About 12% of people in Singapore have over $1.36m in net wealth. But how much will make you happy?

How many millionaires in Singapore are there?

We all know that Singapore is the land of Crazy Rich Asians.

In fact, according to Knight Frank’s The Wealth Report 2022, there are a boatload of millionaires and billionaires in Singapore:

HNWI populations [US$1 million + (S$1.36 million +) Net Wealth]
Date	2020	2021	2026 (Projected)	2020 to 2021 (per cent Change)	2021 to 2026 (per cent Change)
Region
World	64,703,169	69,750,472	106,263,114	7.8 per cent	52.3 per cent
Asia	16,074,153	17,545,940	28,233,662	9.2 per cent	60.9 per cent
Australasia	2,839,034	3,033,213	4,643,820	6.8 per cent	53.1 per cent
Country/Territory
Australia	2,438,709	2,612,249	3,933,489	7 per cent	51 per cent
Chinese Mainland	8,200,731	9,256,622	17,138,050	13 per cent	85 per cent
Hong Kong SAR	701,780	757,086	940,866	8 per cent	24 per cent
Malaysia	66,350	70,238	130,750	6 per cent	86 per cent
Singapore	498,396	526,370	592,104	6 per cent	12 per cent
South Korea	812,064	830,284	1,353,197	2 per cent	63 per cent
Taiwan	911,620	983,325	1,429,828	8 per cent	45 per cent
Thailand	115,284	125,406	162,497	9 per cent	30 per cent
UHNWI populations [US$30 million + (S$40.73 million +) Net Wealth]
Date	2020	2021	2026 (Projected)	2020 to 2021 (per cent Change)	2021 to 2026 (per cent Change)
Region
World	558,828	610,569	783,671	9.3 per cent	28.4 per cent
Asia	158,455	169,889	225,391	7.2 per cent	32.7 per cent
Australasia	22,077	24,245	32,271	9.8 per cent	33.1 per cent
Country/Territory
Australia	18,958	20,874	27,330	10 per cent	31 per cent
Chinese Mainland	88,358	93,854	133,471	6 per cent	42 per cent
Hong Kong SAR	5,455	6,050	7,593	11 per cent	26 per cent
Malaysia	715	712	1,018	0 per cent	43 per cent
Singapore	3,874	4,206	6,007	9 per cent	43 per cent
South Korea	6,313	6,635	9,402	5 per cent	42 per cent
Taiwan	7,087	7,857	9,934	11 per cent	26 per cent
Thailand	1,242	1,272	1,266	2 per cent	0 per cent

Note: Knight Frank estimates net wealth on a location-by-location basis using balance sheet data, where available, on households’ financial and non-financial wealth. Net wealth includes primary residences and second homes not owned primarily as investments, and it does not include Central Provident Fund (CPF) funds.

Also, Knight Frank defines a High-net-worth individual (HNWI) as someone with a net worth of US$1 million (S$1.36 million) or more, including their primary residence, while an ultra-high-net-worth individual (UHNWI) is someone with a net worth of US$30 million or more, including their primary residence.

To put things into context, there are 4.5 million people in Singapore as of end-June 2021 (via SingStat).

This means that approximately 12 per cent of people in Singapore are at least millionaires.

That got me thinking.

Does having that much money buy happiness?

Here’s what the research says.

How much money does the average prson need to be happy?

Although no single piece of research can answer this question definitively, this 2018 study published by Purdue University in the field of happiness research will be pretty helpful.

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The researchers analysed data from the Gallup World Poll survey, where a representative sample of over 1.7 million individuals from 164 countries were surveyed.

In the survey, respondents were asked to think of a scale where their best possible life would represent a 10 on the scale, and their worst possible life would have a score of zero on the scale.

They were then asked to rate their own current lives overall on that zero to 10 scale.

FYI: This question is actually called the Cantril’s Self-Anchoring Striving Scale and is considered a more accurate and holistic method to measure happiness/subjective well-being/life satisfaction.

The researchers then studied the correlation between the Cantril ladder score and each individual’s income and found that people who earned more tend to be happier no matter which part of the world they are from.

However, the researchers also found that there was an income satiation point.

According to the APA Dictionary of Psychology, satiation refers to:

1. The satisfaction of a desire or need, such as hunger or thirst; another name for satiety.
2. The temporary loss of effectiveness of a reinforcer due to its repeated presentation.

As part of Southeast Asia, the income satiation point for the average person in Singapore is an annual income of about $93,000.

This means that when people earned more than $93,000, their happiness levels tapered off.

This could possibly be the case where any increase in income beyond this income satiation point does not have too significant an effect on the person’s ability to lead a comfortable life.

In other words, for the average person, more income increases overall life satisfaction but with diminishing marginal returns.

But millionaires might be happier than the average person

But, there are limits to the Purdue University study.

Although the Gallup survey can be considered statistically representative, millionaires like the top one per cent of the wealthiest people in Singapore are not as well-represented.

Also, the Gallup survey relies on the average person’s annual income, which generally has a more restricted range than people’s net worth, which can be accumulated over time and includes all assets in addition to income.

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To examine this better, we will look at a study done by Economics Nobel laureates Grant Donnelly and Micheal Norton and Emily Haisley at BlackRock and Tianyi Zheng at the University of Mannheim.

They surveyed about 4,000 millionaires about their wealth and happiness.

For wealth, the researchers asked the respondents about their current net worth.

For happiness, they were asked to rate their happiness on a 10 point scale.

They found that respondents with a net worth of about US$10 million reported that they were happier than those with a net worth of ‘only’ US$1 million or US$2 million.

More specifically, the US$10 million millionaires reported that they were about 0.25 points happier on a 10-point scale.

In other words, the research suggests that the more money both groups had, the happier they were.

How you made the wealth matters

Also, the researchers found that when they controlled for total wealth, they found that the millionaires who were ‘self-made’ and earned their wealth through means like entrepreneurship, investing etc., were slightly happier than those who inherited the wealth.

Collectively, the two main findings and the results suggest that among millionaires, the increase in happiness benefits are only significant for the super-wealthy and when the wealth was earned rather than inherited.

Closing thoughts

The studies suggest that more income increases overall life satisfaction for the average person but with diminishing marginal returns.

But amongst millionaires who earn much more than $93,000 a year, things might be a bit different, as Grant Donelly would attest:

“So, while we’ve believed before there is diminishing marginal utility, the curve doesn’t diminish as quickly as we once thought — and even when basic needs have been met, acquiring more wealth does increase happiness.”

READ ALSO: Do you worry about money? How to avoid stressing about personal finances

This article was first published in Seedly.