Thursday Thread: I Am Not Limitless
Well-Being levels off at $75,000 of income per year.
At the end of 2020, I finally. finished. it. Daniel Kahneman’s 418-page masterpiece of a book: Thinking, Fast and Slow.
In the book, Kahneman, winner of the 2002 Noble Peace Prize in Economics, lays out what felt like his life’s work to explain human decision-making through a sociological and psychological lens.
For those that enjoy an academic read, Kahneman takes you on a tour in an F1 car to discover the numerous biases and brain powers that go into how we navigate everyday decisions. One of the studies that he highlights is the famous data on perceived correlation between:
How much money you make and your overall emotional well-being/life evaluation.
In other words, does money make us happy?
Emotional Well-Being = the quality of a person’s everyday experience such as joy, fascination, anxiety, sadness, anger, and affection.
Life Evaluation = a person’s thoughts about his or her life, zoomed out.
The story is buried deep in the book. Page 397 in case you were wondering. A 450,000 person study. In America. Using the Gallup-Healthways Well-Being Index.
The Results:
People’s life evaluations rise steadily with income, regardless of whether you are rich or poor. The more money you make, the more enthusiastically you are going to answer the commonplace question of “So how’s life?” with “Life is good!”
However, it is a different story with well-being (remember above definition). Emotional well-being levels off at $75,000/year. Put another way, once a person makes $75k, the quality of their experience does not improve.
OK. This is what I really want to talk about.
When you hear that number, my guess is you immediately test against your own experience. Then come thoughts of “well, is that before tax or after?” and “Is that just a single person, or family income?” I even went the route of: “That study was in 2010, and doing a quick inflation calculation, the number is now $103,817.54…”
Let’s not go there.
Let’s stay with the idea that there is a number, for you, in your life setup, where the quality of your life experience levels out. “It” exists. You might have to put some elbow grease into naming it, but there is a threshold.
I once heard that one of the most beautiful, impactful parts of life is when you come to terms with your own limits. The hours in a day. The number of people you can truly impact. The number of friends you can keep close. The number of conversations you have left with a person.
Can we come to terms with the fact that in our pursuit of financial security, we might eventually reach a point where increasing the amount of money in our pocket no longer delivers a return on well-being?
Regardless of what your “number” is or could be, a few questions begin to surface:
Do I believe this limit exists? Is there such thing as “enough?”
If I do, do I believe it applies to my experience personally?
Then things get scary:
What if I reach my limit?
What if I don't reach my limit?
What if I surpass my limit?
How do I spend?
How do I give?
How do I live?
Whether you make $75,000, or $7,500, or $750,000…
This is an experiment in satisfaction and perspective. In contentment, in stress, in joy, and in time as currency. The Ambient planning process is just as much about discovering your destination as it is about tweaking your direction. You need both.
So what's your number?
Princeton Happiness and Money Summary