Access to Cash, Not Income, Key to Life Satisfaction


If you needed to come up with $1,000 cash within a week, could you do it?

How you answer such a question apparently plays a key role in measuring one’s life satisfaction, a bigger role than even income or marriage/cohabitation.

A recent paper in the Journal of Happiness Studies by Martin Berlin and Niklas Kaunitz of the Swedish Institute for Social Research (SOFI) at Stockholm University found that Swedes who said they could not come up with a moderate sum of money (a little over $1,000) within a week — either from savings, family, friends, or a bank — reported lower measures of life satisfaction than those who said they could.

The researchers found that it would take a fivefold increase in income to counter the decrease in “satisfaction with life circumstances” that’s associated with being unable to gain access to the cash, and a twentyfold increase in income to make up for the dip in “satisfaction with daily life,” as a result of the lack of access to cash.

The authors suggest that it is a sense of economic security, not wealth per se, that matters for someone’s well-being. It also did not seem to matter if the cash came from one’s own savings or from outside help.

I have not been able to read the full research paper, but if I am interpreting it correctly, someone who makes $10,000 per year and has access to $1,000 cash has the same level of life satisfaction as someone who makes $50,000 per year but does not have access to $1,000 cash. However, I would assume that there is a strong correlation between income and having access to cash.

I think this research also has implications for social safety nets. Knowing that you have access to food, shelter, and healthcare, even if your income is below the poverty line, must bring some sense of security to such individuals.

I also think this research is consistent with a couple of self-help books/articles I’ve read (Steve Pavlina and Larry Winget) where the authors talk about the feeling of confidence and an abundance mentality that is achieved by carrying a decent amount of cash in their wallets. Carrying around that much cash is a sign that you likely have access to cash, and results in the same feeling of life satisfaction being measured by the Swedish researchers.

I’ve previously written about the relationship between money and happiness. Anton Deaton, the most recent Nobel Prize winner in Economics, and Daniel Kahneman, the 2002 winner of the Nobel Prize in Economics, found that “emotional well-being” peaks at an income of about $75,000.

We’ve all heard the phrase “money can’t buy happiness”, but after reading a couple of books by Jonathan Kozol, I can’t help but think that it must be really hard to be happy when one lives in extreme poverty.

So while maybe money doesn’t buy happiness, it, along with a social safety net, may at least help you move up a bit on Maslow’s hierarchy of needs, which is a step in the right direction.


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