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

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

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.

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