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Charted: Money Can Buy Happiness After All

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Can money buy happiness

The Briefing

  • Previous research has indicated that money stops buying happiness after $75,000/year
  • However, new research finds a strong correlation between income and happiness, trending upwards even after $80,000/year

In One Chart: Money Can Buy Happiness After All

What’s the relationship between money and happiness? Previous studies have indicated that, while money can in fact buy happiness, it plateaus at approximately $75,000/year.

However, new research suggests otherwise.

Using over a million real-time reports from a large U.S. sample group, a recent study found that happiness increases linearly with reported income (logarithmic), and continues to rise beyond the $80,000/year mark.

Below, we’ll provide more details on the research methodology, while touching on a few possible reasons why higher incomes may improve people’s happiness levels.

How is Happiness Measured?

Past research on happiness relative to income has relied on retrospective data, which leaves room for human memory errors. In contrast, this new study uses real-time, logged data from a mood tracking app, allowing for a more accurate representation of respondents’ experienced well-being.

Data was also collected by random prompts over a period of time, with dozens of entries logged for each single respondent. This provides a more well-rounded representation of a person’s overall well-being.

Two forms of well-being were measured in this study:

  • Experienced well-being
    A person’s mood and feeling throughout daily life.
  • Evaluative well-being:
    Someone’s perception of their life upon reflection.

Both forms of well-being increased with higher incomes, but evaluative well-being showed a more drastic split between the lower and higher income groups.

The Results (Measured in Standard Deviations from Mean)

Annual IncomeWell-Being (Experienced)Well-Being (Evaluative)
$15,000-0.21-0.34
$25,000-0.11-0.32
$35,000-0.09-0.19
$45,000-0.06-0.15
$55,000-0.05-0.07
$65,000-0.03-0.04
$75,000-0.01-0.02
$85,0000.010.03
$95,0000.030.01
$112,5000.040.08
$137,5000.060.17
$175,0000.080.17
$250,0000.170.24
$400,0000.190.35
$625,0000.150.38

Why Does Money Buy Happiness?

The report warns that any theories behind why happiness increases with income are purely speculative. However, it does list a few possibilities:

  • Increased comfort
    As someone earns more, they may have the ability to purchase things that reduce suffering. This is particularly true when comparing low to moderate income groups—larger incomes below $80,000/year still showed a strong association with reduced negative feelings.
  • More control
    Control seems to be tied to respondents’ happiness levels. In fact, having a sense of control accounted for 74% of the association between income and well-being.
  • Money matters
    Not all respondents cared about money. But for those who did, it had a significant impact on their perceived well-being. In general, lower income earners were happier if they didn’t value money, while higher income earners were happier if they thought money mattered.

Whatever the cause may be, one thing is clear—Biggie Smalls was wrong. Looks like more money doesn’t necessarily mean more problems.

»Like this? Then you might enjoy this article, Which Countries are the Most (and Least) Happy?

Where does this data come from?

Source: Proceedings of the National Academy of Sciences
Details: Participants were 33,391 employed adults living in the United States; median age was 33; median household income was $85,000/y (25th percentile = $45,000; 75th percentile = $137,500; mean = $106,548; SD = $95,393); 36% were male; and 37% were married

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Here’s What $1,000 Invested in Vaccine Stocks Would Be Worth Now

Ever wonder what you would have gotten if you invested $1,000 into the different vaccine stocks at the start of the pandemic?

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Vaccine stocks performance during the pandemic

The Briefing

  • Three of seven COVID-19 vaccine stocks have outperformed the S&P 500 since the beginning of the global pandemic
  • Novavax is the highest performing vaccine stock, returning 1,549% to shareholders

Vaccine Stocks During a Pandemic

It’s often said that with every crisis comes great opportunity.

While such catastrophes do create upheaval and uncertainty in financial markets, they can also lead to new opportunities for investors, as asset classes react to different environments.

Since the World Health Organization (WHO) declared COVID-19 to be a pandemic on March 11, 2020, the performance of vaccine stocks have been varied—but with some notable winners that notched triple or quadruple digit returns.

