The Pay Raise People Say They Need to Be Happy
We frequently overestimate just how much happiness money buys
By JOE PINSKER
Tue, Nov 21, 2023 9:11am
3 min
3 min
People are often convinced their lives would improve if only they could climb a few rungs on the income ladder.
They are right, to an extent. Many studies have found a link between income and happiness, both in terms of day-to-day mood and longer-term life satisfaction. Having more money would help many people afford necessities, and on average, richer people report being happier.
Exactly how much more money do we think we need to be happy? A new survey from the financial-services company Empower put the question to about 2,000 people.
In the survey, most people said it would take a pretty significant pay bump to deliver contentment. The respondents, who had a median salary of $65,000 a year, said a median of $95,000 would make them happy and less stressed. The highest earners, with a median income of $250,000, gave a median response of $350,000.
Employers are planning on an average pay increase of 3.9% in 2024 for nonunion employees, according to a survey from the consulting firm Mercer. In the Empower survey, Americans said that to be happy, they would need almost a 50% raise.
Just how much happier a 3.9% or 50% raise would make any given person is hard to determine, researchers said.
One study, published in the journal Proceedings of the National Academy of Sciences last year, found that people who randomly received $10,000 tended to get a happiness boost that lasted at least six months. (The $2 million given out in the study was provided by a wealthy couple, who the researchers estimated generated 225 times more happiness than if they had kept the money themselves.)
Another, from the Review of Economic Studies in 2020, looked at lottery winners in Sweden whose prizes were mostly between $100,000 and $500,000. They reported higher levels of satisfaction with their lives more than a decade after their windfall, compared with lottery players who won no prize or a small one.
The magnitude of a raise’s effect, though, might not be life-changing.
“The impact of money on happiness isn’t as large as people typically assume,” said Elizabeth Dunn, a psychology professor at the University of British Columbia and a co-author of a book on money and happiness. “Happiness is determined by so many different factors that changing any one thing, it’s hard to have a huge impact.”
Happiness for sale
About seven in 10 respondents in the Empower survey said they strongly or somewhat agreed with the statement: “Having more money would solve most of my problems.” Similar proportions of people in each income bracket felt that way, including those with salaries of $200,000 or more.
Dunn said that many people might be happier if they focus on the best ways to use the money they have, rather than on getting more of it.
“That’s something that we know makes a difference and that people have control over in the immediate term,” she said.
Dunn said many people over emphasise money, relative to other variables, as a path to contentment. Her research indicates that those who give priority to time over money tend to be happier in life.
A little bit more
And as soon as someone does reach a new pay tier, they often start focusing on the next one as their target recalibrates.
“They might imagine that once they get the higher salary, then that’ll be enough,” said Matt Killingsworth, a senior fellow at the University of Pennsylvania’s Wharton School who studies the causes of happiness. “In reality, once they get there, they’ll probably want a little bit more.”
Even very wealthy people think like this. A 2018 study asked millionaires to rate their happiness on a scale from one to 10 and, if they didn’t say 10, predict how much money they would need to move one point higher. Slightly over half of those with a net worth of $10 million or more said their wealth would need to increase by at least 50%.
“It’s part of what makes humans amazing,” said Killingsworth of the impulse to continue advancing. “But it also means we rarely look at an aspect of our life and say, ‘That’s absolutely perfect.’”
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By KATE TALERICO
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As Paris makes its final preparations for the Olympic games, its residents are busy with their own—packing their suitcases, confirming their reservations, and getting out of town.
Worried about the hordes of crowds and overall chaos the Olympics could bring, Parisians are fleeing the city in droves and inundating resort cities around the country. Hotels and holiday rentals in some of France’s most popular vacation destinations—from the French Riviera in the south to the beaches of Normandy in the north—say they are expecting massive crowds this year in advance of the Olympics. The games will run from July 26-Aug. 1.
“It’s already a major holiday season for us, and beyond that, we have the Olympics,” says Stéphane Personeni, general manager of the Lily of the Valley hotel in Saint Tropez. “People began booking early this year.”
