Casual Fridays: Semi-secret money study

Interesting to contemplate what it takes to make one happy (and how that translates to material factors such as money)

For the sake of us older readers, in future you might want to phrase the appropriate questions under family status as Married/Divorced - no kids at home. Or just "no dependents."

I'm not sure what your hypothesis is here, but on surveys where my annual income is asked, I hate how there's usually just one bracket for $20k and under. It might or might not make your results more significant to break that down even more (or just come up with a survey for us poor folks only, striated by "how poor"). In my environment (a small midwestern college town) the cost of living is low enough that there's a significant difference in lifestyle and happiness for people making $10k (grad students) compared to those making $20k (low-ranking college staff such as myself).

Where's my dollar? Aren't you supposed to give me a crisp dollar bill to encourage me to complete the survey?

I'd prefer a shinny new Euro for finishing the survey

I will be interested to see how one's current income level affects perceptions of 'rich' and 'what do I need/want' - but only mildly, *unless* there is no correlation :). That would greatly surprise me.

Curious also as to the hypothesis behind the 'how much would you give away?' question - I would have expected some Q about how much the respondent currently gives to charities or whatever (easy to answer right now in the wake of tax season, for US responders).

I agree with Katy. I live in Urbana, IL. As an undergraduate (at the same university I'm now a grad student at), I made about $10,000/year, and felt strapped for cash. Now I make about $16,000/year, and I feel rich by comparison. The food and alcohol I get is better than before, I live in a nicer place, and I can afford to do things like buy a new (low-end) laptop once in a while. Of course, it's not surprising that a 60% increase in income could have these effects, but that always gets lumped together in these surveys.

I have a hard time dealing with the question of "richness". It seems meaningless.

I also had a hard time answering questions about the incremental value of money and happiness. Beyond a certain point, and I bet that point is very low, money doesn't really help happiness but it can help security and comfort, and if you earn a great deal, then you can retire early which would make me happy. It raises a lot of subtleties which can't easily be answered in a survey format.

I think the survey should have somehow taken into account "family" income. I am the sole earner in my family so I need a significantly higher salary to support my family vs someone in a double income family.

Just to let you know, that's not an iPod, it's an iPhone.

I was curious about the 'how much you would give away' question. It makes no distinction between charitable giving and personal gifts, like paying off your parents' mortgage. To me those are very different kinds of giving, so it made the question tricky.

It may have helped to have a location type of question -- I live in LA right now, and the amount of money I feel like I'd need to be comfortable is much more that what I would have said while living in Chicago, which would have been higher than what I would have needed in St. Louis, where I grew up.

I also had some worries about "richness" without reference to cost of living. $100k annual income where I grew up (median household income of $24k) is rich, but if I was living in SanFran $100k wouldn't be rich. So I went with those numbers and not numbers based on me living in this college town (with a median household income of $39k).

I have fairly minimal requirements for income to spend... i.e., I said I could be happy on $16,000 for my current lifestyle. I really don't know what I'd do (barring giving it away) with more than $80,000/year- at least as long as I am single with no kids.
But I have a very high standard for what amount of net worth is "enough" to feel fully secure. I'd have to have at least enough to retire on, pay for future kids college, and take care of worst-case-scenario medical bills if my parents got sick. Realistically, I will never need all of that on hand at once, but that is the amount it would take (which could easily run 10 million or more) to max out happiness from money.
Of course, I think you can never max out happiness from money if you keep giving it away.

As a subtle-point: if I had a million dollars tax-free, I'd feel guilty about not paying taxes, so I'd probably give away more than if you had said "a million (post-taxes)". I don't know if that's how you intended the give-away question to work.

Fun survey!

I agree with everyone that is saying that the location of where you live has a huge influence on what you perceive as being rich, comfortable, etc.

The demographic questions are difficult on Casual Fridays. We don't want to make the survey so long that it takes forever to fill out -- and we're also not interested in spending a lot of time poring over all the data (remember, it's supposed to be casual) -- so we try to limit those questions as much as possible. I'm sorry if folks felt like their particular demographic wasn't covered.

That said, we should have geography covered at least in a broad sense because the survey engine collects IP addresses, which give us a good idea of where you're responding from.