Here’s how much a $1,000 investment would be worth as of March 31, 2021, if you had put money into each vaccine stock at the start of the pandemic:

StockValue of Investment% GrowthMarket Cap ($B)
Novavax$16,4911,549.1%$14.3
Moderna$5,019401.9%$59.9
BioNTech$3,247224.7%$31.3
Johnson & Johnson$1,25225.2%$419.8
Pfizer$1,12212.2%$207.2
AstraZeneca$1,12112.1%$93.8
Sanofi$1,0969.6%$105.2

The Business of Vaccines

The returns on vaccine stocks have varied greatly. They are staggering in the case of Novavax and Moderna, but also seem quite underwhelming, when considering the likes of Sanofi, AstraZeneca, and Pfizer.

One factor for the discrepancy in stock price performance is the revenue potential from vaccine sales relative to the rest of the existing business, as vaccine sales will have a much greater impact on the fundamentals of smaller companies.

For example, before the pandemic, Novavax had revenues of just $18.7 million—this meant that capturing any portion of global vaccine sales would create massive value for shareholders. On the flipside, vaccine sales are much less likely to impact the fundamentals of Sanofi’s business, since the company already is generating $40.5 billion in revenue.

To put it into perspective, analysts are expecting total sales from COVID-19 vaccines to be around $100 billion, with $40 billion in post-tax profits.

Vaccine Stocks vs the S&P 500

Even in a booming and valuable industry, it’s difficult to identify the long-term leaders. For example, in the mobile phone market, there was a time where the likes of Motorola, Nokia, and Blackberry appeared untouchable, but eventually lost out.

Similarly, with the limited information available at the start of the pandemic, few, if any, could have separated the winners and losers from this group with accuracy.

In the past year, the S&P 500 grew 44.9%—meaning that only three of the seven vaccine stocks have seen their share prices outperform the market.

Nobody said helping solve a global pandemic guarantees a pay off.

Where does this data come from?

Source: S&P Global Market Intelligence
Notes: Investment growth is calculated between March 11, 2020-March 31, 2021. All market capitalization values are as of March 31, 2021.

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Bitcoin is the Fastest Asset to Reach a $1 Trillion Market Cap

Bitcoin is now part of a select very few assets that hold a market cap greater than $1 trillion. How long did it take to get there?

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Bitcoin fastest asset to $1 trillion

The Briefing

  • Bitcoin (BTC) hit a $1 trillion market cap in just 12 years, making it the fastest asset to do so
  • Investor sentiment towards BTC appears to be at extreme bullishness, with the asset adding roughly $500 billion in market cap just in 2021

Bitcoin is the Fastest Asset to Reach $1 Trillion

The world is moving forward at an accelerated pace. Historically, it’s taken multiple decades for companies to be worth $1 trillion. For bitcoin, it took just 12 short years to reach such a milestone.

To help put things into perspective, here’s a look at how long it took America’s biggest tech companies to reach the $1 trillion market cap.

AssetTime To Reach $1 TrillionCurrent Market Cap
Microsoft44 years$1.9 trillion
Apple42 years$2.2 trillion
Amazon24 years$1.7 trillion
Google21 years$1.5 trillion
Bitcoin12 years$1.1 trillion

Market caps as of April 12, 2021

Extreme Bullish Sentiment

Bitcoin has been subject to widespread commotion in markets.

At the start of 2021, the cryptocurrency had a more modest market cap of $500 billion, but has gained more than another $500 billion since. An onslaught of headlines has contributed to extremely bullish investor sentiment, including:

1. CEOs begin to show interest
Elon Musk and Jack Dorsey have made sizable investments in bitcoin through Tesla and Square, respectively. It’s estimated the gain from Tesla’s $1.5 billion bitcoin investment was greater than the profits from the entirety of their business in 2020.

2. New ETFs on the block
Multiple Bitcoin ETFs focused were recently approved by Canadian regulators and some have already launched on the Toronto Stock Exchange (TSX). For many years, the Grayscale Bitcoin Trust (GBTC) was the only readily accessible investment vehicle trading on equity markets that had exposure to BTC.

3. Financial institutions finally joining in?
Mastercard, Visa, and Bank of New York Mellon have made announcements to make it easier for customers to use cryptocurrencies.

On to the Next Trillion?

Future projections for the price of bitcoin are garnering more extreme and widening price targets.

The accelerated rate of change today has many of the Big Tech companies already inching closer to the next trillion in value. Will bitcoin follow suit?

Where does this data come from?

Source: coinmarketcap.com
Notes: Financial data is as of April 12, 2021

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