Does money buy happiness? Long a subject of debate, the question for one economist is rooted in the numbers, along with clues to where the happiest people in Orange County may live.
Aaron Popp, a research associate at CSUF’s Woods Center for Economic Analysis and Forecasting, recently explored whether such a question can be answered for Orange County by examining the average financial wealth of it residents by ZIP code.
What he found by mapping the data are disparities in income by location.
His research was prompted by a recent study conducted in the United Kingdom, where economists had access to a national survey and were able to find connections between happiness and financial wealth — held in cash, stocks, bonds and other financial assets. Housing wealth and pension wealth did not seem related to happiness once the researchers controlled for other forms of wealth, income and other demographic factors.
“While we cannot observe how wealthy people are, we can observe how their financial wealth grows by tracking their interest and dividend income,” he explains. “The Internal Revenue Service publicly provides income tax data for every ZIP code, including the total number of returns filed, the total income earned on those returns and total income by type of income. The average of interest and dividend income per return in 2013 constitutes net financial wealth in our analysis.”
Popp plotted the results on a map of the county, showing the wide disparity in average financial wealth. The richest ZIP code is 92657, Newport Coast, with an average of $44,355 of interest and dividend income per return; the lowest is 92703, Santa Ana, with an average of $66 of dividend and interest income reported per return.
In one of the wealthiest counties in the country, why such a disparity? Popp believes housing prices and the cost of living affect how much people can save or invest.
“In Santa Ana, while median household income is $53,335, similar to median household income for the nation as a whole, home sale prices are over twice as much as the median for the country,” Popp notes. “Overall, the cost of living is about 47 percent higher in Orange County compared to the national average.”
He noted: “ZIP codes in Santa Ana rank in the bottom 20 percent of the country by financial wealth, despite being at the 50 percentile by income. This fact highlights how difficult it is to save in Santa Ana and the rest of Orange County.”
Adding to the mix: those with families living abroad may send much of their income to relatives living elsewhere — income that would otherwise go to savings, he added. “This explanation is important in our analysis, because it suggests that we may underestimate average financial wealth in areas with large Hispanic and Asian populations and, consequently, underestimate their happiness.”