris to Rome to Tokyo to Buenos Aires.
Up to a point? I call bullshit on that too. That's a lack of creativity. Assuming we're not talking "point" = the scale of the universe or something beyond reasonable human potential. I'd be very happy spending my life trying to figure out how to benefit humanity with the $127 billion Bezos is sitting on. It'd be an immense joy, it'd be challenging, it'd be rewarding, it would fundamentally further my happiness.
There are various types of personal happiness, some are more core than others. Articles that discuss the up to a point benefits of money always collapse due to that.
> I'm happy when I'm not living in a ditch. When I'm warm in Winter. When I have food and I'm not afraid of starving to death. When I can afford to pay my rent or mortgage.
Yeah, but I'm even happier when that applies to others, too. I can't even imagine how grand life would be if it applied to every last person on the planet.
But how does money as such figure into that? The value of my money doesn't just depend on the amount of money I have, but also on the amount of money others don't have. If everybody had a billion dollars, it would be the exact same situation than if everybody had one dollar. That's why the whole money obsession seems a bit silly, to put it mildly.
> I'd be very happy spending my life trying to figure out how to benefit humanity with the $127 billion Bezos is sitting on.
If you totally ignore the accumulation part of it, and you pretend it's money that was magically "made" where there was no money, and then added as some kind of gift to the economy, then such mental gymnastics can be fun. I'm with Nietzsche though, the need for power which is implied in the need for money is based on inability, and by the same token, the lack of need for it based on ability and knowledge of self.
You can't easily be happy when you're hungry or otherwise suffering, true. But I'd say I mostly need health and agency, and even then my main happiness comes from the universe existing. If I got bored with my toys, I could just stare at clouds or the skin of my hand or a billion other things and be happy, at the very least content. Do people even know how cool and pretty a rain drop is? How many there are when it rains? And that's even before animals and people. I know this sounds like advice from a hippie calendar, but it's the best way I can describe how I actually do live my life "on the inside". Heather B. also put it well: "it's the simple things that please me" :)
Money is just a tool, like being able to measure weight or distances. It's that we pretend that doing useful things well is proportional to the amount of money someone "makes", and in turn that gives people the idea that just having come by money in any way at all bestows usefulness and importance on them. But they can't even convince themselves, and not me either. It's orthogonal. You need food, shelter, medicine, rights and respect, maybe books and a few other things, but nothing fancy, no jet planes; maybe that's not enough for everybody to be happy, but it'd be enough for a lot of people I dare say, because it might be enough for me. But in so far any of those are tangled up with money, which is just a symbol, a placeholder, that's just us being confused and kinda lame, but says nothing about money doing anything per se.
> This planet has - or rather had - a problem, which was this: most of the people living on it were unhappy for pretty much of the time. Many solutions were suggested for this problem, but most of these were largely concerned with the movement of small green pieces of paper, which was odd because on the whole it wasn't the small green pieces of paper that were unhappy.
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[ 3.2 ms ] story [ 265 ms ] thread- family size.
- at around $2-5 Million in assets you could live off the interest and do what you want for work or not.
Vastly under the radar yet a perfect fit for his boating interests.
I would say that having no debt, or at least having manageable debt, along with knowing you are saving enough for retirement, and making enough that you don't have to second-guess if you can afford every purchase you make, is the real cutoff.
For example, if you don't have mortgage debt then you are probably renting. So I consider mortgage "manageable" debt, along with any short-term debt that you can pay off within a year.
The other thing to consider, is life is full of stress-inducing "things" (situations, people, material objects, etc). Often times throwing money at the stress makes the stress lower or go away. So if you make enough where you can throw money at most of your stress and not break the bank, then that would greatly impact your happiness.
Robots are miserably bad at this, so far.
Some kind of organization is ideal, because I often live out of the clean laundry hamper and it's a chore to hunt for stuff every time you need clothes.
With a human you never have to worry about software upgrades, charging batteries, or wake up in a cold sweat in fear of your hired help violating Isaac Asimov's laws of robotics.
Well, that could mean that robots may too violate the laws of robotics!
I open a car factory. It is fully automated.
See?
Besides, the original question is totally boring if you allow human automation. Of course I can hire someone to do labour. No one needs that explained to them.
Cooking, cleaning the house, mowing the lawn, driving to places, filling out tax returns, shopping for clothes or household goods....
Fully automated solutions for any of the above either do not exist or are prohibitively expensive.
The alternatives are not prohibitively expensive, on the contrary. You have restaurants, apartments, parks and public transport as alternatives.
It seems to me that quite some people here want to get rich to afford hiring people to manage things that they don't actually want to own. That's why I think more money doesn't make you more happy, as happiness comes from the sense of accomplishment, not from being able to command an army of workers to work on things you don't care about.
That's often due to them actually wanting those things but not for themselves but for showing them off as status markers.
I'd still hate the tax returns, but others like cooking and mowing I enjoy when I'm free of time constraints.
If you no longer have to work, and you choose not to work because your current job isn't ideal, it can be hard to get the motivation to search for a new job. At the same time, without work, it can be hard to find purpose.
