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"Research has found that there is a connection between wealth and happiness, but only upto a limit. The beneficial effects of wealth taper off almost entirely o

"Research has found that there is a connection between wealth and happiness, but only upto a limit. The beneficial effects of wealth taper off almost entirely once a comfortable living standard is reached". But which study? I've heard that thrown around a lot, and probably with citation a few times. But I don't see a linked study here, and I recently read (or heard, maybe on Radiolab?) that further studies have contradicted that. And in fact various happiness metrics increase pretty much linearly with wealth. And they came at it from another angle, saying that the biggest jump after basic security comes when you have somewhat more than others around you. That is, are you richer than your neighbor? Does he covet your ox?

nileshtrivedi 14y ago
Absolutely. I think there's a lot more we're yet to understand about the connection between wealth and happiness. Here is one research which was cited in the NYTimes article: http://www.people.hbs.edu/mnorton/aknin%20norton%20dunn%202009.pdf http://www.people.hbs.edu/mnorton/aknin%20norton%20dunn%2020... However, this point is not central to my post. My analysis is only concerned with how much savings we need to live a particular lifestyle for a given number of years - including the effect of inflation. I had seen many people using heuristics like this: If you can beat inflation by 3%, 100/3 = 33x times your annual expenditure is your FU money. That turned out to be incorrect because of not considering the life expectancy, and cash flow. Also the critical variable turned out to be (1 + interest rate) / (1 + inflation rate) instead of (interest rate - inflation rate) which can be significant. As I commented elsewhere, 21x may be sufficient instead of 33x. That's what the post is about.