Researchers reveal how much money we need to be happy

Over the next ten years, Elon Musk Could become the world’s first trillionaire. Tesla’s board of directors recently proposed a $1 trillion compensation plan If Musk can achieve a series of ambitious growth goals.

AustraliaThe corporate salaries are not that high yet. But even so, outgoing Virgin CEO Jayne Hrdlicka will reportedly receive nearly $50 million in stock and other cash benefits when she leaves.

US research shows that people think the average CEO earns ten times more than the average employee, and would prefer it to be closer to five times.

In fact, the real gap us It is estimated that CEOs have earned a staggering 265 to 300 times more than the average American worker over the past decade.

Australians think CEOs earn seven times more than the average worker and want just three times more.

But the actual gap here is also wider. A long-term study has found that chief executives of Australia’s top 100 companies earned 55 times more than the average worker last financial year.

So, how much is enough?

People have been asking this question for thousands of years.

The ancient Greek philosopher Aristotle explained the concept of eudaimonia, a road map to the “good life” when he said: “It belongs more to those who have cultivated their character and mind to the maximum, and who keep the acquisition of external goods within moderate limits, than to those who manage to acquire more external goods than they can possibly use, and who are devoid of souls.”

Aristotle’s philosophy does not require us to avoid money or wealth entirely, but it does not believe that it should be the sole focus of life.

Research in recent decades has reached different conclusions about how much money is needed to achieve optimal well-being.

A 2010 US study showed that the maximum level of happiness is about $75,000. That number would naturally need to be increased today to account for inflation – which, if these findings were still correct today, would be closer to $111,000 in today’s dollars. You also need to consider the cost of living in your area.

Other findings suggest that happiness may continue to increase as wealth grows, but that the increase in happiness from $1 million to $10 million may be less than the increase when someone moves from poverty into the middle class.

A 2022 experiment looked at people from Brazil, Indonesia, Kenya, AustraliaCanada, the United States and the United Kingdom to receive a random $10,000 (A$15,000 at today’s exchange rates).

The report found that people in low-income countries, including Australia, were “three times more happy than in high-income countries”. But the cash still brought clear benefits to people with household incomes up to $123,000 (equivalent to $184,000 today).

Remarkably, people who participated in the experiment (explained starting at 4:42 in the video below) donated more than two-thirds of that money to family, friends, strangers, and charity.

Value time and relationships

Decades of international research have consistently shown that materialistic goals—acquiring wealth and possessions for reasons related to image and status—can harm happiness.

This is because materialistic pursuits often arise from low self-esteem or a tendency to compare yourself negatively to others, and there is always someone to compare yourself to.

People can get stuck on a “hedonic treadmill” where they get used to a new level of wealth and the luxuries it provides, and then need more to feel happy.

This is also because the work required to acquire wealth may mean less time to focus on hobbies and spend time with loved ones.

A Harvard study of two generations of men and their children, dating back to 1938, showed that deep, meaningful relationships with others are key to physical and mental health.

American psychologist Abraham Maslow proposed a “hierarchy” of people’s “needs” in 1943. This suggests that “self-actualization” – reaching the pinnacle of personal growth – begins with having enough money for the basics of food, housing and access to the opportunities needed for personal growth.

Consistent with this, research shows that “time abundance” (maximizing your free time by paying people to do things you don’t want to do) and “experiential purchases” (e.g., eating out with loved ones, going on vacation) can support well-being by helping people develop new skills, build relationships and create lifelong memories.

It is in the interest of most of us to close the gap between rich and poor

Latest figures show economic inequality is rising in Australia. This has a particularly severe impact on young Australians as housing becomes increasingly unaffordable.

At a wider societal level, research in the UK shows that as inequality increases, social outcomes get worse. These include rising crime rates, drug and alcohol abuse, obesity as a result of people being unable to afford nutritious food, and declining trust in society.

What percentage of wealth do you think the richest 20% of Australians own? And in your ideal Australia, how much wealth would there be? should What do the richest 20% own?

The latest Bureau of Statistics data we have for 2019-20 shows that the richest 20% of Australians own about 62% of our wealth.

There is evidence that as inequality increases, this will lead to social problems that threaten the well-being of entire communities.

Ironically, those who pursue extreme wealth and benefit the most from this inequality are not necessarily happier or more content as a result.