So you might be stuck in a situation where you aren't working and struggling to find meaning.
There are plenty of financial reasons, but isn't that what we're talking about? If you have enough money that you don't have to work for the rest of your life, you probably have enough money that you can spend your time on whatever act of creation you find fulfilling.
Purpose without existential risk of failure is not usually perceived as genuine.
If you have enough money and only put a fraction of it to use, you might create things, but you're never really risking anything. I'd wager more people join the military for purpose than the local paintball team, not despite but because the former really puts your life at risk.
Says who? That may be associated with lutheran ethics of hard work, but doesn't look like an universal nor an essential requirement. Was Mother Theresa devoid of purpose because there's no way she could fail at taking care of people?
That's just as common in many other non-Western cultures, such as Japan, South Korea, China. All three are materialistic and work-centric. Japan has extreme work identity, South Korea is barely a notch lower than Japan on that. Both put the US - and the entire West - to shame on work-centric life (for better or worse depending on your views on such things). China today is one of the greatest materialistic work cultures that has ever existed. You see it in all of China's markets and businesses today, and the move from rural to urban to seek greater materialism and elevated work identity. It's an intense fever there, eg:
https://www.theguardian.com/world/2017/apr/04/china-plans-bu...
One of them was the president of an insurance company and he was ousted in a Machiavellian political maneuver, because he fully expected to hold that position until his health failed him or he died at the post.
You can see it in the current crop of 80-year old politicians in my country. One of them wants to go up for re-election and he would be in power until he was 90 years old...
If you have financial independence, you have the choice to work or not, and if you do work, to do whatever work you find most meaningful.
Without financial independence, you have no choice but to work, and for the vast majority of people without financial independence there isn't much choice of what kind of work to do either.
Volunteering and creative experimentation fills that gap just fine.
That's certainly the line that society wants people to believe. A lot of people want a job that gives them a sense of purpose, but I'd be surprised if as much as 2% of the workforce think their job gives them a sense of purpose right now. I think we're just lucky that the majority of people don't question whether or not their job is ultimately necessary, and choose not to bother when they realise it's a waste of time.
The next level above financial independence is financial freedom (you can just get whatever you want, from shoes to houses) - off the top of my head I would guess this is probably around the 0.01%, which would be about 32k people in the USA. As an example of freedom, these people can buy nationality and avoid immigration limitations (going rate is ~$1-5m).
The article is way off just comparing salaries. There are 3 social classes in terms of having a meaningful lifestyle distinction - those who have to work for someone else, those who don't, and those who have full freedom to decide where they go and what they do each day. All they did was compare a bunch of people in the same social class (somewhat shockingly the Romans considered this equivalent to a slave class).
J suspect that ceteris paribus, being frugal reduces happiness - by definition, it's not getting things you want to get.
Once you can afford something that was way out of reach before, you buy it and after the first few moments you realize it is not as great as you expected. Do this a few times, and you'll learn what is important. The more wealthy people I know do have a slightly above average car and house, but IME the biggest difference is that they have far more extreme - both in amount and in price - experiences, i.e. weekend trips, fine wining and dining etc.
Higher earners tend to just upgrade and spend more (apartment, clothes, restaurants, hotels etc), and aren't really living that differently - that lifestyle can certainly soak up maximum income achievable in a salaried job.
I think this is what the article inadvertently pointed to, that the higher salaries could lead to a sense of frustration that nothing really changed.
No, it's before tax income.
Income Variables. Participants were asked to report monthly household income rather than yearly income to facilitate responding. Respondents were asked the question, “What is your total monthly household income in [local currency], before taxes? Please include income from wages and salaries, remittances from family members living elsewhere, farming, and all other sources.” Households were defined as a person’s home that had its own cooking facilities, which could have been anything ranging from a one-room flat to a single house.
From the study's supplementary information: https://static-content.springer.com/esm/art%3A10.1038%2Fs415...
Dollars are also represented as International Dollars, which are adjusted for the local purchasing power, expressed in units equivalent to one USD in the US.
I'm my parents' last child and am soon to graduate Grad school and enter 'the working world'. I can definitely feel their relief in knowing decades of parental sacrifices and obligations have paid off and finally come to an end.
Savour that pride and relief -- you've earned it.
Many people I have talked with about happiness are really talking about non-anxiety. Basically defining being 'happy' as having zero anxiety and being 'un-happy' as worrying about (anxious) one or more things.
In that model not having debt relieves future obligation anxiety, owning a house addresses 'where will I live' anxiety, savings address 'what if something comes up' anxiety etc.
If that model held true for the survey participants then once you had enough income to offset your anxieties you would not get any more 'happy'.
Raise the baseline too high and you may never reach it, and never be happy, despite having a good life. Is that what you want?
Because it can be. Because we’re the richest country in the world and yet for some reason we force people into bankruptcy because they didn’t have health insurance on the day they had a medical emergency.
