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Journal Article

Money and happiness: rank of income, not income, affects life satisfaction

Authors

Publication date

2010

Abstract

Does money buy happiness, or does happiness come indirectly from the higher rank in society that money brings? We tested a rank-income hypothesis, according to which people gain utility from the ranked position of their income within a comparison group. The rank hypothesis contrasts with traditional reference-income hypotheses, which suggest that utility from income depends on comparison to a social reference-group norm. We found that the ranked position of an individual’s income predicts general life satisfaction, whereas absolute income and reference income have no effect. Furthermore, individuals weight upward comparisons more heavily than downward comparisons. According to the rank hypothesis, income and utility are not directly linked: Increasing an individual’s income will increase his or her utility only if ranked position also increases and will necessarily reduce the utility of others who will lose rank.

Published in

Psychological Science

Volume

21 (4):471-475

DOI

http://dx.doi.org/10.1177/0956797610362671

Subjects

Income Dynamics, Well Being, and Social Psychology

Links

http://serlib0.essex.ac.uk/record=b1590470~S5

Notes

Originally 'Early View' 18 Feb. 2010; Albert Sloman Library Periodicals *restricted to Univ. Essex registered users*


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