Sunday, December 30, 2012

$$ can't buy happiness, but do happy people make more $$?

Estimating the influence of life satisfaction and positive affect on later income using sibling fixed effects

Jan-Emmanuel De Neve & Andrew Oswald
Proceedings of the National Academy of Sciences, 4 December 2012, Pages 19953-19958

Abstract:
The question of whether there is a connection between income and psychological well-being is a long-studied issue across the social, psychological, and behavioral sciences. Much research has found that richer people tend to be happier. However, relatively little attention has been paid to whether happier individuals perform better financially in the first place. This possibility of reverse causality is arguably understudied. Using data from a large US representative panel, we show that adolescents and young adults who report higher life satisfaction or positive affect grow up to earn significantly higher levels of income later in life. We focus on earnings approximately one decade after the person’s well-being is measured; we exploit the availability of sibling clusters to introduce family fixed effects; we account for the human capacity to imagine later socioeconomic outcomes and to anticipate the resulting feelings in current well-being. The study’s results are robust to the inclusion of controls such as education, intelligence quotient, physical health, height, self-esteem, and later happiness. We consider how psychological well-being may influence income. Sobel–Goodman mediation tests reveal direct and indirect effects that carry the influence from happiness to income. Significant mediating pathways include a higher probability of obtaining a college degree, getting hired and promoted, having higher degrees of optimism and extraversion, and less neuroticism.


Nod to Kevin Lewis

3 comments:

Tom said...

"This possibility of reverse causality is arguably understudied." Are the authors just boasting or does their study actually substantiate that (entirely separate) claim?

rusrus said...

Happy idiots probably make less than pissed-off geniuses

Otto ikn said...

Shorter De Neve & Oswald: People who use more of their neurons enjoy life more. The end.