I want:
1. People not to have to worry about seeing a doctor because they can’t afford it.
2. People not to have to worry about having shelter.
3. People not to have to worry about where their next meal will come from.
4. People to be able to provide a solid, basic, decent life for themselves and their families.
5. People to be able receive an education without it being onerously expensive.
Among other things.
I don’t think these are intractable problems for a civilization that sent people to the moon, perform open heart surgery, and deliver energy consistently and safely to millions of people.
If you're always questioning if you're happy enough, you'll never truly reach happiness.
So one obtains shelter, and healthcare, and an education, and all those things you listed. And they're still not happy? If cake is the baseline, is more icing going to make that much better?
I have observed that people who reach that state aren't looking for "more money" so much as they are looking for something that is more fulfilling for them personally. And the article observes that as well.
Are you? When I just Googled "richest country in the world", not a single result placed the US in #1.
That said, I wouldn't be surprised if the median salary in the US was higher than the median salary in Luxembourg/Ireland/Singapore/Brunei/oil-rich-middle-east. Along with a lower tax burden resulting in higher net pay.
This sums up pretty much.
It is not the Money ($) i need. But what I think is rather basic things to live.
A place called Home. It doesn't have to be free, it could be even be rented that I dont own it. But it should be affordable, without being anxious about Landlord kicking you out, or hike the rent to a ridiculous level so you cant continue to live. It shouldn't take your entire working life, 25 - 30 years of continuously working and giving 40% of your salary, what if you are sick in between this 30 years? What if you were fired? This whole living burden is what causes people anxious, and hence do not risk into taking another higher paid job and move up the ladder. The stagnation of wages.
I dont need a house, just a small flat, 150 Square Feet will do, with an open kitchen and a small toilet and shower. The whole flat is probably the size of many Americans's houses bath room. Hopefully along with Water pipes that doesn't include heavy metal like lead poisoning, hot water system that could shower longer then 3 min in Winter. Is that too much to ask for? I am not calling for free housing, but one that is affordable.
Food is Cheap, I used to live in UK with less then 1.5 pound budget per day. Good Quality clothes are actually not expensive in terms of production cost, most are rent, labour and marketing. And Medical is affordable if you have insurance.
So Food, Medical and Clothes are actually easily affordable in most developed countries. ( Name be one place that it isn't ) As long as you have a job. Any job in fact, even labour intensive job or lower end jobs could easily afford all of these.
So out of all the basic needs in Maslow thoery, shelter is the most expensive, most unaffordable, and also most anti competitive. But all government are very happy with that, as it is basically modern slavery.
What a joke.
A person making 500k or more or someone with high net worth is going to have a more full life (not needing to work, help community, help family)
However, it depends on what the debt is for.
If the debt is for a huge mortgage owning a 10 unit apartment building, but you are making a couple hundred bucks a month in net profit... then you do not feel pressure as compared to someone who took out a 30k loan to build a swimming pool.
These discussions about "income" are so skewed towards a certain type of income, namely wage income.
The people conducting these studies have their own biases: justifying taking other people's wealth via forceful means such as taxes.
Just because 1-2% of people make their ends meet with their wealth working for them doesn't mean their presence requires them to be represented with equal weight in research.
Not sure how this isn't self-evident to you.
> The people conducting these studies have their own biases: justifying taking other people's wealth via forceful means such as taxes.
Uh-huh. Taxes are theft, government is bad? Are you sure you're not the one with the biases?
But income tax is theft. If you do not pay our overseers, then you are at the wrong end of a gun or the otherwise of a steel cage.
Your logical conclusion is non sequitor.
The point is that it is theft.
Whether they theif offers your "protection" for taking from you, is besides the point.
But think about it: A single person making $105k is just touching the top 10% of income earners in the US: https://dqydj.com/income-percentile-calculator/
Having spent some time in about that bracket in an average cost-of-living area (earned slightly more, but I'd spent the previous few years being a broke grad student), I can attest that it felt amazingly rich - there were few things I would have done with more money. My life satisfaction came from my job, my relationships, and my hobbies.
There's a lot of evidence supporting the general conclusion that happiness is either logarithmic in income, or asymptotic after a point. Just blowing it off as "a joke" doesn't hold water. There's also considerable evidence that things like friendships, family, good relationships with neighbors, etc., are much more important contributors to happiness than income.
We're talking about human happiness, the capacity for love, freedom, and self actualization. Happiness.
We're not talking about buying overpriced liabilities such as fancy cars, furniture and clothes.
I make over 150k and it's awful working 160 hours a month.
Think about why this study is messed up:
Wage earners spend the Best part of day typically indoors, taking orders from another person.
Wage earners send their children to be taken care of by strangers.
Wage earners send their kids to the zombie factory (public schools)
The fact is that someone with a few million can:
- take care of their own children/babies - educate their own children - take care of their aging parents - take care of sick relatives - can explore the world
Don't tell me that having 2M in the bank will not make you, your family, and neighborhood FAR "happier" than someone making 300k in wage slavery.
I can tell you for a FACT that making that much money (millions) will objectively lead to higher quality of life for people and their families.
