Nanogirl Michelle Dickinson: Money CAN buy happiness

Researchers have found correlations between annual income and perceived happiness. Photo / 123RF

Money can't buy happiness, or so we are told, but new research out this week suggests that money can actually buy us happiness – up to a point.

Previous large scale studies have shown that people increase their self-perception of well-being as their financial income increases. What wasn't clear from those studies is whether or not happiness continues to rise indefinitely as income increases or if there is an optimum where maximum life satisfaction occurs.

In a new study published in the journal Nature Human Behaviour, scientists from Perdue university studied data from 1.7 million individuals using the Gallup World Poll.

Looking at factors including emotional wellbeing, life satisfaction scores as well as gender and education, the researchers found correlations between annual income and percieved happiness.

They measured emotional wellbeing by asking the participants to note emotions that occurred day-to-day including feelings of happiness, sadness, excitement, worry, stress as well as how much they smiled or laughed.

Life satisfaction was measured using a method called Cantril's self-anchoring striving scale which asked participants to imagine where they stood on a ladder with steps numbered zero at the bottom to ten at the top.

With zero being the worst life possible and ten the best, this ladder scale picks up on some of the cultural differences found around the world with personal perception of income.

The study found that people from wealthier countries felt happier with their lives when they were earning higher salaries.

Interestingly New Zealand along with Australia came out on top with the highest financial need for happiness of all of the countries studied. Our happiness level peaked when we were earning a whopping annual salary of $160,000.

With the OECD Better Life Index 2016 data showing the average New Zealand full time salary hovering around $62,000 it seems that many of us may be stuck on an endless treadmill seeking to earn more to perceive feeling happy.

The study also found two regional clusters, with an average income of $150,000 per year seen as the optimum happiness number for individuals residing in countries including of New Zealand, Australia, East Asia and North America.

However, a second cluster which included Southeast Asia, Eastern Europe Latin America and the Caribbean only desired an average annual salary of around $48,000 for optimum happiness.

So why do New Zealanders seem to have such a rich seeking lifestyle?

The researchers put part of it down to purchasing power. New Zealand is a relatively expensive place to live with many of our cities featuring high on the Mercer annual global cost of living survey.

High costs of living mean higher salaries are required to purchase the basics including housing, food and transportation.

However, the cost of living was only one factor and the researchers think that social influence is also significant. How we compare ourselves to others and feelings of inadequacy when we see that people have more or better material objects than us also seems to influence our feelings of success and satisfaction.

This is where earning more becomes a burden, and the study showed that once individuals earned more than our ideal happiness amount, we actually became less satisfied in life.

The researchers suggest that earning too much money can result in people pursuing more material gains and engaging in more social comparisons which ends up reducing their happiness in the long term.

So it seems that we can earn too much money, or at least we can when it comes to our happiness levels, and appreciating what we have rather than comparing ourselves to others could be an easy way to increase our step on Cantril's life satisfaction ladder.