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A Brief Analysis on The Correlation Between Income Rates, Emotional Well-being and Happiness

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Happiness is the quintessential objective of every human being and what we do at any particular time can be in some way traced back to our innate desire to find self-actualization and enlightenment in this elusive concept. As a result, many efforts have been made to obtain an understanding of what factors contribute to individual happiness. Income levels play an important role in determining happiness and in my opinion provide the means which allow for access to a lifestyle which is conducive to feeling fulfilled. I agree that a point is reached at which income greater than a certain value has diminishing returns and may even negatively impact individual happiness. Poverty has a hugely detrimental effect on a person’s ability to be happy and negatively impacts the lives of people who are trapped within it. It is also in my belief that happiness can be linked to the country of residence depending on how developed it is and the degree to which the government of the country plays an active role in the provision of services and amenities and how these impact upon the lives of the population within that country.

Why is it that a person’s income can play an important role in determining happiness? I believe this can be explained by referring to the law of diminishing marginal returns. Once a person’s income reaches 75000 dollars a point is reached where any income earned beyond this point requires a person to sacrifice free time and mental wellbeing. This sacrifice may produce a higher income but simultaneously decreases happiness. The time spent working can no longer be devoted to social activities such as spending time with family or loved ones, attending parties and social gatherings with friends, developing relationships and meeting new people and devoting time to hobbies and interests. All these things are a source of happiness and cannot be replaced by other material goods which a greater income can yield. Hence, we can assume that a point of saturation is reached where the quality of life regarding possession of material goods doesn’t increase. Once you reach a certain threshold of possessing and having the ability to purchase these goods you can no longer derive much more happiness from material objects and the returns from a greater income become minimal with regards to life satisfaction.

Following on from this logic we can consider how poverty plays a hugely detrimental role in allowing for a person to be happy. The Webster definition tells us that poverty can be defined as “the state of one who lacks a usual or socially acceptable amount of money or material possessions”. Beyond the definition we must examine how exactly this “lack’ translates directly into the happiness of an individual. The biggest problem with poverty is that it leaves a person solely focused on directing every effort into generating income. Often people living in poverty didn’t and don’t have access to education. They do not have the means to improve their skills or qualifications which would allow them to take up positions which produce a greater income. These people are usually trapped working menial and highly labour-intensive jobs for most of their day. This adversely affects a person’s mental health and is often physically exhausting to the person. The lack of complexity and simple nature of these jobs also leaves the person feeling unaccomplished and unfulfilled which further contributes to overall unhappiness. A general disdain and contempt for this lifestyle destroys all motivation for working to improve your skills or put a greater amount of effort into developing new ones and as a result these people become trapped in this lifestyle. The lack of time also leads to social problems within family life and social needs cannot be fulfilled. Often people suffering from the frustrations of a low-income lifestyle tend to project and release their negative emotional state onto those around them.

There are several courses of action which the government could take to influence people’s level of income which as we have analysed is correlated to happiness when below the 75000-thousand-dollar threshold. To directly influence people’s happiness, the government must involve its self through policies that will affect the facets of social life and individual incomes which in this case are the two factors which have been strongly linked to happiness. By introducing more public holidays the government will give people with low income more opportunities to participate in social activities. This contributes to a healthier and higher emotional wellbeing. Another potential policy is to provide people with free healthcare. Healthcare is often a large expense for low income families. Of course, funding such a policy would have many logistical difficulties but perhaps a solution is to increase taxes at higher income bands which will not lower the happiness of the overall population much since an income greater than 75000 has been shown to be enough. Often low-income families can’t afford healthcare and suffer from physical and perhaps mental ailments which also negatively impact quality of life and happiness. The implementation of education initiatives for low income workers to gain new skills and qualification can act to reduce poverty by allowing people to qualify for higher income jobs but as discussed earlier are hard to incentivize because often people living in poverty have little motivation to work on developing these qualifications.

I can objectively say that these are the immediately superficial and identifiable factors which have the greatest impact on individual happiness and feelings of accomplishment. Income at levels greater than 75000 have little effect on happiness whereas incomes below a necessary level are a great detriment to it. The government can take several actions to promote mental wellbeing and increase disposable income but shouldn’t be directly responsible. The once mystery that is happiness begins to unravel as our ability to collect data and research improves and a concept that seems quite elusive has become slightly clearer in my mind.

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A Brief Analysis on the Correlation Between Income Rates, Emotional Well-being and Happiness. (2020, March 16). GradesFixer. Retrieved January 29, 2022, from
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