I'm personally working hard now to accumulate several investment properties and live free for life so that I can retire before 40 so that:
- I can raise my kids - help parents, family, friends - explore world and learn - focus all my free time on healthy living - get best medical treatments
You damn right it will make me happier to be able to do yoga 3 times a day, raising my kids and also building cool shit without Having to answer to a boss.
You know it's true that lots of money makes you immeasurably more fulfilled. Don't listen to socialist lies that you only need some bullshit 105k (<75k after tax)
Few can produce ground-breaking ideas or are lucky enough to actually earn a million dollars quickly (as opposed to stealing it).
I would be an order of magnitude happier if I could work on my own projects instead of working for someone else. There's a reason people do side-hustles and punish themselves trying to get something going outside of their normal $100k salary... it's for the hope of having true financial freedom. The study is correct that $100k vs $150k doesn't make much difference at all... but if I had $1 million in a bank it would be a huge difference.
the first things become very boring, very fast. i am speaking for me.
if you look at most millionaires, they continue working full-time. it just needs to be a good job, of course
Socialists were the first and the main critics of Wage Slavery. More recently, you have the Situationist movement, which coined the slogan "Ne Travaillez Jamais!" (Never Work!) and has a body of work criticizing this model (both in capitalist and in marxist-leninist countries).
Anyone saying you "only need 105k" is not a socialist.
Oh, and the better kicker: I was even happier in grad school when I was earning $24k/year. One of the happiest times of my life. That doesn't apply to everyone's grad school experience, but for me, it was awesome. Lived in a shitty apartment above central square in one of the more expensive regions of the country (hi, Cambridge, still love you but glad I don't have to deal with your housing market). My roommates and officemates at work have become life-long friends.
I will indeed tell you that having 2M in the bank has been a much smaller factor in my happiness than almost anything else, particularly the effect of the people in my life. My day-to-day happiness is much more affected by whether I got a good night's sleep, whether my children are healthy, whether my wife and I are communicating well, whether I'm healthy and able to do the things I like or whether I've once again managed to injure myself pretending I'm 24 instead of 42. :-)
(I'm not unsympathetic to the desire for FI, btw -- quite the opposite. But I've noticed that I want it primarily in a theoretical way, for the comfort in knowing I could quit, not because I actually want to quit. Yes, I'm lucky that I have .. multiple .. jobs that I absolutely love, but I've also chosen to accept a 66% paycut to work in a job I love instead of blasting to FI in industry, and I'm good with that. Sometimes it annoys me and I go do some consulting or bitcoin mining to help make up the difference. :-)
You still need to work 40 hours a week or whatever, and only get X weeks of vacation. Having a 180K salary instead of 150K doesn't change any of these obligations, or change your life in any significant way, you just put away more money into the bank.
Of course, stepping from 40K to 100K in salary is practically life altering. Unless you absolutely suck at budgets you can easily get out of debt and start having real vacations. You can afford hobbies, etc.
That's one thing I've always wondered. Unless you can reach super high incomes, the "buy/rent a jet" incomes, your life isn't that different from "all the rest." You still commute to work daily, have a house, etc. I mean sure, the house and car may have higher price points, but the lifestyle is still the same. Maybe I'm wrong and all those luxury brand commercials are right, spending 30 minutes (or however long) per day in a 80K car is so much more rewarding than spending those 30 minutes in a 40K car.
For example:
- Housekeepers who come often
- Paying someone to manage the yard
- Private school and college funds for kids
- International vacations for the whole family
- Paying for family to visit you if you are working adults
The idea being that a couple making $200k jointly per year spending $800/mo on a maid gives them far, far less happiness than a homeless person getting their first warm meal and shower this month.
Just one thing: you don't need a "buy/rent a jet" income to not have to commute to work daily. Retiring early appears to be surprisingly easy with decent income and good spending habits. Taking a year or two off even more so. Eg with the 80k (the more expensive car you mentioned), you can live handsomely for 4+ years in South-East Asia or Eastern Europe.
$3mil let's you live on $50k/year for 60 years. And realistically, more than that due to interest - 2% of 3mil is 60k, so if you have it well-invested you could live off it with $50k/yr indefinitely.
The truth is, most people can barely afford to save due to aforementioned high costs.
Stocks for example have averaged, inflation adjusted, about 6% in the past 50 years. 6.6% in the past 60 years and 8.2% in the past 40 years, for comparison. So let's say 6%. This is inflation adjusted, and dividends reinvested.
At that point you're earning $180k a year. Even if you spend $100k, you'll be accruing money over time while maintaining purchasing power. In 50 years, you'd add another $4m of inflation-adjusted wealth for example, but that's wildly underestimating reality as that doesn't figure in the compound effects of adding $80 to your wealth each year.
I live in the Netherlands where 40K is quite a reasonable income. I really dont get why you would need 100k to do the things you need. Perhaps people need to become a bit more frugal?
People here in general don't have any debt (except for mortgages) and a vacation to an Asian country is 1-2k/month'(yes people sometimes do take 2 months vacations here). Even a month of Australia is only 3-4k. Hobbies? I don't know what kind of exotic hobbies people have in the bay area but even flying drones (relative expensive) is relative affordable if you get started with a cheap Chinese drone before you buy an Expensive one.
