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

By Christopher J. Boyce, G. D. A. (Gordon D. A.) Brown and Simon C. Moore

Abstract

Does money buy happiness, or does happiness come indirectly from the higher rank in society that money brings? Here we test a rank 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 utility from income depends on comparison to a social group reference norm. We find that the ranked position of an individual’s income predicts general life satisfaction, while absolute income and reference income have no effect. Furthermore, individuals weight upward comparisons more than downward comparisons. According to the rank hypothesis, income and utility are not directly linked: Increasing an individual’s income will only increase their utility if ranked position also increases and will necessarily reduce the utility of others who will lose rank

Topics: HT, BF
Publisher: Sage
Year: 2010
OAI identifier: oai:wrap.warwick.ac.uk:2554

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Citations

  1. (1990). 0.0840 Absolute value of t statistics in parentheses (adjusted to account for clustering as a result of aggregated variables (see Moulton,

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