Datastream

Charted: Money Can Buy Happiness After All

Published

11 months ago

March 1, 2021

Carmen Ang

Article/Editing:

Raul Amoros

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 Income	Well-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
$85,000	0.01	0.03
$95,000	0.03	0.01
$112,500	0.04	0.08
$137,500	0.06	0.17
$175,000	0.08	0.17
$250,000	0.17	0.24
$400,000	0.19	0.35
$625,000	0.15	0.38

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

Related Topics:money income happiness low income high income well-being

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Datastream

The Accelerating Frequency of Extreme Weather

Extreme weather events, like droughts and heatwaves, have become more common over the years. But things are expected to get worse.

Published

1 week ago

January 13, 2022

Carmen Ang

The Briefing

We’re already seeing the impact of climate change—today, droughts, heatwaves, and extreme rainstorms are 2x more frequent than they were a century ago
In less than a decade, Earth’s climate is expected to warm another 0.5°C
If this happens, heatwaves will be 4.1x more frequent than they were in the 1850-1900s

The Accelerating Frequency of Extreme Weather

The world is already witnessing the effects of climate change.

A few months ago, the western U.S. experienced one of the worst droughts it’s seen in the last 20 years. At the same time, southern Europe roasted in an extreme heatwave, with temperatures reaching 45°C in some parts.

But things are only expected to get worse in the near future. Here’s a look at how much extreme climate events have changed over the last 200 years, and what’s to come if global temperatures keep rising.

A Century of Warming

The global surface temperature has increased by about 1°C since the 1850s. And according to the IPCC, this warming has been indisputably caused by human influence.

As the global temperatures have risen, the frequency of extreme weather events have increased along with it. Heatwaves, droughts and extreme rainstorms used to happen once in a decade on average, but now:

Heatwaves are 2.8x more frequent
Droughts are 1.7x more frequent
Extreme rainstorms are 1.3x more frequent

By 2030, the global surface temperature is expected to rise 1.5°C above the Earth’s baseline temperature, which means that:

Heatwaves would be 4.1x more frequent
Droughts would be 2x more frequent
Extreme rainstorms would be 1.5x more frequent

The Ripple Effects of Extreme Weather

Extreme weather events have far-reaching impacts on communities, especially when they cause critical system failures.

Mass infrastructure breakdowns during Hurricane Ida this year caused widespread power outages in the state of Louisiana that lasted for several days. In 2020, wildfires in Syria devastated hundreds of villages and injured dozens of civilians with skin burns and breathing complications.

As extreme weather events continue to increase in frequency, and communities become increasingly more at risk, sound infrastructure is becoming more important than ever.

Where does this data come from?

Source: IPCC
Details: The data used in this graphic is from the IPCC’s Sixth Assessment Report, which provides a high-level summary of the state of the climate, how it’s changing, and the role of human influence.

Datastream

Blockchain Applications: Tokenization of Real Assets

Tokenization is a future application of blockchain technology, and it could make investing in physical assets much easier. (Sponsored Content)

Published

1 week ago

January 12, 2022

The Briefing

Tokenization is a solution that divides the ownership of an asset into digital tokens
This process could democratize investment in physical assets

Blockchain Applications: Tokenization of Real Assets

Did you know that blockchain has the potential to transform the way we invest in physical assets?

Tokenization is a solution that divides the ownership of an asset (such as a building) into digital tokens. These tokens act as “shares”, and are similar to non-fungible tokens (NFTs). The difference here, however, is that the tokens are fungible and they are actually tied to the value of the asset.

In this graphic sponsored by Global X ETFs, we visualize how tokenization could be used in real estate.

Tokenization in Real Estate

Blockchain has strong potential in real estate investing because it mitigates many of the asset class’ hurdles. Here’s a brief round-up of its theoretical advantages:

Liquidity

Buying and selling real estate is normally a tedious process. If a property were to be tokenized, it would essentially cut out the middleman and allow buyers and sellers to transfer ownership directly.

These transfers would be as easy as buying and selling cryptocurrency.

Removing barriers to entry

Because properties are expensive, real estate investing is typically limited to institutional investors with large amounts of capital. Individuals can gain exposure through a real estate investment trust (REIT), but these vehicles can carry high minimums and fees.

Tokenization could enable individuals to buy and sell real estate in small denominations (even fractions of a token) and without traditional fees.

Transparency and security

Blockchains are decentralized, digital ledgers known for their security. Tampering with a blockchain’s data is incredibly difficult because the ledger is shared and verified by all of its users.

This provides investors with full transparency into the past transactions of a property, as well as an undeniable proof of ownership.

Democratizing Investment

If tokenization proves to be effective, it could be extended to a whole range of other physical assets—most of which have their own unique barriers. Consider the following table, which lists the 12-month and 10-year return of various luxury goods.

Category	12-month return	10-year return
Handbags	+17%	+108%
Wine	+13%	+127%
Collector cars	+6%	+193%
Watches	+5%	+89%
Rare whisky	-4%	+478%
Art	-11%	+71%

Source: Knight Frank (Dec 2020)

Rare luxury goods have historically been sold through live auctions, where the highest bidder is awarded ownership. Thanks to blockchain technology, this could change in the future. In fact, Sotheby’s (a 277-year-old auction house) recently began to accept cryptocurrency as a payment option in its auctions.

In short, tokenization has the potential to greatly reduce the barriers around alternative and physical assets. For investors, this means a much wider set of opportunities to pursue.