Rent, family size, location, etc probably makes a huge difference but I really don't think 100k is the magical number that you need to become happy.
Another point that makes a difference is that if you ever want to get a mortgage and buy a house, the maximum the banks will give you is a constant multiplier times your annual salary. In Ireland it’s 3.5x — good luck trying to buy a house on a €140k budget in Dublin.
In my case, my total effective comp increased about 8x in the last 5 years after being corrected for taxes and CPIs of the countries I lived in, and I kind of concur with the OP in that it’s more of a log curve than linear. Things get progressively ‘easier’ but less lifestyle-changing over time.
The multiplier isn't constant or fixed but dependent on interest rates. So there are certainly multipliers that work in certain periods, like about 4x now in the Netherlands. But that'll go down once rates rise, it's only a constant insofar as the long-term interest rates appear somewhat constant (or rather, sticky) in a given period of time. At the end of the day they look at ability-to-pay, and interest rates factor in to that, which are variable.
At 30k salary, I was able to save $400-$500/month in Boston. It would have been near zero if I had student debt (6%+ interest). Frightening thinking back, but I was always one major repair on my car or mid level health issue away from spending an entire years worth of savings.
The entire cost for my graduation is probably come in under 1000€ total, 800€ will be tuition and the rest directly university related spending. (There is an additional 2k€ spending on stuff like a new laptop, software, etc. that wasn't necessarily required but made things easier).
Another obvious fix would be to spread good jobs around the country so we don’t have such concentrated HCOL cities. That’s as easily done as the suggestion of lowering cost of graduation to your sugessted price point. We have an entire political party against free or near free education, which means more taxes to pay for it. I don’t fully disagree with some of their stances. Many degrees don’t provide financial value, and can be learned online or have meet ups to discuss topics. A college degree for a college degree sake is what’s happening to much of the populous.
And at every step, people jumped straight into employment from school.
US High School should focus on that. If a student graduates they should already have a job offer signed, that should be their primary target. If they don't they should be moving into higher education. College and other Institutions should have the same goal.
What I have found is that the majority of "happiness from money" comes from the financial security, not actually spending the money. The reduction in stress going from a chronically broke PhD student to having 5 years of living expenses in savings is huge.
It's the knowledge that you can immediately solve almost every problem that pops up with a bit of money, and figure out the details later. Missed your flight? Book another one. Car trouble? Call assistance and take an uber. Lost your job? Take a short vacation and then hit up your network on LinkedIn.
And in most countries in Europe, you can feel secure with a lot less in income/savings than in the US. You don't need to worry about what your health insurance does not cover, probably don't have any student loan debt - and probably don't need to worry about a college fund for kids, can commute by public transport in cities, have better unemployment protections, and so on.
And then your expectations shift, you require more expensive things to acquire that base level of prosperity and satisfaction, and you have a whole new set of problems which feel just as stressful, relatively speaking.
Just an edit: I think it goes back to our shortening attention spans and modern conveniences quite a lot. Being bored and comfortable with it at some level is an important life skill.
There's that idea that giving poor people money will have them just spend it gambling or buying drugs, doesn't seem to be true, either.
A lot of these just sound like justifications to pay people less, or an odd way to shame people for wanting something material. Money is power, and power is always valuable.
Basically, if I usually buy a certain Ikea table if I need a table, I still buy that Ikea table, and it still feels too expensive to me, regardless of the fact that I earn a lot more now. If I get an apartment that I like, I don't have any desire to get a more expensive one. I only want a more expensive one if the current one is really bothering me for some reason. I'm still uncomfortable with purchases of certain amounts, or buying things for myself in general (particularly, clothes and furniture). It's physically painful to spend certain amounts of money.
There's a set point in my brain for how things are supposed to cost, and that point is very hard to move. I.e., it takes actual effort to explain to my brain that I can spend more now. There's nothing automatic like the general wisdom suggests.
It really leads to a persistent feeling of danger, so yes, making 100k instead of 40k could literally save your life, or at least keep you from being an indebted loan shark victim for the rest of your life.
Right, that problem just doesn't exist in the Netherlands.
Basically everyone pays, I would guess, around $150 a month median for insurance, with a standard deviation of probably around $25. That covers anything life threatening and quite a bit more.
There's a bit of co-pay on things like dental and there's a mandatory own-risk of about $500 a year on certain procedures.
If you're about 10% below the median income in the Netherlands you get an insurance subsidy which tops out slightly above $100 a month.
The point I'm trying to make here though, which I lightly implied, is that regressive tax systems and distributive justice lead to overal higher happiness.
i.e., if there are diminishing marginal returns of happiness from money, it makes sense that Total Happiness in a country is optimised through a substantially regressive system. That's one of the interesting things about it.
I suspect by "regressive tax" you mean "a tax rate that increases as the amount subject to taxation increases" . Wikipedia defines "regressive tax" to be the opposite one- where the tax rate decreases as the amount subject to taxation increases.
