Money Does not Buy Happiness: Or Does It? A Reassessment Based on the Combined Effects of Wealth, Income and Consumption

Headey, Bruce; Muffels, Ruud; Wooden, Mark

doi:10.1007/s11205-007-9146-y

Cited by 214 publications

(141 citation statements)

References 29 publications

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“…For example, individuals who overspend their incomes and accumulate debt may gain less hedonic benefit from their wealth than those who earn the same but prudently save or invest their money (see Chancellor & Lyubomirsky, 2011;Dunn, Gilbert, & Wilson, 2011). Consistent with this theory, both lack of debt (Brown, Taylor, & Price, 2005) and total assets (Headey, Muffels, & Wooden, 2008;Headey & Wooden, 2004;Johnson & Krueger, 2006) have been found to be stronger predictors of life satisfaction than income alone.…”

mentioning

confidence: 89%

How your bank balance buys happiness: The importance of “cash on hand” to life satisfaction.

Ruberton

Gladstone

Lyubomirsky

2016

Emotion

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Could liquid wealth, or "cash on hand"-the balance of one's checking and savings accounts-be a better predictor of life satisfaction than income? In a field study using 585 U.K. bank customers, we paired individual Satisfaction With Life Scale responses with anonymized account data held by the bank, including the full account balances for each respondent. Individuals with higher liquid wealth were found to have more positive perceptions of their financial well-being, which, in turn, predicted higher life satisfaction, suggesting that liquid wealth is indirectly associated with life satisfaction. This effect persisted after accounting for multiple controls, including investments, total spending, and indebtedness (which predicted financial well-being) and demographics (which predicted life satisfaction). Our results suggest that having readily accessible sources of cash is of unique importance to life satisfaction, above and beyond raw earnings, investments, or indebtedness. Therefore, to improve the well-being of citizens, policymakers should focus not just on boosting incomes but also on increasing people's immediate access to money.

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confidence: 89%

How your bank balance buys happiness: The importance of “cash on hand” to life satisfaction.

Ruberton

Gladstone

Lyubomirsky

2016

Emotion

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“…The topic has been addressed in a vast and inconclusive research literature (for a selection of recent reviews, see refs. [1][2][3][4]. No single article can settle this complex question definitively, but data recently collected by the Gallup Organization in the Gallup-Healthways Well-Being Index (GHWBI) provide a rich source of observations, as well as an unusually detailed measurement of well-being.…”

mentioning

confidence: 99%

High income improves evaluation of life but not emotional well-being

Kahneman

Deaton

2010

Proc. Natl. Acad. Sci. U.S.A.

2,241

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Recent research has begun to distinguish two aspects of subjective well-being. Emotional well-being refers to the emotional quality of an individual's everyday experience—the frequency and intensity of experiences of joy, stress, sadness, anger, and affection that make one's life pleasant or unpleasant. Life evaluation refers to the thoughts that people have about their life when they think about it. We raise the question of whether money buys happiness, separately for these two aspects of well-being. We report an analysis of more than 450,000 responses to the Gallup-Healthways Well-Being Index, a daily survey of 1,000 US residents conducted by the Gallup Organization. We find that emotional well-being (measured by questions about emotional experiences yesterday) and life evaluation (measured by Cantril's Self-Anchoring Scale) have different correlates. Income and education are more closely related to life evaluation, but health, care giving, loneliness, and smoking are relatively stronger predictors of daily emotions. When plotted against log income, life evaluation rises steadily. Emotional well-being also rises with log income, but there is no further progress beyond an annual income of ~$75,000. Low income exacerbates the emotional pain associated with such misfortunes as divorce, ill health, and being alone. We conclude that high income buys life satisfaction but not happiness, and that low income is associated both with low life evaluation and low emotional well-being.

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“…Second, the household income per capita also can be perceived as an approximation of individual consumption. Headey, Muffels and Wooden (2004) show that consumption has at least the same impact as income on well-being. Lastly, according to the standard economic theory with higher income the same increases in income should have smaller effect on well-being.…”

Section: Data Descriptionmentioning

confidence: 96%

An Empirical Investigation into the Determinants and Persistence of Happiness and Life Evaluation

Chrostek

2014

J Happiness Stud

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A comparison of measures of happiness and life evaluation indicates significant differences in correlates. Life evaluation is less dependent on external circumstances than happiness. Temporary changes in health, labour market status and income have a smaller impact on life evaluation than on happiness. Despite the differences both types of well-being exhibit a positive relation between current and past well-being. This result contradicts the hypothesis of general habituation. JEL-Classification: D0, I31

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Money Does not Buy Happiness: Or Does It? A Reassessment Based on the Combined Effects of Wealth, Income and Consumption

Abstract: Happiness, Wealth, Income, Consumption, Panel data,

Cited by 214 publications

References 29 publications

How your bank balance buys happiness: The importance of “cash on hand” to life satisfaction.

How your bank balance buys happiness: The importance of “cash on hand” to life satisfaction.

High income improves evaluation of life but not emotional well-being

An Empirical Investigation into the Determinants and Persistence of Happiness and Life Evaluation

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