Linux Foundation 2021 annual report

Posted Dec 8, 2021 17:31 UTC (Wed) by tpo (subscriber, #25713)
In reply to: Linux Foundation 2021 annual report by farnz
Parent article: Linux Foundation 2021 annual report

"The best-known theory on this topic is that money can buy happiness, but only up to a point. This comes from a study by two Nobel Laureates, Daniel Kahneman and Angus Deaton (2010) , which found that emotional wellbeing rises with income. However, it rises logarithmically. That is, as an individual's income increases, their wellbeing increases at a slower and slower rate. And after income surpasses about $75,000 per year, Kahneman and Deaton's data suggests, wellbeing stops increasing altogether."

https://www.givingwhatwecan.org/post/2021/06/can-money-bu...

I guess this is what I remembered. However if there are other studies that show a "consistently logarithmic increase" then I have no problem with that.

Linux Foundation 2021 annual report

Posted Dec 8, 2021 18:21 UTC (Wed) by farnz (subscriber, #17727) [Link] (2 responses)

So, couple of things:

If you go back to Kahneman and Deaton's study, they did not state that wellbeing stops increasing above $75k - rather, they stated that with the data they had, there were no signs of an increase in happiness above $75k, but noted that their data set did not include enough people earning above $75k to draw conclusions from. It's the media that extrapolated from this to "wellbeing stops increasing", when the researchers said "not enough data".

Matthew Killingsworth had a longer term study than Kahneman and Deaton, which started in 2010, but did not publish results until 2021. Killingsworth had more high earners than Kahneman and Deaton, and due to the length of the study, Killingsworth had data on people who'd seen their pay rise considerably during the study period. This extra data agreed with Kahneman and Deaton up to $75k, but showed that as pay rose beyond that, wellbeing continues to increase, remaining proportional to the log of your income.

One other thing that comes out of Killingsworth's data is that there exists a floor level of pay where you are at risk of being made unhappy by random life events - coincidentally around $75k - because you cannot afford to throw money at the problem. Things like your home heating/cooling system breaking down fall into this category; if my home heating fails, I can afford to just pay 10x the normal price for an emergency replacement of the broken bits, where when I earned less, I couldn't.

Linux Foundation 2021 annual report

Posted Dec 8, 2021 19:41 UTC (Wed) by rahulsundaram (subscriber, #21946) [Link] (1 responses)

> One other thing that comes out of Killingsworth's data is that there exists a floor level of pay where you are at risk of being made unhappy by random life events

Yep. This is the key part of the study. Below a certain amount of income, it is impossible to be not worried about random life events. Every blip can be a tragedy. It doesn't say that beyond that income level, happiness doesn't increase. It is not unreasonable to say that beyond a point, happiness isn't likely to increase proportionally but I don't know that we have seen studies that explicitly show that.

Linux Foundation 2021 annual report

Posted Dec 9, 2021 13:12 UTC (Thu) by Wol (subscriber, #4433) [Link]

While it may vary for a lot of people (things like rent and mortgage levels have a big impact), this can clearly be identified as a line below which you do not have the ability to ride out those little things which knock you.

More to the point, its a line where you are wasting money buying things in small quantities, because you cannot afford to take advantage of those little discounts if you buy in bulk. If you can't afford a week's toilet rolls, you can't afford to save money by buying a month's supply for only twice the price ...

Breaking through that ceiling can be HARD...

Cheers,
Wol