Or you're making a fairly non-obvious and interesting claim!
They're definitely not?
> I'm curious what the justification for this claim is as well.
My claim makes no sense cause I used the wrong (opposite) word! Apologies, please read it the other way around.
the EU as a whole actually has a more regressive tax system than the united states (although they spend the proceeds very differently), but in the netherlands, the regressive and progressive taxes essentially cancel out so that overall taxes are flat.
here are some sources: https://www.washingtonpost.com/news/wonk/wp/2012/09/19/other... https://www.economist.com/blogs/democracyinamerica/2011/12/i... https://www.forbes.com/sites/paulroderickgregory/2012/12/05/...
I looked into the Dutch case. It indeed appears that there's no progressive effective tax, but rather a flat tax. Each group pays about an equal share of the tax burden as their share of the income.
The study published in EBS is a great start, but it is omitting some important elements. Taxation of cars is left out, despite them being a luxury good whose costs are carried by the more affluent class. Transaction tax on real estate, same thing, omitted and mostly a rich-people thing. Real estate taxes, same thing. Nor are capital gains taxes or company's income taxes included, thereby omitting income effects from entrepreneurship and ownership in companies, these capital effects and its taxes of course scale with affluence.
What it does include on the other hand, are various insurances. e.g. insurance to unemployment (including the 'final unemployment': pensions) and sickness. These aren't really taxes per se, but rather individual insurances earmarked per person.
Finally, it hints at combining tax rates with redistribution. For example, healthcare subsidies get deducted from medical insurance premiums in the study. But it's only one of many different forms of redistribution. They don't make similar deductions for rent subsidies (which are quite substantial). I felt that was lacking, either include it all or nothing at all.
Which brings in perspectives... this study essentially adds sales tax to the traditional income tax as a way of determining collective burdens, which is super interesting. But the authors do not change the denominator from income to something else that's related to sales tax. So it's a claim about income+expense tax, as a percentage of income. Rather than say taking all your taxes, including those related to expenses, as a percentage of total expenses. If you did this, you'd see tax systems become progressive again, as rich people have a higher savings rate (i.e., income that's not spent, and thus not hit with sales tax). The authors do mention in the beginning of the article, but don't discuss the implications after. If you wanted, you could see this as a form of deferred taxes.After all, un-spent after-tax income isn't taxed with sales-tax, until it's spent. When its spent, it's taxed, removing the regressive element. And if it's not spent but saved/invested instead, you don't pay sales tax, but you do have to pay tax on capital in the Netherlands. Which is exactly the tax that this study left out!
So, extremely interesting and it's definitely the case that we can't blatantly call the Netherlands progressive without sales tax context. But to make the opposite claim, to say the Netherlands is regressive or flat, probably can't be made as easily either. It really depends on your perspectives.
At least they had movies on and weren't blasting Fox News.
The result of that is that distributive justice is a lot stronger, and the impact of a regressive tax system is magnified. A median salary in the US might generate unsatisfactory, whereas in the Netherlands even a below-median salary has quite good outcomes because of this.
For example, the median healthcare insurance expenditure in the Netherlands is about $1.5k a year, and healthcare outcomes are quite good. Tuition fees in university for undergrad and graduate degrees are about $2.5k a year across the board, with a tiny fraction of students being the exception like dental or piloting schools. Student loans are currently at 0% and set to go to 1% next year. Tuition-waving subsidies exist for children of poor parents. Childcare is heavily subsidised. Traffic policy and public infrastructure is such that a car is not necessary, and employers tend to reimburse all public transportation costs for most employees. Lastly, it just feels like culturally the Netherlands is slightly more sensible with its consumerism and interest in toys. Most seems to be spent on things with higher lifetime values, meaning the effective value of money seems to do a bit better, but that's just intuition from anecdotes.
In short, when you get your after-tax income, you tend to be able to spend a very large portion of it on things you don't really need, but just enjoy. Nice food, vacations, hobbies. There just isn't an need for a $100k salary for your kids to go to a nice school, have childcare or a good insurance, or a car to get your family places. Nor do you need $100k to cover interest payments + principal on 6% student debt of $100k.
That having been said, your numbers on Asian/Australian vacations definitely cater to a certain tourist. I've done a month in Asia on 1k, but I was 19. Similarly I could do 3k in Australia, but I'd be a certain kind of vacation. You AirBnb and eat some simple Asian takeaway like food and travel by bus. That's not everyones idea of a holiday. It's a different vacation from getting taxis to hotels and eating in restaurants.
Vacation in Australia? For 4 people it's impossible to spend less than 5000 euro on just flight tickets alone. Expect to spend another 1500/week if you do it very, very frugally. And that's exactly what you should do - travel half around the world to have a mediocre vacation just to save a bit of cash on site.
To explain - I am backpacker, will never travel any other way (family or not), avoid any luxury on purpose (reduces the intensity of whole experience) and surviving with 500 USD/month in India for months was a breeze for me. But your numbers are just plainly wrong. You need tons of cash if you want to travel to exotic places, even really cheap ones (ie remote Indonesia).
