There are lots of ways to measure happiness. For some of us, it’s how much chocolate cake we got to eat today, or perhaps going on a shopping spree. According to the United Nations’ Annual World Happiness Report, if you want to lead a happier life, try giving more to charity or strengthening your support system of friends and family. Well, this is data on what you can do with your income... but what's the actual correlation between income and happiness?

Surprising (or obvious?) research finds that as your income increases, so does your well-being. Yet this relationship hits a plateau at $75,000, implying a limit to the logic that money buys happiness. Another caveat: this positive increase only applies to a sense of general wellbeing and happiness, not how often you feel happy. This is all to say, many people experience far more happiness investing in experience and time with loved ones than with designer clothes and expensive watches.

Factors that create happiness at the individual level are complicated. According to the aforementioned study by leading psychologist Daniel Kahneman, income and emotional well-being are positively correlated, but only until $75,000. Additionally, health and social connection can be just as important as money. So should you abandon pursuing a raise when your salary reaches $75,000 and focus instead on meditation? While we can’t answer that, we did find some compelling data on the choices legislators could make to improve happiness in their states, and the solution is simple. 

States with lower poverty rates showed higher happiness marks for everyone state-wide. A few stragglers remain, like New Hampshire, where happiness indicators (which consist of 32 relevant metrics around the subcategories of emotional and physical well-being, work environment, and community and environment) remain poor despite a low (by comparison) 7.6% poverty rate (less sun, perhaps?). However, the correlation between poverty and happiness is, broadly speaking, quite clear-- and with average income in the states amounting to less than that $75,000 cutoff, this holds true to Kahneman's study. 

So it seems, national happiness is a multidimensional question. Plotting key indicators of national happiness, such as GDP per Capita or “the feeling of one’s ability to make life choices,” in three-dimensional space reveals obvious trends. While “having more money” or “feeling more free” may intuitively correlate with increased happiness, what lies behind the surface is how good these variables are at estimating happiness. Our numbers suggest that 65% of happiness is estimated by a nation’s GDP per capita and healthy life expectancy. So maybe there is a formula to happiness?

There haven’t been many changes over the past five years when it comes to the top five happiest countries. So what exactly is the reason for Finland’s so-called “three-peat” or Denmark’s allergy to negativity? Well, many of these Nordic happiness havens have strong welfare states, which means no confusing insurance premiums and no FAFSA. This centralized deliverance of necessary services reflects in these countries’ strong sense of community and faith in social welfare.