How much money is enough? And at what point does it stop making you happier?

When it comes to money, many of us think we'd be happy just to have enough to be comfortable and stop worrying.

But in truth, for some, 'enough' would never be enough.

Bruce Whitfield discusses this interesting human phenomenon with Steven Boykey Sidley, Professor of Practice at the Johannesburg Business School at UJ.

Sidley wrote an article for Daily Maverick, summing up his ruminations with a friend during a pleasant meal overlooking False Bay.

The deeper question, he says, is at what point will more money cease to make us happier?

It's a question studied in depth by Nobel-prize winning academic Daniel Kahneman, the so-called 'father of behavioural psychology', who died last month.

Kahneman and his academic partner found that the happiness axis increases up to about $75,000 per year in income, after which more money has little impact on one's state of mind, writes Sidley.

The number from the 2010 study would translate into around $107,500 in today's money - just over R2 million in annual income.

In 2021, when another psychologist published a study with a different result, Kahnemann and co produced a new set of results themselves.

It basically shows that you need more and more money to effect your happiness at the same rate, says Sidley.

"It shows that there is a real gain in happiness from $100K to $200K in annual income, but, beyond that level of income, you have to earn $400K and then $800K to achieve the same gain in happiness. And so on; happiness is less and less affected as wealth increases."

Steven Boykey Sidley, Professor of Practice - Johannesburg Business School, UJ

In summary then, it seems that your jumps in happiness get flatter and flatter the richer you get, he says.

Podcaster Scott Galloway raises another interesting angle to this money-happiness curve, which he says could offer the solution to for instance America's fiscal problems.

If you doubled the tax rate for everybody earning $10 million a year above that threshold, they would not be less happy, according to the research.

"That would bring in $210 billion... which would solve the homeless crisis, pay for all of NASA, fix education..."

Steven Boykey Sidley, Professor of Practice - Johannesburg Business School, UJ

Boykey translated this roughly into numbers for South Africa, where there are 10 000 people who earn more than R5 million a year.

If you had to double taxation for the above that threshold, you'd bring in R30b, he concludes.

"This would fix many of our social ills - with the caveat that the government would have to spend that money wisely, and perhaps for some that's a bit of a stretch."

Steven Boykey Sidley, Professor of Practice - Johannesburg Business School, UJ