Income Threshold For Happiness Has Risen - Economic Implications

The concept of what level of income is required for a person to feel satisfied with their life has perplexed economists for a long time. Initially, it was thought that achieving the $75,000 annual income mark led to a peak in happiness, however new studies are now indicating this figure may be significantly higher. With an increased demand for higher paying jobs, there is no doubt that the economic implications of this revelation are both far-reaching and momentous.

Economists have traditionally used money to measure how well a person is doing. This has led to focus primarily on wages, taxes, prices and the ability of individuals to purchase goods and services. What had not been effectively taken into account when looking at happiness was the impact of having enough financial freedom to make choices and pursue goals without regard to cost. New research has revealed that achieving this level of financial freedom is sadly out of reach for many, in particular those earning less than $90,000.

In terms of economic implications, pressure can now be placed on employers to pay higher wages to attain this level of financial freedom and in turn, greater happiness. Higher paying jobs offer more stability, allowing individuals to feel more secure in their employment and this translates to improved productivity and mental health. Equally, it leads to people being in a better position to make career choices and pursues paths which may have otherwise been cut off owing to financial reasons.

The cost of living in some cities such as San Francisco has led to another issue in relation to financial wellbeing. Poorly regulated growth in the number of expensive shops and businesses causes average wages to not keep pace with the rate at which costs are going up. Lower salaries lead to a lower level of satisfaction with life despite having a larger disposable income; rather than accumulating wealth, one's money is instead only just enough to cover necessities.

Evidence suggests that that the threshold for happiness is climbing, with many people feeling they need to earn above $90,000 annually in order to gain access to some degree of financial freedom. This has significant economic implications as it means earring less may lead to a decreased sense of wellbeing, with increased pressure on employers to provide higher paying jobs as a response. It remains to be seen whether such wages can rise to match the growing cost of living, but in any event, economic changes are needed to ensure that anyone who works hard can achieve some level of financial tranquillity and happiness.