Running Head: Rank Income Effects Money and Happiness: Rank of Income, not Income, Affects Life Satisfaction

Title : Money and Happiness : Rank of Income , not Income , Affects Life Satisfaction

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

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 s...

How Much Does Money Really Matter? Estimating the Causal Effects of Income on Happiness

There is a long tradition of psychologists finding small income effects on life satisfaction (or happiness). Yet the issue of income endogeneity in life satisfaction equations has rarely been addressed. This paper aims to do just that. Instrumenting for income and allowing for unobserved heterogeneity result in an estimated income effect that is almost twice as large as the estimate in the basi...

A Reconsideration Based on the Combined Effects of Wealth, Income and Consumption

Money Doesn’t Buy Happiness... Or Does It? A Reconsideration Based on the Combined Effects of Wealth, Income and Consumption The accepted view among psychologists and economists alike is that economic well-being has a statistically significant but only weak effect on happiness/subjective well-being (SWB). This view is based almost entirely on weak relationships with household income. The paper ...

Money Doesn’t Buy Happiness – or Does It? a Reassessment Based on the Combined Effects of Wealth, Income and Consumption*

The accepted view among psychologists and economists alike is that economic well-being has a statistically significant but only weak effect on happiness/subjective well-being (SWB). This view is based almost entirely on weak relationships between household income and SWB. But income is clearly an imperfect measure of economic well-being. Also needed are measures of wealth (net worth) and consum...