Study: Money, Mental Health Strongly Related

A Gallup study reports that there is a strong relationship between income and mental health:

While the substantial majority of Americans rate their mental health today as excellent or good, there are significant variations in this self-reported mental health measure by one's socioeconomic position. Those with higher incomes are much more likely than those with lower incomes to report excellent mental health, and this relationship persists even when other variables such as age, education, gender, and marital status are taken into account.

Wealth inequality 10 times income inequality in United States

The wealth inequality between the bottom 10% and the top 10% in America is greater than ten times the income inequality between the bottom 10% and the top 10% in America, suggesting, perhaps, that much wealth is tied up in unrealized appreciation of family businesses, real estate, and securities portfolios, that higher earners put their money to work while low earners do not, and/or that the low income earners do not have enough money left over after meeting expenses to invest or save:

The best way to give people a sense of where they stand is to lay out some data. Every three years the Federal Reserve Board conducts a national survey that tracks the financial health of American households.

The Fed slices and dices this stuff with the vigor of an Iron Chef; the result is a rich, if dry, array of offerings on household net worth, pension and income levels, plus other demographic side dishes.

Whenever I slip these tidbits into cocktail party chatter, people are surprised to realize how little money it takes to win a gold star from the Fed. If you and yours are bringing in $40,000 a year, you're doing better than half the households in America.

Or, as a Washington think tank recently pointed out: If you're a teacher married to a policeman, your combined household income puts you in the top 25 percent of all households in the nation.

Below you'll find the average income picture sliced into income levels. Think of this chart as a parking ramp. If your household income is $170,000, you're among the nation's top 10 percent wage earners and get to park on the top floor.

Anything in six figures means you're in the top 20 percent and get to park on the floor right below.

Annual income parking ramp
Income level (percentile) Median income (rounded)

Level VI (90 to 100) $170,000
Level V (80 to 89.9) $99,000
Level IV (60 to 79.9) $65,000
Level III (40 to 59.9) $40,000
Level II (20 to 39.9) $24,000
Level I (less than 20) $10,000

Source: Before-Tax Family Income, 2001 Federal Reserve Board Survey

So does making $170,000 a year make a person rich? Last year a plurality of respondents (29 percent) in a survey by The New York Times said that "rich" was making between $100,000 and $200,000 a year. Unfortunately, the survey didn't break out how many people in that salary range considered themselves rich. If the people I talk to are any indication, very few do.

Of course, income is only one part of the equation defining where you stand. Net worth is more telling. Net worth, as every financially precocious schoolchild knows, is the sum of one's assets -- home equity, investments, savings accounts, retirement funds, cars, furnishings and such things as jewelry, furs, wine collection, old baseball cards -- minus all outstanding liabilities such as mortgage balance, revolving and credit card debt, college loans and so on. Across all households, the national median net worth is $86,000. Half of your fellow citizens have more than that, half less. As you see, there's a massive disparity between the haves and have-nots.

Net worth parking ramp
Net worth (percentile) Median net worth (rounded)

Level VI (90 to 100) $833,600
Level V (80 to 89.9) $263,100
Level IV (60 to 79.9) $141,500
Level III (40 to 59.9) $62,500
Level II (20 to 39.9) $37,200
Level I (less than 20) $7,900

Source: Family Net Worth, 2001 Federal Reserve Board Survey

Where Do You Stand On America's Wealth Spectrum?, Bankrate.com, 11/1/2007

Also clear is that the distinction between wealth and income remains lost on the vast majority of Americans and most journalists, as well.