Travelling properly is great but needs quite a lot of cash, unless you can afford to spend months doing it every year, which is unrealistic for most of us. Plus many of us prefer to have 3-4 shorter vacations per year, but still travel quite far and have intense experiences.
Then you have sports - I am not into snobbish activities, but I also don't chose sport based on price of equipment. Paragliding? More than 3000 euro for a started pack of used equipment (new would be more like 4k). Ski alpinism? Maybe 2500 euro for skis, boots, avalanche airbag. Not even going into clothing. And those numbers are for a single person.
Oh, and you want to support your parents because they live in a EU country where 500 eur is quite OK salary? You need cash.
You want to save for the pension, create a cushion for rainy days, retire early, invest, whatever? You got it, you need cash, the more the better. I have not met a single person who wouldn't like to do that if they could.
Simple, sad fact is, exciting life in many cases costs quite a bit. One should optimize since plenty of things can be experienced almost for free, but this strategy will get you only that far. If you are happy with little, great for you. I have certain plans and expectations from life, and they require cash, tons of it.
In my experience, the best way to fix that "problem" is to get some kids :)
Although we still live very well in absolute terms, a lot of people I know have and will have a worse quality of life than their parents did, despite being more successful and earning more money! It’s kind of depressing.
I live near Seattle where $100K is probably a reasonable income (give or take $30K).
Now, I make more than that by a large margin where my cash target side of the house is roughly $300K not including stocks. I live pretty well, so what do I do with the extra money?
Well, I trickle down. I have four employees for my house and land. When you not only provide for yourself, but you provide for others then I claim that there is extra happiness to be had. My house keeper, for instance, makes $40K with an average of 20 hours of week, flexible timing, and a monthly stipend for benefits.
You can buy happiness, but only if you spend it on people rather than things.
No one said you need it. They're saying at that income a lot of pain points go away. As others pointed out, much of it has to do with a reduction of stress. A lot of small problems can be solved with money. It doesn't mean that people will solve them with money - but knowing that you can eases the brain quite a bit.
And then of course, there's health care. With good employer paid insurance, the deductible for a couple is about $3300. So if you have any kind of chronic medical condition, you'll pay that much each year at least. If your employer did not pay and you had to purchase it (e.g. you are self-employed), it'll cost perhaps $500/mo for the premium, with a deductible anywhere from $6000 to $10K.
>Perhaps people need to become a bit more frugal?
There is that as well. People here tend to change their smartphone every 2 years, and always buy a brand new expensive one. They'll pay a pretty high fee for cable TV. They'll insist on 50-100 Mb/s Internet, when, in my experience, 15Mb/s was fine for a couple (no degradation in quality for services like Netflix). They'll generally pay $15-30K for new or recently new cars. And many people change cars too often.
Consequently, many Americans spend nearly everything they make on stuff that ultimately contributes very little, if anything, to their contentment. Since buying those things didn't actually make them happy, they figure they need more money, and more debt, to buy more things. It's a trap we've created for ourselves.
Oh, and our health care system is ridiculously expensive.
-> Most thorough study yet about the subject comes out, says 100k is the magical number.
You: Well I'll keep believing my thoughtless, data less opinion anyway.
Me: Rolls Eyes
Sure, you can be skeptic, but at this point, if you needed to take a decision based on this, you'd do better go with the 100k magic number, the odds are definitly more in its favor then your belief.
I think the biggest difference would be the outsized political, social influence and your own private jet.
But of course even at $10m you could easily afford to rent a jet pretty frequently.
edit: the figure I used is just the cheapest possible aircraft you can rent. if you actually want a jet, you are looking at $10,500 and up, which would make your monthly flight eat more like 32% of your budget. most people are going to find this untenable.
https://www.economist.com/blogs/graphicdetail/2013/05/daily-...
...which by the way I find extremely plausible, just judging by the fact that most of our senses (hearing volume & frequency, light intensity, etc.) are perceived in a logarithmic way.
That being said, my personal opinion is that money does not make people happy, but it definitely prevents a lot of causes of unhappiness.
I generally have found this to be a tautology. Being less unhappy means being more happy. In fact, I've found that being content with things has improved my happiness significantly.
It's not just about maximizing every positive experience, but minifying the negatives as well.
This is another great link on debunking popsci like 75K is where people are happy sort of headlines that points to your point.
If it's truly a logarithmic relationship (rather than asymptotic), this would imply that billionaires are an order of magnitude happier than everyone else.
log(10,000) is 4
That doesn't seem to be 4 times as happy.
1) Most people don’t know how to buy more happiness past some point.
2) There’s also a point at which you’re ridiculously ecstatic 24/7, so you’re really more interested in self-actualization than “happiness”.
I should clarify that I don’t yet know a good way to get instant long-term happiness, there is some work and time involved.
> Slang meaning "money" dates from 1940s, but compare breadwinner, and bread as "one's livelihood" dates to 1719. Bread and circuses (1914) is from Latin, in reference to food and entertainment provided by the government to keep the populace content. "Duas tantum res anxius optat, Panem et circenses" [Juvenal, Sat. x.80].
