Income & Happiness: A Double-Edged Sword

Most people look at those with a high income and figure that they must be happier for it. The higher, the happier. That usually accompanies the implication that if they personally made more income, then they would also be happier. In the preceding posts, we explored how earning more has diminishing returns for spending and how we can choose to walk a happier path rather than running on the hedonic treadmill. There is another way that high-income professionals steal the joy from their success. Comparison. Understanding that can help us dodge that killjoy.

Measuring Income & Happiness.

The largest world-wide study of income and happiness to date was published in Nature Human Behavior 2018. They used survey data from >1.7MM people around the world. When presenting income, I will adjust it to Canadian Dollars. It is gross per person income (pre-tax). For household income, multiply by the square root of the household members (1.4 for a couple, 1.73 for 3 people, double for a household of 4). Don’t worry, I did that for you too.

money happiness

They measured happiness through self-rating of three components of subjective well-being. Self-actualization is the pinnacle achievement of the hierarchy of needs. The top of psychological health, being able to autonomously grow into their best and most fulfilled selves.

They also measured more basic levels of happiness via the balance of positive affect (good emotions and mood) and negative affect (poor emotions and mood).

Income & happiness in different global regions.

Happiness is complicated and influenced by more than income. Economic development, climate, root language, root religion, and history were used to divide the world into different clusters very similar to the map below.

Increased income = increased happiness. To a point.

Happiness by any of the 3 measures increased with income in all regions of the world. However, the increase in happiness plateaued and then actually decreased after a satiation point. The satiation point was higher in regions with a higher median income (r=0.73; p=0.03). Intriguingly, happiness actually worsens past that point! Mo’money mo’problems.

The very wealthy are a much smaller dataset. In a survey of 4000 millionaires, more income did equate with modestly more happiness. It is 0.2 on a 10 point survey score. So, it is questionable whether that is clinically significant. However, another interesting signal was that those who earned some of their income were happier than those who inherited the money. So, the happiness may have something to do with the satisfaction of achievement more than what it can actually buy. When asked how much money would make them perfectly happy, the answer was generally double. Even the wealthy work out on the hedonic treadmill.

Our belief about whether more money will make us happier is important. It effects how make daily decisions on how to spend our time. If we believe that more money is the answer, then we may prioritize that over our time. However, those who tip that balance too far may worsen their quality of life.

Income and basic affect around the world.

Positive affect and freedom from negative emotions increased with increasing income, until it hit a satiation point. The income for happiness satiation with regard to basic affect was remarkably constant at around 50-80K/yr $CAD, just about anywhere in the world.

Interestingly, in Africa there was freedom from negative affect at even the lowest income levels. In contrast, North Americans at the highest income levels had more negative affect than even the lowest income Africans. On the flip side, North Americans also had much higher levels of positive affect at all income levels to. Seems we are quite moody!

Income and life evaluation globally.

Things get more interesting with the life evaluation measure of happiness. For the higher level “life evaluation” measure of happiness, there was great variation between regions. From a regional standpoint, North Americans have won the Life Evaluation lottery simply by living here. Even at low-income levels, there was a higher level of happiness than other parts of the world. This may reflect a combination of climate, culture, political stability (seriously), and general economic prosperity.

Within a given region, increased income was associated with increased happiness. For most of the developed world, the satiation point was around 120K $CAD for a single up to $208K/yr for a household of 4. When you consider the income-tax bite, that means a maximum spend of ~$90K/yr for a single and ~$135-$150K/yr for a household of 4. That spend would include saving/investing for retirement plus current spending.

What accounts for this improved happiness with increasing income within a given region? Certainly, money can buy comfort, security, and the resources required to move your life in the direction you want it to go. However, expectation and comparison also play roles.

Happiness & Education Level

People with higher educations required higher incomes to hit their happiness satiation levels. This was apparent with basic mood, but more pronounced for life evaluation.

happiness evidence

Generally, people with higher education levels expect to be paid more. They may also have higher expectations of life opportunities. That is speculation. However, entangled with this is comparison. We naturally compare ourselves to those around us. For professionals, that is very frequently other professionals.

Comparison & Happiness

Where we live.

A study on happiness using the 2000 American National Election Study and US Census data showed that people were happier when they lived in richer immediate neighborhoods. They were also happier for a given income when in a poorer county. So, perhaps a wealthy place where you sleep at night is more comfortable and secure. However, hob-knobbing in an area where you are higher on the wealth ladder helps too.