Interesting questions about the "how much would you give away" question. You're right, Ewan, we might have learned more just by asking how much people *do* give away, but since this is more of a study of peoples' fantasies about money, we were more interested in hypotheticals.

I agree that "rich" is very relative to cost of living, so I'll be interested to see how widely distributed the responses are. Does anyone think that a net worth of less than, say, $50,000 qualifies as rich? Does anyone think more than $50 million is required?

Oh, and it is definitely an iPod, Carolina -- we just got one. The iPod Touch was initially marketed as an "iPhone without the phone," so they are easily confused.

This was interesting and related Freakonomics article that people might enjoy, even if the the question and conclusion were a little off IMO.

http://freakonomics.blogs.nytimes.com/2008/04/17/the-economics-of-happi…

I was confused by the "too much money" and the "give away money" questions. If I had an infinite amount of money, I'd just start taking over functions of the government: start my own science foundation or my own space program. If you think big enough, you can always find something to spend your money on. And then, on that same topic, are you giving your money away if you, say, start a scholarship fund or build schools? I would think of that as basically the same as buying things I want.

Happiness is a really hard quality to compare. I can say I was a happy kid when I was 15 or whatever, but I can't say whether I'm happier now or I was happier then. Similarly, it's really difficult to say whether a version of me making say $10,000 would be any less happier than a version of me making $100,000, unless those two versions of me knew how it felt like to be in the other situation. I might be happy now, but I do not know what a bazillionaire's life is like, so would not know if i'd be happier there. On the other hand, if I only made $10,000 I'd probably be able to survive, and there's a possibility I could adjust to that kind of life and find happiness. Since I haven't been there, I don't know how miserable I'd be.

I agree with previous comments about geographic location needing to be part of the survey. With our combined salaries, our family would be living high on the hog in many parts of the country, but we're simply "doing okay" in the San Francisco area. Having enough money to put food on the table, roof over our heads, and gas in the car to get to work affects assessment of financial levels required to be happy, I suspect. At least, I'm not very happy when I can't pay bills on time or when a tough decision has to be made between paying taxes or getting the car fixed... I was also confused as to whether my responses should take my household into account (support of two wage-earning adults plus child, plus a child support payment). I ended up answering for the household, with our household salary, etc, further inflating the assessment of how much money is required to be happy. Maybe the real question that I was answering is "how much money is required to be stress-free"?

Yeah, I live in the San Francisco Bay Area. A small old house with virtually no lawn is $750,000. If I got $1 million tax free, I'd buy a house and wouldn't give any part of it away (though it would free me to give money to charity and such in the future). If I still lived in Arkansas, it'd be a totally different matter...

That's the only part I'm sure about. IIRC from Stumbling on Happiness, humans really suck at predicting their own happiness in these cases. Really, I have no idea.

I answered that the minimum income I would need to be happy is $0. I observe, for instance, that my son seems happy, and he has no income. I could be perfectly happy if my own father took care of all my needs, too. I don't need income to be happy.

I answered that the maximum income I would like (such that more income would make no difference) is $500,000,000. But I feel like that's a lie. The real answer is there is no limit. This is because the more income I have the more my interests expand to building my own research fleet to become the next Cousteau, and creating a research laboratory to figure out cold fusion and create nano-engineered super materials. I also want a space program. We need a giant interstellar ark. Make that TEN giant interstellar arks.

I agree with xerxes and James Bach. And even on a smaller scale, it's really hard to know if there's a line to be drawn somewhere.

"Ok, so now I have a slightly nicer apartment, can pay off my debts, travel a bit and throw an amazing birthday party once a year. I'm happy. But... not having to go deep into debt for buying a house would definitely make me happy. Bump the amount up a bit. That would probably be when I'm married and have kids. Oh, marriage and kids. Bump the amount up a bit. Well, wouldn't it be nice being able to build your house just the way you like it? Bump the amount up..."

And then we can go on through starting your own company; buying art, owning a boat; to taking your own private jet to Hong Kong to visit friends; and all the way up to buying TV networks to get rid of crappy shows and reviving good ones.

Then again, maybe I am just really hard to please.

I may have made an error on one of the questions, the money wasn't in the currency I am used to and I think I might have answered the question about minimum amount to be happy as if it were written in GBP rather than USD. Whoops :-\

WRT how much income is needed before you stop feeling happier with more...