Many will quip that money doesn't buy happiness, but it certainly helps or some variant of this pithy phrase. Here's the real interpretation of these results: people need their fundamental goods satisfied, beyond that all you can buy are toys.
Fundamental needs are housing, food, education, a social life, a sense of purpose, a sense of control, and healthcare. Notice that nowhere in this is money mentioned. That means that society can in theory be organized around principles of universally delivering these foundational goods and values without needing to produce toys for the rich and we might all be happier for it.
From a common sense standpoint, it's not so much that having money makes you happy, but having to worry about money definitely can make you unhappy.
Probably bad analogy: Eating a meal that I'd rate 9/10 doesn't make me much happier than a meal that's 8/10, but having to worry about whether I'm going to be able to eat today at all would definitely make me sad.
- a wise man.
For example; I want a new PC, so I work for 6 months working and thinking on that new pc. Then finally, when I have enough money to buy it and do it, I love it. The effort that cost me gives it an extra value to me. Exactly like when you worked as a kid for the game you really wanted to have. Didn't matter if the game ended being horrible, for you that game was special, and also you could continue playing it after some years with nostalgia feelings.
If I have enough money, this effort is allmost zero. At the moment i get a new need i could satisfy it.
Of course, this is just another hypothesis, and could explain why some people says aren't happier with more money, probably they want something harder to get and still achievable with money/work.
Sounds like satiation point is where the lower levels of Maslow's hierarchy have been satisfied.
This article [0] makes the point that mastery, belonging, and autonomy contribute to happiness, as well as the worldview of abundance vs one of scarcity.
[0] Why so many smart people aren't happy https://www.theatlantic.com/business/archive/2016/04/why-so-...
Not to mention subject to massive binning effect. You might have binned single people with married couples with kids, both of which have different requirements.
Personally, I’m deeply skeptical of any psychology or sociology research that relies on magic numbers like “105,000”. As far as I can tell, the study doesn’t even account for cost of living.
It very obviously can. I'm happy when I'm not living in a ditch. When I'm warm in Winter. When I have food and I'm not afraid of starving to death. When I can afford to pay my rent or mortgage. And those are the primitives. I'm extremely happy when I can spend a month at the beach (say I live in the mountains or midwest), or hop on a plane and enjoy the glorious creations of cultures from Paris to Rome to Tokyo to Buenos Aires.
Up to a point? I call bullshit on that too. That's a lack of creativity. Assuming we're not talking "point" = the scale of the universe or something beyond reasonable human potential. I'd be very happy spending my life trying to figure out how to benefit humanity with the $127 billion Bezos is sitting on. It'd be an immense joy, it'd be challenging, it'd be rewarding, it would fundamentally further my happiness.
There are various types of personal happiness, some are more core than others. Articles that discuss the up to a point benefits of money always collapse due to that.
Yeah, but I'm even happier when that applies to others, too. I can't even imagine how grand life would be if it applied to every last person on the planet.
But how does money as such figure into that? The value of my money doesn't just depend on the amount of money I have, but also on the amount of money others don't have. If everybody had a billion dollars, it would be the exact same situation than if everybody had one dollar. That's why the whole money obsession seems a bit silly, to put it mildly.
> I'd be very happy spending my life trying to figure out how to benefit humanity with the $127 billion Bezos is sitting on.
If you totally ignore the accumulation part of it, and you pretend it's money that was magically "made" where there was no money, and then added as some kind of gift to the economy, then such mental gymnastics can be fun. I'm with Nietzsche though, the need for power which is implied in the need for money is based on inability, and by the same token, the lack of need for it based on ability and knowledge of self.
You can't easily be happy when you're hungry or otherwise suffering, true. But I'd say I mostly need health and agency, and even then my main happiness comes from the universe existing. If I got bored with my toys, I could just stare at clouds or the skin of my hand or a billion other things and be happy, at the very least content. Do people even know how cool and pretty a rain drop is? How many there are when it rains? And that's even before animals and people. I know this sounds like advice from a hippie calendar, but it's the best way I can describe how I actually do live my life "on the inside". Heather B. also put it well: "it's the simple things that please me" :)
Money is just a tool, like being able to measure weight or distances. It's that we pretend that doing useful things well is proportional to the amount of money someone "makes", and in turn that gives people the idea that just having come by money in any way at all bestows usefulness and importance on them. But they can't even convince themselves, and not me either. It's orthogonal. You need food, shelter, medicine, rights and respect, maybe books and a few other things, but nothing fancy, no jet planes; maybe that's not enough for everybody to be happy, but it'd be enough for a lot of people I dare say, because it might be enough for me. But in so far any of those are tangled up with money, which is just a symbol, a placeholder, that's just us being confused and kinda lame, but says nothing about money doing anything per se.
> This planet has - or rather had - a problem, which was this: most of the people living on it were unhappy for pretty much of the time. Many solutions were suggested for this problem, but most of these were largely concerned with the movement of small green pieces of paper, which was odd because on the whole it wasn't the small green pieces of paper that were unhappy.
-- Douglas Adams