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The Relationship Between Money and Happiness

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Charting the Relationship Between Money and Happiness

Charting the Relationship Between Money and Happiness

Today’s chart is best viewed full-screen. Explore the high resolution version by clicking here.

Can money buy you happiness?

It’s a longstanding question that has many different answers, depending on who you ask.

Today’s chart approaches this fundamental question from a data-driven perspective, and it provides one potential solution: money does buy some happiness, but only to a limited extent.

Money and Happiness

First, a thinking exercise.

Let’s say you have two hypothetical people: one of them is named Beff Jezos and he’s a billionaire, and the other is named Jill Smith and she has a more average net worth. Who do you think would be happiest if their wealth was instantly doubled?

Beff might be happy that he’s got more in the bank, but materially his life is unlikely to change much – after all, he’s a billionaire. On the flipside, Jill also has more in the bank and is likely able to use those additional resources to provide better opportunities for her family, get out of debt, or improve her work-life balance.

These resources translate to real changes for Jill, potentially increasing her level of satisfaction with life.

Just like these hypotheticals, the data tells a similar story when we look at countries.

The Data-Driven Approach

Today’s chart looks at the relationship between GDP per capita (PPP) and the self-reported levels of happiness of each country. Sources for data are the World Bank and the World Happiness Report 2017.

According to the numbers, the relationship between money and happiness is strong early on for countries. Then later, when material elements of Maslow’s hierarchy are met, the relationship gets harder to predict.

In general, this means that as a country’s wealth increases from $10k to $20k per person, it will likely slide up the happiness scale as well. For a double from $30k to $60k, the relationship still holds – but it tends to have far more variance. This variance is where things get interesting.

Outlier Regions

Some of the most obvious outliers can be found in Latin America and the Middle East:

Latin America vs. Middle East

In Latin America, people self-report that they are more satisfied than the trend between money and happiness would predict.

Costa Rica stands out in particular here, with a GDP per capita of $15,400 and a 7.14 rating on the Cantril Ladder (which is a measure of happiness). Whether it’s the country’s rugged coastlines or the local culture that does the trick, Costa Rica has higher happiness ratings than the U.S., Belgium, or Germany – all countries with far higher levels of wealth.

In the Middle East, the situation is mostly reversed. Countries like Saudi Arabia, Qatar, Iran, Iraq, Yemen, Turkey, and the U.A.E. are all on the other side of the trend line.

Outlier Countries

Within regions, there is even plenty of variance.

We just mentioned the Middle East as a place where the wealth-happiness continuum doesn’t seem to hold up as well as it does in other places in the world.

Interestingly, in Qatar, which is actually the wealthiest country in the world on a per capita basis ($127k), things are even more out of whack. Qatar only scores a 6.37 on the Cantril Ladder, making it a big exception even within the context of the already-outlying Middle East.

Nearby Saudi Arabia, U.A.E., and Oman are all poorer than Qatar per capita, yet they are happier places. Oman rates a 6.85 on the satisfaction scale, with less than one-third the wealth per capita of Qatar.

There are other outlier jurisdictions on the list as well: Thailand, Uzbekistan, and Pakistan are all significantly happier than the trend line (or their regional location) would project. Meanwhile, places like Hong Kong, Ireland, Singapore, and Luxembourg are less happy than wealth would predict.

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Money

Who Expects to Get Richer in 2024, by Both Generation and Gender

A survey of 600 high net worth individuals revealed there’s one subset of people who are confident of making it in 2024.

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A cropped graph showing the percentage of people surveyed in the Knight Frank Next Gen Survey, sorted by generation and gender, and whether they anticipate a wealth increase in 2024.

Who Expects to Get Richer in 2024, by Generation and Gender

This was originally posted on our Voronoi app. Download the app for free on Apple or Android and discover incredible data-driven charts from a variety of trusted sources.

The jury is still out on how the global economy is expected to perform in 2024, but as seen during the pandemic, economic turmoil sometimes provides opportunities for the wealthy.

We visualize the percentage of high net worth individual (HNWI) respondents who expect their wealth to increase in 2024, categorized by generation and gender, from the Knight Frank Next Gen Survey, accessible in their latest wealth report.

The survey covered 600 global HNWIs, who are individuals with more than $1 million in assets or make more than $200,000 a year, and then categorized their responses by gender and generation.

Affluent Gen Z Women Eye Financial Gains in 2024

At a glance, there’s a very apparent generational difference in the expectations of getting richer in 2024.

About half (52%) of the surveyed Baby Boomers think their assets will grow, compared to Gen X (56%), Millennials, (69%), and Gen Z (75%).

GroupMaleFemaleOverall
👴 Boomer53%50%52%
👩‍🦳 Gen X56%56%56%
👩‍🦱 Millennial75%64%69%
🧑‍🦰 Gen Z69%81%75%
👨‍👩‍👧‍👦 All Generations68%63%65%

Note: Percentage of respondents who said they expect their wealth will increase in 2024.

There’s also a noticeable gender difference. Men tend to be more optimistic than women, with one glaring exception.

A staggering 81% of the surveyed high net worth Gen Z women expect to make hay this year, making them the most optimistic of all the groups.

This corroborates a trend where Gen Z women were also the most optimistic in retirement planning. As CNBC reports, a combination of newer avenues of financial resources, and an openness towards advice, has given them a more optimistic attitude than their older counterparts.

Meanwhile, American Millennials are expected to become the richest generation ever as a $90 trillion asset transfer between Boomer parents and Millennial children begins to take place over the next two decades.

A huge percentage of that wealth comes in the form of property assets accumulated by generations before them. This especially includes houses, whose prices have skyrocketed over the last two decades.

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