The link between money and happiness is always fraught with danger. While it is easy to understand how being very poor connects with general unhappiness, there are people who contend that there is no link once you are beyond the reaches of extreme poverty.
A new study, however, contends that not only is happiness inextricably linked to income, but that the cost of achieving it is rising fast and is already beyond the reach of many Australians.
The study’s findings contend that the happiness of ever-increasing numbers of Australians have become more dependent on income than ever this millennium.
The study from the University of Sydney used data from the Household, Income and Labour Dynamics in Australia (HILDA) survey, provided by the Melbourne Institute.
That information showed that Australia’s average happiness has been declining since 2009, well before the COVID-19 pandemic struck and made everyone miserable.
The annual HILDA survey asks Australians to recall how often they felt happy, joyful, sad, tired or depressed in the past month, in each year since 2001.
The researchers then combined each person’s frequency of feelings into a single happiness score to see how it changed between 2001 and 2019 in relation to household income.
The scores in this study provided quite different findings to when people were asked about their life satisfaction, which in Australia is well above the OECD average.
The researchers explained that there was a significant difference between asking respondents to consider how often they experienced emotions in a month compared to how satisfied they were with their life in general.
The findings showed that average happiness peaked in 2009 and has declined every year since 2012.
The researchers also measured the ‘change point’, the point at which happiness no longer strongly depends on income and found that this value had almost doubled from $43,000 in 2009 to $74,000.
Economic studies of happiness have found that, on average, happiness increases with income, but there is a point where that is no longer the case, and they refer to that as the ‘change point’.
According to this latest study, the number of Australians on an income below the ‘change point’ was around 60 per cent in 2009, while now around 74 per cent of the population has an income below that mark.
“Our work shows someone living in the average Australian household earning $50,000 in 2001 and the equivalent amount in 2019 (adjusted for inflation) has become much less happy over the past two decades,” explained researcher Professor Nick Glozier.
“On the other hand, the happiness of people living in a wealthier household (for example, $80,000 per household) has been largely preserved.”
Prof. Glozier said that despite high life satisfaction rating in Australia and stable income inequality across households, increasing numbers of Australians’ happiness had become dependent on their income over the first two decades of this century.
“Australians’ happiness is becoming more sensitive to income as the change point has increased,” he said.
“At the same time, incomes are stagnating and happiness levels are declining, which is likely to drive further inequities in wellbeing between the rich and poor in Australia.”
Do you think there is a link between income and happiness? Were you happiest in your life when your income was highest? Why not share your thoughts in the comments section below?
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