You may have heard $75,000 is the 'magic' income number. Find out the story behind it.

You may have heard $75,000 is the magic household income for happiness.

But what, exactly, does that mean?

In a landmark study a few years ago, Princeton University researchers Angus Deaton and Daniel Kahneman set out to definitively answer the question of whether money buys happiness. If anyone is equipped to answer that question, it's these two. Both have won the Nobel Prize in economic sciences: Kahneman in 2002 and Deaton just last year in October 2015.


In their study, they analyzed over 450,000 responses from people across America about their annual income and overall happiness to get at the relationship between the two. They broke down their findings using two metrics: emotional well-being and life evaluation.

Emotional well-being is basically how you feel your life is going on a daily basis — your everyday happiness or joy, or, conversely, stress or sadness. ("How are you today?")

GIF from "The Simpsons."

Whereas life evaluation is an overview of your entire life and how you see it going — how pleased you are with where you're at. ("How's life treating you?")


GIF from "Nacho Libre."

Deaton and Kahneman found that low income is associated with low emotional well-being.

Poverty makes it so that misfortunes such as getting sick, divorce, and being alone are felt even more. As income rose, though, emotional well-being rose consistently alongside it.

The thing is, happiness through emotional well-being didn't change too much beyond $75,000. Once that point was reached, people were basically just, "I'm good."

GIF from "Episodes."

In the discussion section of the study, the researchers offer a possible explanation: "Perhaps $75,000 is a threshold beyond which further increasesin income no longer improve individuals' ability to do what mattersmost to their emotional well-being, such as spending time withpeople they like, avoiding pain and disease, and enjoying leisure."

Life evaluation, on the other hand, just kept rising with the income.

So if we're talking about satisfaction, sure, more money leads to more. (I mean, if you make a million bucks a year, you can probably conclude that life is treating you PRETTY GOOD.)

GIF from "30 Rock."

But the thing is, when talking about happiness, what really matters in life are the good times you have with friends and family.

Let me leave you with some food for thought.

The Census shows that in 2014, 63.8% of U.S. households earned less than $75,000. More shocking is that although the average household income historically is right around that $75,000-happiness mark, the median household income is just around $54,000 — which indicates most households in the U.S. fall almost $20,000 short of the magic number.

Now that doesn't necessarily mean that all those households are chronically unhappy, but what it does mean is that a large amount of Americans may not have the level of income necessary to spend time with loved ones, avoid pain and disease, and have enough leisure time.

America is still one of the richest countries in the world, yet so many continue to fight for these basic needs. Maybe it's time we close the gap between so few having so much and so many having so little. In fact, this incredible CEO is already doing his part.

Because if the $75,000 threshold has taught us anything, it's that life shouldn't be about the exorbitant amount of money you could be making. But rather, how happily we could all be living.

More
True
TD Ameritrade

Climate change is happening because the earth is warming at an accelerated rate, a significant portion of that acceleration is due to human activity, and not taking measures to mitigate it will have disastrous consequences for life as we know it.

In other words: Earth is heating up, it's kinda our fault, and if we don't fix it, we're screwed.

This is the consensus of the vast majority of the world's scientists who study such things for a living. Case closed. End of story.

How do we know this to be true? Because pretty much every reputable scientific organization on the planet has examined and endorsed these conclusions. Thousands of climate studies have been done, and multiple peer-reviewed studies have been done on those studies, showing that somewhere between 84 and 97 percent of active climate science experts support these conclusions. In fact, the majority of those studies put the consensus well above 90%.

Keep Reading Show less
Nature

As a child, Dr. Sangeeta Bhatia's parents didn't ask her what she wanted to be when she grew up. Instead, her father would ask, "Are you going to be a doctor? Are you going to be an engineer? Or are you going to be an entrepreneur?"

Little did he know that she would successfully become all three: an award-winning biomedical and mechanical engineer who performs cutting-edge medical research and has started multiple companies.

Bhatia holds an M.D. from Harvard University, an M.S. in mechanical engineering from MIT, and a PhD in biomedical engineering from MIT. Bhatia, a Wilson professor of engineering at MIT, is currently serving as director of the Marble Center for Cancer Nanomedicine, where she's working on nanotechnology targeting enzymes in cancer cells. This would allow cancer screenings to be done with a simple urine test.

Bhatia owes much of her impressive career to her family. Her parents were refugees who met in graduate school in India; in fact, she says her mom was the first woman to earn an MBA in the country. The couple immigrated to the U.S. in the 1960s, started a family, and worked hard to give their two daughters the best opportunities.

"They made enormous sacrifices to pick a town with great public schools and really push us to excel the whole way," Bhatia says. "They really believed in us, but they expected excellence. The story I like to tell about my dad is like, if you brought home a 96 on a math test, the response would be, 'What'd you get wrong?'"

Keep Reading Show less
Packard Foundation
True

I live in a family with various food intolerances. Thankfully, none of them are super serious, but we are familiar with the challenges of finding alternatives to certain foods, constantly checking labels, and asking restaurants about their ingredients.

In our family, if someone accidentally eats something they shouldn't, it's mainly a bit of inconvenient discomfort. For those with truly life-threatening food allergies, the stakes are much higher.

I can't imagine the ongoing stress of deadly allergy, especially for parents trying to keep their little ones safe.

Keep Reading Show less
popular
Amy Johnson

The first day of school can be both exciting and scary at the same time — especially if it's your first day ever, as was the case for a nervous four-year-old in Wisconsin. But with a little help from a kind bus driver, he was able to get over his fear.

Axel was "super excited" waiting for the bus in Augusta with his mom, Amy Johnson, until it came time to actually get on.

"He was all smiles when he saw me around the corner and I started to slow down and that's when you could see his face start to change," his bus driver, Isabel "Izzy" Lane, told WEAU.

The scared boy wouldn't get on the bus without help from his mom, so she picked him up and carried him aboard, trying to give him a pep talk.

"He started to cling to me and I told him, 'Buddy, you got this and will have so much fun!'" Johnson told Fox 7.

Keep Reading Show less
Most Shared