How much money you need to earn in South Africa to be happy

A new study published by nature.com attempts to answer one of life’s most difficult questions – can money buy happiness?

The study is based on a massive survey conducted as part of the Gallup World poll, which asked over 1.7 million people from different parts of the world to rate their happiness on a scale of 1-10, and then measured this rating against their household income and other socio-economic factors such as gender, marriage-status and age.

Unsurprisingly the study found that happiness steadily rises in relation to how much a person earns – but only up to a point.

The study called this the ‘satiation’ point: the level where a person was sufficiently satisfied so that no matter how much more they earned, it did not significantly impact how happy they felt.


How much money makes people happy

The report found that globally, people are satisfied at $95,000 (approximately R1.13 million) – but also that emotional well-being was satiated at between $60,000 and $75,000 (R710,000 to R890,000).

“However, there is substantial variation across world regions, with satiation occurring later in wealthier regions. We also find that in certain parts of the world, incomes beyond satiation are associated with lower (levels of happiness),” the researchers said.

Specifically, earning too much money can affect your happiness, due to a higher workload, and less free time, the study said.

It suggested that once a person’s basic needs are met, it could lead to increasing competitiveness, with a weighted focus on material gain and social status.

For overall happiness, the highest satiation points seemed to form two general clusters.

The first was made up of regions with high satiation points. These included most ‘wealthy’ nations:

  • Western Europe/Scandinavia – $100,000;
  • Northern America – $105,000;
  • East Asia – $110,000;
  • The Middle East/North Africa – $115,000; and
  • Australia/New Zealand –  $125,000;

The second cluster had significantly lower satiation points, comprising typically ‘poorer’ nations:

  • Latin America/the Caribbean – $35,000;
  • Sub-Saharan Africa – $40,000;
  • Eastern Europe/the Balkans – $45,000; and
  • Southeast Asia – $70,000;

As South Africa falls in the latter cluster, it means that a South African earning more than R1 million a year (the global average happiness level), might not be any happier than someone earning $40,000 (R475,000 – the regional happiness level).


How they got the numbers

Of course, this is a generalisation, and there are a number of caveats to the data – especially in explaining why a region’s satiation level may be so low.

“First, it is crucial to recognise that it was necessary to control for the number of individuals within households,” the researchers said.

“Our income metric was therefore equivalised household income rather than raw household income. Thus, the estimates here pertain to single-person households only.”

To obtain estimates for households with more people, one can simply multiply the satiation estimate by the square root of the house-hold size. For instance, a household with four members would have a satiation point two times higher than the estimates reported here.

“Second, one should note that our estimates are aggregated over all locations within countries,” the study said.

“Even within individual countries, there can be substantial differences in the cost of living across areas (for example, urban versus rural), and exact satiation figures would thus vary depending the specific location in which one is residing.”

“Finally, it is important to remember that income satiation relates to differences between sub-populations and not changes within individuals. If an individual earning an income at satiation received a doubling of their salary, satiation does not mean that they would not feel higher social well-being.”

Rather, satiation means that, at baseline, groups at the higher income are no happier than groups at the lower initial income, the researchers said.

“Thus, the fact that satiation estimates were lower may speak to the reality of the ‘hedonic treadmill’—the well-studied phenomenon that happiness levels tend to return to a relatively constant baseline amidst various life events and circumstances.”


Read: 10 cities where foreigners earn the most money

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How much money you need to earn in South Africa to be happy