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March 5, 2021, 3:13 p.m. EST

Study of 1.6 million people looks at the effects of income on our emotional well-being

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By Nicole Lyn Pesce

They say money can’t buy you happiness — but it appears that making more of it makes you feel much better about yourself. 

A new study published in the American Psychological Association journal Emotion looks at how a person’s income influences their “self-regard emotions,” aka their pride, confidence, shame, etc. 

Researchers from the United States and Singapore analyzed data from 1.6 million people across 162 countries. And they found “consistent evidence” that people with higher incomes looked at themselves and their lives more favorably than those with lower incomes — regardless of whether they were living in a high-income country or a developing country. Having a higher income predicted whether people felt more positive self-regard emotions, including confidence, pride and determination. But lower income predicted more negative self-regard emotions, such as sadness, fear and shame. 

And those feelings stick. The researchers also looked at a longitudinal study of more than 4,000 Americans over time, and they found that higher income still predicted higher levels of self-regard 10 years after the initial survey, while lower income predicted greater levels of negative self-regard emotions lasting a decade later. 

It should be noted that the findings are correlational, so the study cannot definitively prove that making more or less money causes these feelings; it suggests a link between them. 

“The effects of income on our emotional well-being should not be underestimated,” said Dr. Eddie M. W. Tong, an associate professor of psychology at the National University of Singapore, in a statement . “Having more money can inspire confidence and determination, while earning less is associated with gloom and anxiety.”

This report is the latest look at how income and net worth can become tied to a person’s self-worth. 

Obviously, having more money gives greater access to essential resources like housing, food, health care and education. It can pay for some peace of mind. A recent California universal-income experiment saw test subjects reporting lower rates of anxiety and depression after getting $500 a month for two years, suggesting that guaranteed income can alleviate the stress of living in poverty while providing the financial security needed to find jobs and stay out of debt. And getting rid of debt has also been shown to help the brain work better , as being debt-free takes the weight off the mind that clears up cognitive functioning, lessens anxiety and improves impulse control.

That’s especially noteworthy as the COVID-19 pandemic has wreaked havoc on physical, emotional and financial health. More than half of U.S. adults (53%) report that coronavirus-related stress and worry have negatively affected their mental health, according to a  Kaiser Family Foundation poll  conducted last July. And women, Black adults, younger adults, and people who have had trouble affording household expenses due to the pandemic’s financial impact were more likely to report a negative impact on their mental health.

Read more: Advice for Salesforce staff who reported having a mental-health issue — and all workers during the COVID-19 pandemic

And don’t miss: How to protect your mental health and fight ‘COVID fatigue’ this winter

So what’s the income sweet spot? Psychologists from Purdue University and the University of Virginia analyzed World Gallup Poll data from 1.7 million people in 164 countries in 2018, cross-referencing earnings with life satisfaction. They concluded that the ideal income for individuals is $95,000 a year for life satisfaction, and $60,000 to $75,000 a year for emotional well-being. In comparison, median household income was $68,703 in the U.S. in 2019, according to the latest Census Bureau data

Families would need more, of course. But the report was also eye-opening in suggesting that emotional well-being capped at $75K, and more income didn’t make a difference after that.

Read more: Psychologists say they’ve found the exact amount of money you need to be happy

Additional research also suggests that money buys more happiness than it used to, as another study published in the journal Emotion last year found that the link between socioeconomic status (including income, education and occupational prestige) and happiness grew steadily stronger between the 1970s and the 2010s. And there was no happiness plateau at higher levels of income in this report; adults making $160,000 or more were definitely happier than those making less than $160,000. 

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