Money Can Buy You Happiness… to an Extent

This is a guest post by Kusum Chanrai. Kusum is studying for her MBA at Harvard Business School. Prior to business school, she worked at Deloitte and Procter & Gamble, and is currently interning at the education non-profit organization, “Pencils of Promise.”

While pursuing an MBA, I’ve encountered my fair share of days in which the rigorousness of the program overshadows any sort of happiness I have in knowing that this what I want to be doing. On those days, to distract myself with a little consolation, I find myself researching the topic of “happiness.”

It goes without saying that happiness comes from within. However, in my research, I’ve encountered the reality that there is certainly something to be said about how one’s lifestyle, career, and income can make this happiness easier to realize. The last factor is the easiest of the three to quantify, and I stumbled across research that might help to address the question,”To what extent can money buy you happiness?”

Keeping in mind that the findings should be considered in general terms, the magic number in annual pre-tax income is $75,000. I was shocked that it was so low, and in fact, many sources proposed that our targeted individual income should in fact be much lower at around $40,000!

The logic for this is simple. David Gilbert, Professor of Psychology at Harvard University, explains that “once you have enough money to meet basic needs – food, shelter, but not necessarily cable —incremental increases have little effect on your happiness.” The curve on the following graph should give you a good idea of what this looks like, quantified:

Living in New York City on my non-profit salary and having to consider every dollar that I pull out of my wallet is definitely stressful; worrying about whether or not I can afford a trip to Pinkberry is certainly far from ideal. However, Professor Gilbert’s lessons illuminated the fact that although being able to afford trips to Pinkberry certainly does make my day-to-day life more enjoyable, there’s a limit to how much influence money has on overall happiness in life.

This led me consider the income I felt that I personally “needed” to be truly happy, and in turn, how to generate the income I needed while keeping in mind that while money can buy you a certain amount of happiness, it has its limits.

I’ve since concluded that, in these terms, I’m on a good path to happiness now… which gives me much consolation on those rough days in business school! By no means can I offer universal advice on the topic of happiness, but having already flirted with a number of different professions in my short professional life, here are my nuggets of advice:

• It’s a cliché, but know your strengths. Know the activities that make you feel “in the zone” and ensure that you’re able to engage in them on a weekly, if not daily basis. Working as an accountant while eschewing Microsoft Excel taught me this.
• It’s easier said than done, but don’t waste your time, proving to yourself or others that you can obtain or endure a particular role that you dislike. Relationships are far more important than careers in shaping one’s overall happiness, and no one likes a whiner.
• Experiment. You’re unlikely to get it right first time – but like men, each mistake flavors and strengthens both your character and dinner conversations.

For more about money and happiness, read: For Richer or Poorer…Really?