Friday, March 16, 2012

'A bit more than enough to get by' is relative, but $75,000 is not.

This is a great article on The Overjustification Effect.  And it demonstrates something that I've come across recently while listening to the audio book of Ben Goldacre's 'Bad Science'.  It's important that people reporting on studies, or any kind of science, mention figures.

The article refers to some research by Daniel Kahneman and Angus Deaton, published in the Proceedings of the National Academy of Sciences. That research appears to show that above a certain threshold, money doesn't make you happier.  I’ve come across references to that research before, where that threshold was reported, as it is in the You Are Not So Smart post above, as basically 'just a bit more than enough to get by'.  But last time there wasn't a number attached.  This time there is; $75,000 a year, just over €57,000, according to  xe.com today.

My jaw dropped when I read this figure.  That's a lot of money!  More so in 2008 and 2009 when the study was completed.  I earn a good bit less than that.  I struggle to get by sometimes, but that's because I'm supporting a family on one income.  If I were single and childless, or if both of us were earning what I earn, I'd be laughing.  I'm reasonably paid for what I do, in what is considered a high paying industry.  I admit that I don’t live in America, where the study was completed, but the cost of living is certainly pretty comparable.  I’m not sure that it’s reasonable to think that, for most people, $75,000 a year is ‘just a bit more than enough to get by’.  It sounds, to me, like substantially more than enough to get by.  It sounds like enough to make you a little bit rich.  

I've heard before that more money doesn't make you happy once you have enough to get you out of poverty.  Now that I see the figures involved, I'd interpret it more as 'more money doesn't make you happy once you've hit a little bit rich', which isn't nearly as interesting or surprising.

My best guess is that to the people writing these articles, $75,000 doesn't sound like a lot of money.  But that must be relative to their own incomes.  And that's why you need to put numbers, statistics or other details of what you're reporting on in what you're writing; because 'a bit more than enough to get by' is relative, but $75,000 is not.

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