Last week’s Casual Friday study was all about money. The basic question was simply what it means to be rich — how much income and net worth does it take before you consider someone to be wealthy? We received over 1,000 responses. Perhaps our most interesting finding was simply the diversity of opinions about what “rich” is. Here’s how the responses broke down:
While most responses fell between $100 thousand per year and $500 thousand per year, 95 people said an income of below $100 thousand was still “rich,” and 75 people said it would take $1 million or more per year to be wealthy! Another way to measure wealth is net worth — the value of assets (bank account, stocks, real estate) minus debts. Here are those results:
The most common response was the traditional $1 million. But over 100 respondents gave values of $200 thousand or less, and more than 100 thought it would take more than $5 million to make a person rich.
But we wanted to learn more than just what our readers think of as “rich.” We also wanted to find out if a subtle difference in the way the survey was administered could affect the results. Respondents were divided into four groups, each of which saw a different pair of images before completing the survey. Group 1 saw this:
Group 2 saw this:
Group 3 saw this:
And Group 4 saw no picture at all. To make sure respondents looked at the pictures, we asked a question about each picture (“which would you rather have?” or “which couple looks happier?”). Then we proceeded to ask the questions about wealth. Maybe if respondents think about consumer goods, or luxury items, or happiness, before responding, their answers will be different. And indeed, they were:
The group that saw the luxury items said it would take significantly more income to be rich compared to all the other groups. Interestingly, there was no significant difference in the results for those who saw consumer goods, happy faces, or no picture. The pattern for net worth was similar:
Once again, seeing pictures of luxury items significantly increased how much respondents said it would take to be “rich.”
Greta and I had a little debate before we did the study; Greta said she thought the high-value items might backfire, resulting in lower estimates. She thought standard consumer items would have a bigger impact on results — so, in a rare feat, I actually win bragging rights this week! A brief exposure to just two pictures of luxury items dramatically affects respondents’ definition of “rich,” while exposure to consumer goods has no effect.
But there are lots of other interesting tidbits in our data. We also asked respondents to tell us how much they would give away if they won a tax-free million dollars. None of the images made a difference — the average amount given was about $200,000 for each group, regardless of which picture they saw. What did make a difference in giving? Actual income. Those who said they earned over $100K per year would give away an average of $154,000 out of a $1 million prize, while those earning under $100K per year said they’d give away an average of $207,000 — a significantly larger amount!
As you might expect, those with higher incomes also defined “rich” as significantly higher-income and net worth compared to those with lower incomes. High income respondents defined “rich” as a net worth of over $4.3 million, while low income respondents said it would take less than half that much to be rich — an even $2 million.
Lower-income respondents also said they’d could be happy with a lower income — $45K per year — than higher-income respondents, who said they would need a minimum of $87K per year to be happy.
One question that perplexed our readers was this one:
How much income is enough? Supposing you cant give any of your income away, what is the ANNUAL income needed to maximize your personal satisfaction and happiness? In other words, how much money would you need each year such that any more could NOT make you more happy and satisfied?
One respondent replied “9999999999999999999999999999999999999999999999999”, while another said “2040723.89”. Others said “unbounded,” “infinite,” “there is no number,” and “No clue, less about the money and more about the game.” Not counting these absurdly large numbers, the average amount was about $325,000 (In case you’re interested, when the non-infinite numbers were included, the average rose to $9.27 X 10^45). Once again, high-income respondents had a significantly higher average ($470K) than low-income respondents ($293K).
I received a couple of emails suggesting that our data would be skewed by responses from outside of the U.S. Fortunately, our survey provider does offer a way to find out where (most) survey respondents are located. There was no significant difference in respondents’ income, regardless of location. There was also no significant difference in responses about what income and net worth it takes to be rich, or in what they would give away. However, non-U.S. respondents did say it would take significantly less income to be happy compared to their American counterparts: $45K per year versus $54K per year
There’s lots more analysis that could be done on this enormous data set. Responses could be broken into even smaller geographic units, like New York/California versus the rest of the US. We could consider finer gradations of income, family size, and more. If you’re interested in taking a closer look, let me know and I’ll send you the data set.