A study by Purdue University found that increasing income can indeed enhance a person’s “subjective well-being,” but once income reaches a certain “saturation point,” further income growth will no longer significantly increase happiness. This ideal income level, also known as the “happiness price” or “happiness cost,” varies by region.
The sense of well-being in the report is primarily measured by life satisfaction, positive emotions, and negative emotions.
Researchers at the U.S. money transfer company Remitly analyzed Purdue University’s data and adjusted it based on purchasing power and currency inflation in various countries. The results showed that the top five countries with the highest happiness cost globally are Iceland ($163,579), Australia ($161,302), Switzerland ($154,504), New Zealand ($137,361), and the United States ($134,827).
The five countries with the lowest happiness cost are Ethiopia ($10,176), Nigeria ($12,273), Rwanda ($13,566), Mauritania ($14,732), and Bolivia ($15,156).
Slovenia is the only country in the world with an average annual income ($42,754) higher than the happiness cost ($36,769), exceeding it by 16.3%.
The report found that when Americans’ annual income reaches $134,827, they feel satisfied, and their sense of happiness no longer significantly increases. The happiness price for Canadians ($113,755) is nearly one-fifth lower, about twice as much as the happiness price for Chinese ($71,201).
In the United States, New York City has the highest happiness cost among cities ($195,969), followed by Honolulu ($192,441), San Francisco ($191,266), Seattle ($176,960), Washington DC ($171,081), San Jose ($169,317), Boston ($168,925), Oakland ($166,965), Berkeley ($163,634), and San Diego ($160,694).
The ten cities with the lowest happiness cost are Cincinnati ($122,480), San Antonio ($123,656), Albuquerque ($123,852), Houston ($125,224), Tucson ($125,420), Jacksonville ($126,400), Knoxville ($127,184), Cleveland ($127,772), Milwaukee ($128,751), and Austin ($130,123).
In Canada, Victoria and Vancouver have the highest “happiness price”.
Victoria tops the national list with a happiness price of $169,951 CAD (approximately $124,047 USD), just slightly higher than Vancouver and Toronto, both at $166,982 CAD (approximately $121,881 USD).
In Australia, Sydney has the highest happiness price at $255,524 AUD (approximately $180,016 USD), followed by Canberra at $242,254 AUD (approximately $170,668 USD), Melbourne at $240,893 AUD (approximately $169,709 USD), Gold Coast at $349,532 AUD (approximately $246,245 USD), and Adelaide at $232,047 AUD (approximately $163,477 USD).
In the UK, London is the most expensive city in terms of happiness cost, at 116,097 pounds (approximately $155,675 USD), followed by Oxford at 101,104 pounds (approximately $135,570 USD), Guildford at 100,043 pounds (approximately $134,148 USD), Brighton at 98,849 pounds (approximately $132,547 USD), and Cambridge at 98,052 pounds (approximately $131,478 USD).
A study published in the Proceedings of the National Academy of Sciences (PNAS) in April 2010 by two Nobel laureates in economics revealed that there is a limit to the money that can buy happiness. When a household’s annual income is below this limit, people’s happiness decreases, but if it exceeds this number, people’s happiness actually remains relatively the same.
This is known as the “happiness plateau” phenomenon, where when income or material wealth reaches a certain level, individual happiness or life satisfaction does not significantly increase.
However, further research suggests that the reality may not be so straightforward. Experts explain that what is important is not what money can buy, but the choices that money can provide.
Money is just one of the many factors that determine happiness. Money is not the secret to happiness, but it may be helpful.
This article is based on a report from the U.S. money transfer company Remitly.