How much is enough? $75,000 is enough, it turns out.

A number of weeks ago, I read in Time about a study which found a correlation between household income and happiness. (Also reported in Inc., U.S. News & World Report, and the Washington Post.)

The study was conducted by researchers Daniel Kahneman and Angus Deaton at Princeton University and published a month ago in the Proceedings of the National Academy of Sciences. The results show that there are two kinds of happiness, which are affected differently by your income level. The first type is your day-to-day mood and well-being (happy, sad, stressed, enjoying life, etc.). The second is your overall sense of the level of satisfaction with the way your life is going.

What the researchers found was interesting. The first type of happiness - one's day-to-day well-being - improves until household income reaches $75,000, but does not continue to improve when income increases above that amount. "Perhaps $75,000 is a threshold beyond which further increases in income no longer improve individuals' ability to do what matters most to their emotional well-being, such as spending time with people they like, avoiding pain and disease, and enjoying leisure." That is to say, below that threshold, every additional dollar of income makes it easier focus on one's emotional well-being rather than worrying about the costs of day-to-day life, such as food and medical care. But at $75,000, a sufficient amount of money can be directed at both daily concerns and emotional happiness. Additional dollars spent over that amount do not increase one's day-to-day well-being. (As an aside, 85% of the 450,000 polled by Gallup and Healthways reported feeling happy the previous day, and 40% reported feeling stressed. Does that add up to more than 100%? Indeed it does. It appears that those two things are not mutually exclusive.)

The second type of happiness, though - one's overall level of satisfaction with his or her life - does continue to increase with higher income levels. "Higher incomes don't seem to have any effect on well-being after around $75,000, whereas your evaluation of your life keeps going up along with income."

Statistically speaking, only 1/3 of households in the U.S. earn over $75,000 annually. The average household income is about $71,500, while the median is only $52,000. And what do those numbers mean? They appear to indicate that 2/3 of Americans could use a little more day-to-day happiness, and half of households need to bring in an extra $23,000 to get there. That's a tall order, I suspect.