I agree that my interests would likely expand into giving more back to the community. I already do this with my time and look forward to donating more of my money (I've been in a two-year money slump and donations have dropped a lot). But I understood the question to imply that we would have to work for the additional money, which is the catch.

I've got a lot of things I'd rather do with my time than work so I've no problem seeing a point when the incremental value of money drops to well below the value of the extra time and effort required. I hit that point in other jobs where I was earning about $100k/year and even with offers of a lot more money, I wasn't interested in putting in the extra time or effort. I'm sure you could tempt me to work with ridiculous amounts of money, but my short-term happiness would definitely drop and I would do it only for the longer-term goal of financial independence.

I haven't looked at any similar studies, but I wonder if/suspect we'll see that those with lower incomes are more willing to give as well. That's certainly my experience in charity fundraising!

Just for fun, my concept of rich derives from a global perspective, and having ones needs met plus a little extra -- thus you don't need *too* much to be rich in my eyes. I wonder how others will conceptualize richness, and how that effects their choices.

"You can never get enough of what you don't need to make you happy." -- Eric Hoffer

I do not think this questionnaire is sciential because everyone who come from different contry and can visit this website could practice the survey.
As everyone knows different country has different economic power.
So,.........

1. One question sais, how little would you need to earn so that no more money would make you happy? $0 should have been an option, but it wasn't there - had to puck $10K.

2. If you won $1 million, how much would you give away? None - because you don't give away the *principle*. But of the interest - on which I would be living - I would be giving away a substantial about. No way to represent that in the responses, so I come off looking like a selfish miser, when I'm simply something other than foolish.

This study fails to take into account how much the person who wins the million dollars would need for him/herself, before any is available to be given away. I have no house/appt., no car, no savings, no college degree, and plenty of debt. In other words, I have less than nothing. I would be thrilled than to give it all away to orphans, needy schools, you name it. But that would be putting the oxygen mask on the person in the seat next to me before I put my own on (if you get my airline metaphor).

Andrea/Stephen:

Both of you have interesting points. However, I do think the study takes some of your issues into account. We ask what your current income is. Presumably if you're making $200,000 a year and still aren't willing to give any of the $1 million away, that's different from someone who's making $20,000 a year.

I also think that comparing your hypothetical "how much do you need" to "how much will you give away" could offer some interesting insight.

But still, you're right in that different people have very different financial situations.

Concerning Does anyone think that a net worth of less than, say, $50,000 qualifies as rich? Does anyone think more than $50 million is required? and the point made in #26: Yes, I think a net worth of less than $50,000 could be considered rich, especially when you think on a global scale. Even though our family lives in an area with a higher cost-of-living than is average for the US, we try to keep this in mind in our decisions with respect to money, so we give away a large percentage of our income. Wasn't there a recent study showing "giving away money can buy happiness?" I think it was featured in Sci Am's 60 Second Science podcast.

you should've asked about the industry people work in! I find it a constant theme of academics that they feel under compensated. Although since those are the peeps I work around, perhaps it is true that everyone feels under compensated...?

I'm not sure if I answered correctly in family status. I'm in a domestic partnership, not a legal marriage, and we have a kid so...I checked the "other" box.

There have been several studies showing that beyond a certain (subjective) level, more money does not increase happiness. Of course, keep in mind that a higher annual income usually means more work as well...which begs the question in relation to the survey questions and the comments here...at what level would it not be worth the extra work to have the extra income?

Also, in my own answer regarding what I would consider "rich," I based my answer not on what I need to have to define myself as being rich, but on what I could say, with little or no hesitation, would qualify someone else as being "rich." What would make me personally feel "rich" is far lower.

Perhaps the questions should have asked about disposable income (after debts, bills, and cost of living have been paid). That's a more intuitive measure of "money" for me. Net value means squat because where I live, many people have homes worth $300,000 or $1M or more....but it's still not really useful for anything besides living in.

What if I don't want either a $6M yacht or a $6M mansion, but a log house and 500 acres of mixed prairie/woodland?
fusilier
James2:24

fusilier:

I guess you ought to pick whichever one you think you can resell the easiest so you can buy your log house.

It didn't say if we were talking about personal or family income. As you had been talking about taxes earlier, I assumed total household adjusted gross income.