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Confused by recent headlines about money and happiness? Here’s a quick cheat sheet summarizing recent academic studies on the link between the two.

Relative income and happiness

Summary: While the rich are generally happier than the rest of us, your income compared to your peers is a stronger predictor of happiness. The higher the income of others in your age group, the lower your level of happiness. Working-age families must earn more and more to maintain the same level of happiness. If your family income trajectory is flat, you’ll tend to be less happy over time. The researchers say this puts Americans on a “hedonic treadmill” because incomes in the U.S. rise with age. Even so, the researchers point out, health and marital status matter more to one’s level of happiness than your level of income relative to your peers’. Also notable is that while there are only modest differences in happiness levels between full time and part time workers, retirees, students and housekeepers, those who are laid off or report their work status as “other” are markedly less happy than the rest.

Report by: Glenn Firebaugh (Penn State) and Laura Tach (Harvard): “Relative Income and Happiness: Are Americans on a Hedonic Treadmill?” August 2005.

Question: Taken all together, how would you say things are these days — would you say you are very happy, pretty happy, or not too happy?

	Very happy	Pretty happy	Not too happy
Family income
Less than $15,000	20%	56%	24%
$75,000 and above	44	51	5
Health
Excellent	44	49	7
Good	26	64	10
Fair	18	59	23
Poor	16	44	40
Education
Less than high-school degree	26	53	21
High-school degree	29	59	12
Some college	30	60	10
College or above	37	56	8
Marital status
Married	40	53	7
Not married	20	62	17
Race
White	32	58	10
Nonwhite	23	57	20
Work status
Working full time	31	59	10
Working part time	28	60	12
Temporarily not working	29	56	15
Retired	34	53	13
Student	30	58	12
Keeping house	33	51	15
Laid off	17	53	30
Other	20	52	28
Gender
Male	30	59	12
Female	31	57	12
Overall	30.5	57.5	11.9

Survey: 1972-2002 General Social Survey, U.S. respondents ages 20-64.

 

Would you be happier if you were richer?

Summary: The belief that good moods and high income go hand-in-hand is “widespread but mostly illusory.” While people with above-average incomes are relatively satisfied with their lives, they aren’t that much happier in terms of moment-to-moment experiences than others. Plus, higher-income people tend to be more tense and spend more of their time at work and commuting and less time to passive leisure activities, such as watching TV or playing golf. While those with incomes of $90,000 and more were nearly twice as likely to report being “very happy” as those with incomes below $20,000, there is hardly any difference between the $90,000-and-more group and the $50,000-to-$89,999 set.

When most researchers want to measure people’s subjective well-being, they ask: “All things considered, how satisfied with your life as a whole these days?” or “Taken all together, would you say that you are very happy, pretty happy, or not too happy?” These questions usually prompt people to provide a “global evaluation” of their lives. Another way to measure subjective well-being is to ask about feelings in “real time,” such as what portion of a day they were in a bad mood — the authors call this “experienced happiness.”

The authors say that many surveys show that levels of life satisfaction or happiness have changed little through the years despite large increases of real income per capita. They say that although there might be some correlation in a cross section of people, the effect of an increase in income on life satisfaction is usually only temporary. And, the correlation between income and subjective well-being is weaker when “experienced happiness” is the measure, as compared to when “global evaluation” is used.

Report by: Daniel Kahneman (Princeton U.), Alan B. Krueger (Princeton U.), David Schkade (U. of Calif.-San Diego), Norbert Schwartz (U. of Mich.) and Arthur Stone (Stony Brook U.); Science, June 30, 2006.

Questions: A sample of working women were asked to estimate the percentage of time they spent in a bad mood on the preceding day. They were also asked to predict the amount of time people with high and low income, among other things, typically spend in a bad mood. Respondents overestimated the prevalence of bad mood for people with a lower income.

Group	Percentage of time in a bad mood or a little low/irritable
Household income	Actual	Predicted
Less than $20,000	32%	57.7%
More than $100,000	19.8	25.7

 

While the actual difference of time in a bad mood was 12 percentage points between high and low incomes, the difference that the women predicted for those groups was much larger — 32 percentage points. Thus, the gap in their actual experiences based on income was far narrower than what they expected based on income.

Survey sample size: Working women — Actual: 64 and 59  women, respectively; Predicted: 83 and 83  women , respectively.

 

Question: Taken all together, how would you say things are these days — would you say that you are very happy, pretty happy, or not too happy?

	Family income
Response	Under $20,000	$20,000-49,999	$50,000-89,999	$90,000 and over
Not too happy	17.2%	13.0%	7.7%	5.3%
Pretty happy	60.5	56.8	50.3	51.8
Very happy	22.2	30.2	41.9	42.9

Survey: 1,173 people, General Social Survey.

Money and income: a correlation, not a cause

Summary: Those with higher incomes are more likely to be very happy. The report cautions that there is a correlation between money and happiness but not necessarily a cause-and-effect relationship.

Report by: PewResearch Center, February 2006

 

Question: How happy are you these days in your life?

Income	Percentage very happy by family income
Under $30,000	24%
$30,000 to under $75,000	33
$75,000 to under $100,000	38
$100,000 and over	49

Survey: 3,014 phone interviews with U.S. adults, age 18 and older.

Money and the blues

Summary: Higher-income Americans report fewer “sad, blue or depressed” days than those with lower incomes.

Report by: Center for Disease Control researchers; Health and Quality of Life Outcomes, August 2004.

 

Question: During the past 30 days, for about how many days have you felt sad, blue, or depressed?

Income	Mean number of days feeling sad, blue or depressed
	Males	Females	Males and Females
Less than $15,000	5.4	6.5	6.1
$15,000-$24,999	3.3	4.5	3.9
$25,000	2.2	3.2	2.7
More than $50,000	1.7	2.4	2.0
All	2.5	3.6	3.0

Survey: 166,564 respondents to the U.S. Behavioral Risk Factor Surveillance System telephone survey, U.S. adults, 18 years and older, between 1995 and 2000.

 

By Laura Lorber

 

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