The Key Lesson From The Great Recession: Cognitive Bias Follows Black Swan Events

The “$75,000 = Happiness Study” and How the American Middle Class got “Anchored” After the Great Recession

How much money buys happiness?

There was a time when we tried to answer that question. It was part of our reaction to one of our prior Black Swan events. If you recall, there was a popular phrase around the time of The Great Recession.

“$75,000 is the magic salary for happiness.”

Most people just shortened it to “$75K = Happpiness.”

That was the headline in all our heads.

In reality, this referenced a 2010 study authored by Nobel Prize winners Angus Deaton and Daniel Kahneman.

Two Nobel laureates took the liberty of answering the question, “How much money buys happiness?” (Whether money brings happiness was a forgone conclusion.)

The answer to happiness appeared to be a cool $75K. That’s what the flurry of articles reported. Here’s a screen grab of google showing the headlines.

It’s easy to forget — a decade later, in a strong economy — that people’s lives were being destroyed during The Great Recession.