If you make the charts the right way, you can definitely make money buy happiness. Read How to Lie with Statistics, and you’ll see the above chart as a poster child for most of the tricks explained in the book:
- The Satisfaction axis is truncated to magnify the increases – most countries have a difference of just 1 point between the lowest and highest scores
- The income reported axis is on a log scale to compress the differences. In most cases the reported income needs to go up 2-4x for a single point increase in satisfaction.
- The figures are self reported through an online poll (Gallup or not, after doing assignments during my management education I have increased my dose of salt when reading online poll results).
Check out the original paper for more data along with detailed graphs, and to draw your own conclusion:
While the idea that there is some critical level of income beyond which income no longer impacts well-being is intuitively appealing, it is at odds with the data. As we have shown, there is no major well-being dataset that supports this commonly made claim. To be clear, our analysis in this paper has been confined to the sorts of evaluative measures of life satisfaction and happiness that have been the focus of proponents of the (modified) Easterlin hypothesis. In an interesting recent contribution, Kahneman and Deaton (2010) have shown that in the United States, people earning above $75,000 do not appear to enjoy either more positive affect nor less negative affect than those earning just below that. We are intrigued by these findings, although we conclude by noting that they are based on very different measures of well-being, and so they are not necessarily in tension with our results. Indeed, those authors also find no satiation point for evaluative measures of well-being.
As for my thoughts on the graph? Brazilians and Mexicans seem to do better with what they have than the rest of the world. Then, there’s Nigeria where money doesn’t seem to buy happiness – must be the conscience kicking in after scamming all those thousands of dollars from gullible people in the other countries.