Psychologists say they've found the exact amount of money you need to be happy

This study analyzed data from over 1.7 million people in 164 countries

A new study finds the ideal income for individuals is $95,000 a year for life satisfaction and $60,000 to $75,000 a year for emotional well-being.

MarketWatch photo illustration/iStockphoto, Everett Collection

Money can buy you happiness, but only a certain amount.

Psychologists from Purdue University and the University of Virginia analyzed World Gallup Poll data from 1.7 million people in 164 countries, and cross-referenced their earnings and life satisfaction. Although the cost and standard of living varies across these countries, researchers came up with a bold conclusion: The ideal income for individuals is $95,000 a year for life satisfaction and $60,000 to $75,000 a year for emotional well-being. Families with children, of course, will need more.

The study, published in the journal Nature Human Behavior, found that once that threshold was reached, further increases in income were actually associated with reduced happiness. People from wealthier countries were satisfied with their lives later on, said Andrew Jebb, the lead author of the study and doctoral student at Purdue's Department of Psychological Sciences, perhaps because they're more likely to compare themselves to others. "Evaluations tend to be more influenced by the standards by which individuals compare themselves to other people," Jebb said.

Researchers defined life satisfaction as an overall assessment of how one is doing, while emotional well-being refers to a person's day-to-day feelings such as happiness, sadness, excitement or anger.

There is a happiness tipping point: The more you have, the more you want, the study concluded. "The small decline puts one's level of well-being closer to individuals who make slightly lower incomes, perhaps due to the costs that come with the highest incomes," Jebb said. "These findings speak to a broader issue of money and happiness across cultures. Money is only a part of what really makes us happy, and we're learning more about the limits of money."

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Americans, who have experienced stagnant wages for several years, seem to be stuck in a rut. This week, polling firm Gallup and digital health company Sharecare, painted a bleak picture: Not one state showed an improvement in well-being by a statistically significant measure — the first time that's happened in the nearly 10-year history of the Gallup-Sharecare Well-Being Index. South Dakota claimed the top spot, scoring 64.1 out of 100 points, followed by Vermont and Hawaii.

Money can buy you happiness, especially if you spend it on other people. "We need to look at why we are unhappy," says Sri Sri Ravi Shankar, founder of the Art of Living spiritual movement and, most recently, a free app to track your happiness. Shankar, who lives in Bangalore, India, and is one of the most high-profile spiritual leaders in India, says unhappy people often need direction. "Engage in some social service activity," Shankar told MarketWatch.

Others dispute the theory that there are limits on how much happiness money can buy. There is no tipping point, according to research published in 2013 in the American Economic Review, Papers and Proceedings by economists Betsey Stevenson and Justin Wolfers, professors at the University of Michigan. "The relationship between well-being and income is roughly a linear-log and does not diminish as incomes rise," they wrote. "If there is a satiation point, we are yet to reach it."

(This story was originally published on Feb. 14, 2018.)

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Quentin Fottrell is MarketWatch's Managing Editor-Personal Finance and The Moneyist columnist. You can follow him on Twitter @quantanamo.