How we feel about the quality of our lives is what matters. So is there a link between money and happiness? Absolutely – especially at the bottom of the pay scale. As you move up, there are diminishing returns. So the wellbeing boost from a £20,000 salary moving to £40,000 would be significant, but to achieve that again, you’d have to move from £40,000 to £80,000, then £80,000 to £160,000. To get the same impact, you have to double each time.
Diminishing returns, even, if I’ve my maths right, a logarithmic one.
Which is correct, it’s also the answer to the Easterlin Paradox. It’s true in general of economic growth and also of individual incomes.
Of course, he then goes on to deny it but still….