Personeni’s hotel typically has no issues filling its rooms each summer—by May of each year, the luxury hotel typically finds itself completely booked out for the months of July and August. But this year, the 53-room hotel began filling up for summer reservations in February.
“We told our regular guests that everything—hotels, apartments, villas—are going to be hard to find this summer,” Personeni says. His neighbours around Saint Tropez say they’re similarly booked up.
As of March, the online marketplace Gens de Confiance (“Trusted People”), saw a 50% increase in reservations from Parisians seeking vacation rentals outside the capital during the Olympics.
Already, August is a popular vacation time for the French. With a minimum of five weeks of vacation mandated by law, many decide to take the entire month off, renting out villas in beachside destinations for longer periods.
But beyond the typical August travel, the Olympics are having a real impact, says Bertille Marchal, a spokesperson for Gens de Confiance.
“We’ve seen nearly three times more reservations for the dates of the Olympics than the following two weeks,” Marchal says. “The increase is definitely linked to the Olympic Games.”
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According to the site, the most sought-out vacation destinations are Morbihan and Loire-Atlantique, a seaside region in the northwest; le Var, a coastal area within the southeast of France along the Côte d’Azur; and the island of Corsica in the Mediterranean.
Meanwhile, the Olympics haven’t necessarily been a boon to foreign tourism in the country. Many tourists who might have otherwise come to France are avoiding it this year in favour of other European capitals. In Paris, demand for stays at high-end hotels has collapsed, with bookings down 50% in July compared to last year, according to UMIH Prestige, which represents hotels charging at least €800 ($865) a night for rooms.
Earlier this year, high-end restaurants and concierges said the Olympics might even be an opportunity to score a hard-get-seat at the city’s fine dining.
In the Occitanie region in southwest France, the overall number of reservations this summer hasn’t changed much from last year, says Vincent Gare, president of the regional tourism committee there.
“But looking further at the numbers, we do see an increase in the clientele coming from the Paris region,” Gare told Le Figaro, noting that the increase in reservations has fallen directly on the dates of the Olympic games.
Michel Barré, a retiree living in Paris’s Le Marais neighbourhood, is one of those opting for the beach rather than the opening ceremony. In January, he booked a stay in Normandy for two weeks.
“Even though it’s a major European capital, Paris is still a small city—it’s a massive effort to host all of these events,” Barré says. “The Olympics are going to be a mess.”
More than anything, he just wants some calm after an event-filled summer in Paris, which just before the Olympics experienced the drama of a snap election called by Macron.
“It’s been a hectic summer here,” he says.
AFP via Getty Images
Parisians—Barré included—feel that the city, by over-catering to its tourists, is driving out many residents.
Parts of the Seine—usually one of the most popular summertime hangout spots —have been closed off for weeks as the city installs bleachers and Olympics signage. In certain neighbourhoods, residents will need to scan a QR code with police to access their own apartments. And from the Olympics to Sept. 8, Paris is nearly doubling the price of transit tickets from €2.15 to €4 per ride.
The city’s clear willingness to capitalise on its tourists has motivated some residents to do the same. In March, the number of active Airbnb listings in Paris reached an all-time high as hosts rushed to list their apartments. Listings grew 40% from the same time last year, according to the company.
With their regular clients taking off, Parisian restaurants and merchants are complaining that business is down.
“Are there any Parisians left in Paris?” Alaine Fontaine, president of the restaurant industry association, told the radio station Franceinfo on Sunday. “For the last three weeks, there haven’t been any here.”
Still, for all the talk of those leaving, there are plenty who have decided to stick around.
Jay Swanson, an American expat and YouTuber, can’t imagine leaving during the Olympics—he secured his tickets to see ping pong and volleyball last year. He’s also less concerned about the crowds and road closures than others, having just put together a series of videos explaining how to navigate Paris during the games.
“It’s been 100 years since the Games came to Paris; when else will we get a chance to host the world like this?” Swanson says. “So many Parisians are leaving and tourism is down, so not only will it be quiet but the only people left will be here for a party.”
