The Magic Income Number

What’s the magic income number? According to Angus Deaton and Daniel Kahneman, it’s about $75,000, at least when it comes to day-to-day happiness. “As people earn more money, their day-to-day happiness rises,” reports The Wall Street Journal. “Until you hit $75,000. After that, it is just more stuff, with no gain in happiness.” Income above $75,000, however, does improve people’s overall “life assessment.” “Giving people more income beyond 75K is not going to do much for their daily mood … but it is going to make them feel they have a better life,” says Mr. Deaton. [%comments]


I'm assuming this is $75k at the average US cost of living... I live in NJ and $75k is barely enough to get by for a small family. When monthly rent is $1500-$2000 per month for a small 2-bedroom apartment, these numbers just don't seem to add up.


Congrats on deal with WNYC. Anyhoo... anything above 75k won't make you feel happier? I haven't sat down to gauge my mood when I was making less so how is this accurate? How many people sit down and do a self analysis and associate happiness with income levels?

Anything above 75k for me = more money going into retirement. I do not splurge... I have a Hyundai, live a mediocre neighborhood.. all to save money. My mood is 'content' when it comes to income but 'annoyed' when it comes to living where I live.

I Hate Overgeneralizations

Yeah, but what's the magic number in Manhattan? I bet it's a tad higher than $75,000.


I wonder how many of the survey respondents live in NYC. With a household income of around $250K and two children, and student loans, my partner and I feel like we're making just enough to not worry about money. We're happy, but for us the magic number is definitely not $75K.

Rick A

Too bad that number is out of reach for so many people in this country, who would probably be content with half of that.


The median individual income for 2006 for all non-zero income earners above age 25 was $32,140.

Why don't they just declare the happiness return on income cutoff to be twice the median individual income?

rob rob

When you desire an object, and identify with the desire, the desire causes anxiety. When the desire is satisfied the anxiety reduces and thus we return to our natural state until the next carrot and stick cycle commences once more.


There are so many variables that need to be included in this type of assessment. Demographics mainly. $75K may be suitable for a single person with an average cost of living, but there are many who have families to take care of as well as additional expenses.
Lifestyle is another variable - some need fancier items than others. But happiness and "daily mood" are tough to gauge. There are numerous items that affect how happy people are, and using $75K as a benchmark seems rather speculative.


The one thing that the magic number doesn't address for me is what you have to do for that level of income. Some jobs are easy while some slowly suck our your soul.


Yikes...if this is really the case then my family and I must be depressed. We are a family of 5 and we make less than $40K. We live in the Chicago land area so it isn't cheap. However, we are quite joyful. We find our joy in our family and although many may call us weird, we find our joy in Christ who has always provided for our needs. We have never lacked in finances. We have never missed a payment in bills. We have chosen to place priorities in different areas so that we can not only survive on a low income, but we can be happy as well. Not saying that anyone who has things like big screen tvs, semi fancy or even fancy cars are wrong for having them, not my place to judge. However, there is something a bit out of wack with the world when one gauges their happiness based on income and "stuff." I'm glad that I can be joyful no matter what. I may not always be happy (there's a difference between happiness and joy) but I strive to always be joyful.



Does that mean, as a Canadian, I can only be happy at 77,285.22 CAD?

Drill-Baby-Drill Drill Team

Income is highly dependent on the city.
Manhattan, NY is more expensive than Manhattan, Kansas.

$75,000 in Kansas will permit you to have a mortgage on a single family house, two cars in the garage, a jacuzzi in the backyard, a home gym and home theater.

$75,000 in NYC will get you a 500 sq foot studio, a transit pass, drinks and an occasional admission to Carnegie Hall cheap seats.


What ever happened to the old saying "Money cannot buy happiness"?

Just because 2 variables correlate does not mean their relationship is cause and effect.

Could it simply be that the average person has to work themselves stupid until they are making about 75K before they smarten up and find their happiness elsewhere?


Is that gross or net income?

And is that per person even in a marriage--so that for a married couple they'd have to take in $150,000 total? And then how does that work if there are children in the family, too?

Without these specifications, just writing "$75,000" doesn't tell much. Instead, writing "75,000 gross, per adult (even in families)" would be clearer.


I make 100K a year. Wife stays home with the kids. We don't spend foolishly, but our house is a large chunk of our income. We bought the house when we had one child and weren't sure how many we were going to have. We ended up with two. We easily could live in a smaller house that would save me 5-10K a year most likely.

Our life is pretty happy. One big TV one nice SUV. We don't have to fret about making our bills each month. We have some money saved up so a big unplanned expense won't kill us. We do shop around and get deals. Not too much named brand clothing in the house. The young one wears some hand-me-downs.

I have come to realize though that more stuff doesn't make you happy. I could be just a content in a smaller house with a cheaper SUV.

But I it would also be nice to take some bigger vacations each year. I would also like my own IPad as my wife hogs ours.

trader n

This is consistent with the 2-Factor theory or and other related management discoveries (like the hierarchy of needs).

$75K or so is probably the amount that people have to make in order not to have to worry about day to day needs or feel deprived.

At lower levels you can motivate people with more money but at higher levels you need to motivate them with more autonomy and responsibility.

It also means that paying more doesn't mean you get better work out of your employees.


$75,000 is probably the number that is enough for a mortgage payment (home), a car payment or two, health insruance, a little in savings and a vacation at the shore.

The point being that if you can cover the basics you are happier. More money might bring more things and more security but not necessarily more happiness.

Wendy Altenhof

If you follow the link to the WSJ article, the only additional information about the nature of the survey is

"The study, which analyzed Gallup surveys of 450,000 Americans in 2008 and 2009, "

That sounds suspiciously like the surveys on happiness ended with the standard "age, gender, household income" questions. It still doesn't make clear whether it was a salary or a household income.

In terms of taking care of your basic needs, I wonder if the happiness was merely correlating to a sense of security. I bet households that make $75k a year almost all have some medical insurance and maybe even some employer-provided group life insurance.


Similar to jprlk, I want to ask, does that mean, I as a South African, can only be happy at ZAR (South African Rand)539250? Because I won't ever get to that amount, I am afraid...


People for whom money doesn't buy happiness don't know where to shop. Buy experiences. Invest in a passion project. Take care of a problem that can be solved with money for someone who can't afford it and don't tell them it's you. There are tons of happiness-inducing things to do with cash. Buying an SUV clearly isn't one of them.