How much money it takes to be happy in South Africa

In a record-high inflationary economy, one’s happiness can be affected when we see prices going up, while our money’s purchasing power continues to decrease – in other words, your money today will not go as far tomorrow.

These types of scenarios have left many economists and psychologists to try to calculate how much is enough to make a person happy. One would think that more money correlates to more happiness, but that isn’t necessarily true.

The latest World Happiness Report (WHR) for 2022 from the United Nations showed that the study of happiness is growing, with more research being done globally, including in South Africa. However, attention to income and GDP as metrics to gauge the quality of life or happiness has been appearing far less.

South Africa currently ranks 91st out of the 146 listed countries – the last being Afghanistan and the first being Finland.

For many countries on the African continent in close proximity to South Africa on the table, there is both an economic and social dimension to happiness whereby harmony and the absence of conflict is a driving force for happiness, and a functional economy adds to it, reported the WHR.

The top five countries on the list – Finland, Denmark, Iceland, Switzerland and Netherlands – are wealthy Nordic countries with thriving economies backed by social benefits.

According to a recent report by Purdue University in the US, one’s income can correlate with emotional well-being and life satisfaction. GoBankingRates said that the Purdue report found that globally, people are most satisfied when they earn $95,000 a year (R1,638,365).

The report also found that emotional well-being was satiated at between $60,000 (R1,034,522) and $75,000 (R1,293,153).

In terms of ‘poorer‘ nations, the report stated that countries in Sub-Saharan Africa could be satiated with $40,000 (R689,681) annually.

The report found that as South Africa is a poorer nation, someone earning more than R1 million a year (the global average happiness level) might not be any happier than someone earning $40,000 (R689,681) – the regional happiness level.

Middle class

In South Africa, the metrics vary significantly. It is difficult to place an exact number on happiness due to the subjective nature of happiness and also the lack of job opportunities in the country.

If one was to rely on the ‘middle class as being a pointer to economic stability, a salaried middle-income consumer would have to earn enough to pay for products and services such as financing a vehicle, buying a home and putting away money for retirement.

The latest salary data from the BankservAfrica Take-home Pay Index shows that the average salary paid to employees in South Africa slipped to R14,340 (R172,080 annually) in July. While working, the average monthly earnings paid to employees in the formal non-agricultural sector was around R23,500 (R282,000 annually).

Not everyone wants all the money.

It is not a universally shared trend to accumulate more and better economic goods without no end, said Paul Bain and Renata Bongiorno, professors of psychology at the University of Bath.

The two professors found from surveying 220 people from 33 countries that if offered unlimited money, a vast group of people would actually choose a more ‘reasonable’ amount.

The graph below shows the choice of multiple respondents in regard to how much money they would like to win from the lottery to live out their absolutely ideal life.

The participants were told that they would have the exact same chance of winning across the spectrum of winnings ranging between $10,000 to $100 billion (essentially an unlimited amount). Interestingly, most people chose to enter a lottery around the $110,000 to the $10 million point.