Earn more than £22k? Money can't buy happiness

An economic research paper published today has found that the UK could be passing its optimum point for life satisfaction. Beyond a certain level of growth, the study contends, economic growth adds nothing to wellbeing.

So is this as good as it gets? Apparently so.

According to Eugenio Proto of Warwick University and Aldo Rustichini of University of Minnesota, satisfaction with life hits a peak when incomes per head (adjusted so that money buys the same products and services across the world) reach $36,000. Adjusted to the British economy, that figure is an annual wage of around £22,000.

Currently, per capita incomes in the UK are in the “sweet spot” at $37,000 (£22,600). So earning much beyond this will make us richer, but, the study says, will not improve our levels of happiness.

The paper suggests that earning much more could even have a detrimental effect on our levels of wellbeing.

Proto said: “Our new analysis has one very surprising finding which has not been reported before – that life satisfaction appears to dip beyond a certain level of wealth. In our study we see evidence that this is down to changes in the aspiration levels of people living in the richest countries.

“As countries get richer, higher levels of GDP lead to higher aspiration. There is a sense of keeping up with the Joneses as people see wealth and opportunity all around them and aspire to having more. But this aspiration gap, the difference between actual income and the income we would like, eats away at life satisfaction levels.

“In other words, what we aspire to becomes a moving target and one which moves away faster in the richest countries, causing the dip in happiness we see in our analysis.”

However, other economists are sceptical about the findings, and say that wealth can make us happier. Philip Booth, editorial director at the Institute of Economic Affairs, said to the Guardian:“There are simple solutions if people feel happier on lower incomes. They can work less or they can migrate from countries such as the US to countries such as Greece or South Korea. Neither of these things seem to be happening.”

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