If you had an extra $1,000, would you use it to reduce debt or would you spend it on something discretionary?
How Americans answer that question may significantly impact economic growth over the next few years, according to an August 20 report from Federated Investors. If Americans decide to focus on debt reduction that could keep a lid on economic growth in the near term, but would likely be good for the economy over the long term. Conversely, if Americans start spending freely, it may boost short-term growth, but it might delay our day of reckoning and make it worse down the road.
(Click on the picture below to enlarge the table in a new window.)
“ANYBODY WHO THINKS MONEY WILL MAKE YOU HAPPY, HASN’T GOT MONEY,” according to billionaire David Geffen. Now we have a new scientific study that helps quantify the connection between money and happiness.
Researchers Daniel Kahneman and Angus Deaton of Princeton University analyzed data from the Gallup-Healthways Well-Being Index and tried to determine how income affects an individual’s emotional well-being and overall life satisfaction. They measured emotional well-being as an individual’s day-to-day level of happiness (e.g., how much enjoyment, laughter, smiling, anger, stress, or worry they experience each day,) while overall life satisfaction was measured as an individual’s satisfaction with their life in general.
Here’s what they found.
As a person’s annual income rises up to about $75,000, their emotional well-being, or day-to-day happiness, rises, too. But, beyond $75,000 in annual income, there was no additional boost to day-to-day happiness, according to the researchers’ article published in the Proceedings of the National Academy of Sciences and reported by Inc. magazine.
What’s the key to $75,000? According to LiveScience.com, “The researchers suggest that making anything more than $75,000 no longer improves a person’s ability to spend time with friends, avoid pain and disease, and enjoy leisure time--all factors involved in emotional well-being.”
Ah, but more money does increase overall life satisfaction. According to the Inc. article, “With every doubling of income, people tended to say they were more and more satisfied with their lives on a 10-point scale--a pattern that continued for household incomes well above $120,000.”
Do these findings match your life experience? Let us know what you think.
Weekly Focus – Think About It
“An object in possession seldom retains the same charm that it had in pursuit.”
--Pliny the Younger
Best regards,
Kevin Kroskey
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