The Price of Happiness
3 hours ago
- Happiness rises nearly perfectly linearly with log(income) from $10k to over $500k/year, with group-level correlations of 0.98–0.99.
- Marginal utility of dollars declines exponentially, but proportional income differences (e.g., 10% raise) have constant effect on happiness.
- Real-world incomes vary exponentially, offsetting diminishing marginal utility, so larger incomes are associated with non-diminishing happiness increments.
- In trade-offs between unequal incomes (philanthropy, compensation, tax policy), exponential differences in happiness are predicted—benefiting lower-income groups yields far larger collective happiness gains.