3 roommates in a basement is only miserable living conditions when compared to the McMansions that people are moving into now. My dad grew up in a 3rd world country. His family would be considered upper-class within their city, and yet they had 10 children crammed into a couple rooms, geckos in their living spaces, and mosquito nets to keep away the malaria. And they got bombed out of their home by the Americans, and had to move up into the mountains, shit in the river, and use stones to wipe their ass.

I included waterbill and trashbill in my utilities estimates; I was basing it off what I paid for utilities when I lived with roommates in California.

Person 1, at least, didn't have a landline - he used his cell (still on his parents plan) or IM from work. Person 1 also did not have zero savings: he managed to save up $20K over 2 years. Remember, a typical grad student salary is about $20k/year, and he was living off $10K/year.

People who make $10-20k/year don't pay much in taxes. Many don't pay anything. That's reverse-income-tax land.

You have a point with clothes, but over the short term, it can be ignored. I'm still wearing some of my clothes from high school, 10 years later. And you certainly have a point about health care, which is the elephant in the room, though that will hopefully get better as Obama's plan phases in.

I suspect that Daniel Kanemann's research could be rephrased as "For a good life, you have to be making more than average." It's not coincidence that $60K/year is just slightly more than median household income in the U.S. I suspect that if he were to run the same experiment in Vanuatu - supposedly the happiest place on earth - he'd find that you need roughly $5K/year for the good life. That's just slightly over their per-capita GDP.