How do Americans define wealth? The answer may surprise you

Welcome to?Fast?Company?Daily, our daily newsletter on?LinkedIn, featuring a free article selected each day by our editors as well as a roundup of great advice on careers, hiring, innovation, and technology.

Visit?fastcompany.com?for our top stories and breaking news.?

The old adage is true: you don’t quit a job, you quit a manager. Join Fast Company work life editors on Tuesday April 11 at 2 p.m. ET as they pull from our reporting to talk about what to do if you’re happy at your job but not with your boss. They'll also cover advice for managers to make sure they aren’t making missteps that could make employees disengage.

In case you missed these stories...

• Now that California has been knocked out of the most extreme levels of drought, one might think that will make this year’s fire season far milder. But that may not be the case across the board.
• Journalist Derek Thompson’s new book, On Work: Money, Meaning, Identity, explores how work fills the role that religion once played in the lives of Americans, and why this new “workism” may be causing burnout.
• Bill Gates said in a Reuters interview he doesn’t see how putting the breaks on AI systems like ChatGPT would “solve the challenges ahead.”
• Activity on right-wing social media networks like Parler, which was created for the “canceled” among us, seems to foment IRL political unrest, a new Yale University study claims.
• Exclusive: Fanta has a new logo, but it’s the brand’s new formula that may prove more divisive.

How do Americans define wealth? The answer may surprise you

By Sam Becker

The value of a dollar?continues to erode?due to high inflation, and as a result, Americans’ budgets are getting even tighter. But even as the typical American household has seen its purchasing power and wealth erode, many people are still feeling at least somewhat “wealthy,” according to an exclusive Harris Poll conducted earlier last month for?Fast Company.

The poll shows that some 68% of Americans define wealth in terms of comfort and basic necessities, as opposed to extravagance and excess. Among those, 48% said they defined wealth as the ability to comfortably afford necessities like food and shelter with some money left over, while another 20% indicated that being able to afford basic necessities alone would be enough to meet their definition of wealthy.

Only 11% defined wealth as being able to afford “extravagant purchases.”

While many people are still wrestling with higher prices and a shaky economy, the data suggests that?money can’t necessarily buy happiness?or contentment, as the old saying goes.?

The poll data also appears to mesh with?recent research?from researchers at both the University of Pennsylvania and Princeton, which found that increases in happiness do march in lock-step with increases in income up to $100,000.

Past that six-figure mark, though, there is a plateauing effect. The recent paper is actually the culmination of two prior studies—one, published by Princeton’s Daniel Kahneman and Angus Deaton in 2010,?which found that?happiness levels cease to meaningfully progress after earning $75,000 per year,?and another, published in 2021 by Matthew Killingsworth, a senior fellow at the University of Pennsylvania, which instead found that happiness indeed does increase as earnings top $100,000, well past the $75,000 mark identified by Kahneman and Deaton.

WHAT WE REALLY NEED TO BE HAPPY

Essentially, both studies were analyzing the same thing—whether increased earnings lead to increased levels of happiness—but came to different conclusions. The most recent paper, published by Kahneman, Killingsworth, and Barbara Mellers (also of Penn), attempts to reconcile the differences. And as for why Killingsworth’s study found that happiness levels increased up to the six-figure threshold, he tells?Fast Company?that the discrepancy in findings came down to the fact that the 2010 study was “essentially measuring unhappiness rather than happiness.”?

In other words, he says, it was similar to giving people a basic math test to try and gauge how good they were at math—it was able to tell who could add, subtract, and multiply, but couldn’t really identify how many people could solve algebraic equations or dabble in trigonometry.?

With that in mind, Killingsworth says that, yes, money can make you happier, up to a point, but it’s the reason why it makes people happy that’s important to focus on.

“The big reasons why richer people are happier boil down to two things: the more money you have, the more you are free to live the life you want to live, and the freer you are from financial insecurity,” he says. “If someone has those two factors, that’s what matters. Higher incomes just turn out to help achieve them.”

As the Harris Poll data suggests, a lot of Americans are content with the ability to cover their basic needs and have a little extra spending money. Accordingly, becoming “richer” is probably not the ideal for most people in the long run. “People probably focus too much on money,” Killingsworth says. “In fact, I find that people who equate their personal success with money are less happy than those who don’t. It’s good to have money but it’s bad to be overly focused on it.”

And when it comes down to it, the happiness associated with higher incomes isn’t really about being able to buy anything and everything you want. It has much more to do with freeing yourself from worry and stress related to your finances—be it not being able to pay your rent, or not having to worry about saving up for retirement.

“It’s about freedom, not opulence,” Killingsworth says.

Follow us on?LinkedIn,?Twitter,?Instagram,?Facebook,?TikTok, and?Medium.