"Happiness Is $60,000 Per Year"

"Money can't buy happiness - but lack of it can certainly make you progressively miserable": says Daniel Kahneman, Nobel Prize-winning economist.

"...Arguing that experience is essentially divided into the 'experiencing self' and the 'remembering self,' Kahnemen suggests that happiness is essentially an act of deftly balancing the two. Here's Kahneman: 'We know something about what controls satisfaction of the happiness self. We know that money is very important, goals are very important. We know that happiness is mainly being satisfied with people that we like, spending time with people that we like. There are other pleasures, but this is dominant.'

...'I think the most interesting result that we found in the Gallup survey is a number which we absolutely did not expect to find with respect to the happiness of the experiencing self. When we looked at how feelings vary with income, it turns out that below an income of 60,000 dollars a year, for Americans - and that's a very large sample of Americans, people are unhappy, and they get progressively unhappier the poorer they get. Above that, we get an absolutely flat line. I mean I've rarely seen lines so flat. Clearly, what is happening is that money does not buy you experiential happiness, but lack of money certainly buys you misery, and we can measure that misery very, very clearly. In terms of the other self, the remembering self, you get a different story. The more money you earn the more satisfied you are. That does not hold for emotions...

...What happens with fear is that probability doesn't matter very much. That is, once I have raised the possibility that something terrible can happen to your child, even though the possibility is remote, you may find it very difficult to think of anything else. Emotion becomes dominant. And emotion is dominated primarily by the possibility, by what might happen, and not so much by the probability. The more emotional the event is, the less sensible people are."