Money cannot buy happiness – except for people who make less than $75,000 a year.
Daniel Kahneman’s 2010 study showed that emotional well-being increases as people earn more money, but only until they reach $75,000 a year. After surpassing that threshold, emotional well-being plateaus, while self-evaluation of life quality continues to increase.
“Above that we get an absolutely flat line,” Kahneman said in a 2010 TED Talk. “Clearly what has happens is that money does not buy you experiential happiness, but lack of money certainly buys you misery, and we can measure that misery very clearly.”
Part of this misery that Kahneman is talking about comes from the stress that financial problems are likely to cause. And this stress can affect people in a variety of ways.
People suffering from financial distress are more likely to be depressed, experience headaches and develop stomach ulcers. These health problems are exacerbated by the fact that 26 percent of people said that they put off a doctor visit because of the difficult economic times, according to a recent survey.
Potential Health Problems Caused by Financial Stress from NBC
- Severe Anxiety
- Muscle Tension
- Ulcers & Digestive Problems
- Migraines & Headaches
- Increased Risk of Heart Attacks
Financial stress is particularly tough for millennials who are navigating the job market for the first time. When evaluating their own stress on a scale of one to 10, millennials report and average level of 5.4 – compared to 4.9 for the rest of the population, according to a study by the American Psychological Association.
“Millennials are growing up at a tough time. They were sheltered in many ways, with a lot of high expectations for what they should achieve,” said Mike Hais, a market researcher, in a 2013 interview with USA Today. “The economy collapsed just as many of them were getting out of college and coming of age — that does lead to a greater sense of stress.”
Financial stress can cause people to make irrational decisions that they would not normally name – something that therapists work with patients to prevent.
“Differentiate between real problems and making that problem worse by complicating it with other issues, such as a destructive relationship or using alcohol and drugs,” said Dr. Alan A. Axelson, a Pittsburgh psychiatrist in a 2009 interview with the New York Times. “That makes it worse. I always say there’s no situation so bad that you can’t do something to make it worse.”
There is an inverse to the problem of having too little money. Though less common, having too much money can also cause significant emotional distress. Some psychologists find that having too much money causes people to feel isolated and unable to trust the people around them.
“Sometimes I think that the only people in this country who worry more about money than the poor are the very wealthy,” said Robert A. Kennedy, a developmental psychologist in a 2011 article with Time Magazine. . “They worry about losing it, they worry about how it’s invested, they worry about the effect it’s going to have. And as the zeroes increase, the dilemmas get bigger.”
There seems to be a fine line between having too little and too much money. Once people reach a threshold of living comfortably, further efforts to make more money do not improve the quality of their lives. So while money may buy happiness at some level, it is worth remembering that it can only do so much.