Friday, October 21, 2011

Money vs. Happiness

Just saw an infographic claiming the median household income for Fairfax county in 2010 was $113K.

Back in the 2005-2006 timeframe, there was a global income study that supposedly concluded that $75K was some kind of magic income number beyond which you reached a point of diminishing returns for increased happiness. Presumably, since that figure was shown in USD and was a global study, that magic number was normalized against some other measures. I would presume that they chose to normalize against each studied country's median household income at the time (about $48K in the US in 2006). That means that $75K figure would represent a figure that was 150% of the US median household income.

Given the number in the infographic and the presumed method for deriving that $75K figure, I would have had to have been earning just shy of $177K in 2010 to be making the normalized equivalent of that magic $75K figure. On the plus side, I guess that means I've not crossed that diminishing returns threshold. However, there are definitely days where it feels like it.

Even though I now make several times more than I did when I was much earlier in my career, I'm not sure the salary improvement is  linearly-reflected in overall life-happiness. I'm not sure there's even some kind of parabolic curve I could chart (passing through the peaks and valleys of life-happiness).

Maybe times have changed. Maybe it's not (or never was) the kind of statistically meaningful figure that some people like to quote. Maybe it wasn't so much a diminishing-returns point but a peak-return point. Dunno.

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