Where we hob-knob.

A study on mobility and happiness from Hong Kong used survey data on where people spent their time to conduct daily activities, income, and happiness. Happiness was higher for those conducting their activities in areas with a lower income than theirs. The effect of a downward comparison was more powerful than the effect of upward comparison.

Where we work.

How we compare to our coworkers influences our happiness. A study using >93K person-years from >13K individuals in Germany compared satisfaction and income with granularity to industry (like healthcare) and occupation (like physician). They found higher job and life satisfaction levels for those with a higher income compared to others within their peer group. Another study suggested that this may be overstated and postulates that factors like income trajectory may be more important than just the current comparison.

Five ways that knowing about income & happiness helps you.

life happiness
Life & Career Satisfaction is a Solo.

The biggest thing to remember is that personal finance and happiness is a one-player game. It is not a competition. A grounding in what more money actually does for you may be a better way of gauging levels of wealth.

You are also playing for you, not everyone else. That is hard for many professionals who have had competition engrained into us. We have also had to conform to the expectations of others to be admitted into medical culture.

You need to be willing to be a bit of a bad-ass and rip out your banjo solo for financial and career satisfaction.

Remember your place in the world.

We have basically won the happiness lottery by being in North America. It is easy to lose this perspective when the media bombards us about all of the problems we have. We are not a perfect utopian society, but we have more social and financial mobility, and a better basic social net, than most of the world. When you are feeling unhappy that you don’t have enough, remember this perspective.

More income is better, but only up to a point.

We hit satiation points when earning more doesn’t really translate into more happiness and may even decrease happiness. That level is lower than what many people may think and is definitely within the range of physician incomes. You have worked hard to make it into this income range. From the ultra-wealthy subset, it does appear that earning your income to some degree is important. That was a good move. However, further trade-offs to earn more should be weighed carefully with the purpose of the work at the forefront.

We do require a higher income level for happiness than less educated people. Some of that may be due to increased costs for help at home to support our long and odd workhours. We also expect more given the investment of our life-force that went into our training and building our practice. However, we also compare ourselves to others with similar training.

Be careful of comparisons to peers.

There will always be someone who makes more than you and there is huge variation of income amongst professionals. It is well documented that some of this may be unfair.

There are inequities between specialties. Provincial associations have made multiple attempts to unpack this complex issue. It is complex because the training, the work we do, and how we do it is highly variable between specialties, within a specialty, and between individuals.

There are also gender inequities due to cultural pressures outside of work and within the medical system. For us to change that, we need to work on it as a united profession. Internally stewing on it won’t make the problem better or you any happier. You can impact that by acting as an advocate, but the biggest changes that you can make for your situation are changes that you make.

Focus on your own trajectory.

Start with why you practice medicine and what you want to get out of it. How can you grow your practice into areas that you find satisfyingly? Developing an area where there is need and opportunity can be both financially and non-financially rewarding. That may not pay more right away. It may even pay nothing, but strong pillars of financial independence enable you to take those risks.

Are there ways that you can outsource tasks that don’t require your expertise to someone whose hourly cost is less than yours? Becoming more efficient and knowing the value of your time can help you earn what you are worth.

Broaden your social circle.

From an income and happiness standpoint, hanging out with people that aren’t as affluent as you and your colleagues is a good thing. However, the importance of this goes way beyond money and feelings of financial superiority.

You need friends and interests outside of medicine to keep life interesting and develop yourself. You need to build social capital. These relationships and interests are cultivated over years. Someday you will want to retire to something, not just from something. Sure, you can try to just hang out with your professional colleagues – but good luck trying to schedule anything.

For the medical martyrs out there, having a social circle outside of medicine also makes you a better doctor. It is easier to relate to people from all walks of life when you see them outside of a hospital or clinic also.


  1. There is an old saying, if one wants be happy, compare yourself to people who are less happy than you. Does doing so reduces one’s motivation to improving one’s situation? How does one stop complacency? Comparing one’s future (more happy, successful etc.) self to the current self might be a solution but isn’t this similar to comparing with other more successful people?

    1. Thanks! Interesting questions. For the comparing one to one’s future self, there may be some interesting other aspects. It could contribute to arrive fallacy (thinking once you get to the next step, then you will be happy – and then you aren’t). Focusing too much on “future-self” could also sacrifice savoring current experiences and mindfulness which are associated with increased happiness. I like the old saying about comparison – very true and now there is some data to confirm the wisdom 🙂

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