Social Indicators Research

, Volume 91, Issue 3, pp 329–344 | Cite as

Personal Values as Mitigating Factors in the Link Between Income and Life Satisfaction: Evidence from the European Social Survey

  • Yannis GeorgellisEmail author
  • Nicholas Tsitsianis
  • Ya Ping Yin


Using data from the first two rounds of the European Social Survey, we examine the link between income, reference income and life satisfaction across Western Europe. We find that whilst there is a strong positive relationship between income and life satisfaction, reference or comparison income exerts a strong negative influence. Interestingly, our results confirm the importance of personal values and beliefs not only as predictors of subjective well-being, but also as mitigating factors in the relationship between income, reference income and life satisfaction. While our findings provide additional empirical support for the relative utility hypothesis, they are also consistent with Rojas’ (J Econ Psychol 28:1–14, 2007) Conceptual-Referent-Theory (CRT), which is based on the premise that the salience of income and comparison income depends on one’s intrinsic values and personal beliefs.


Comparison income Happiness Life satisfaction European Social Survey 


  1. Ahuvia, A., & Wong, N. (1995). Materialism: Origins and implications for personal well-being. In F. Hansen (Ed.), European advances in consumer research (Vol. 2, pp. 172–178). Provo, UT: Association for Consumer Research.Google Scholar
  2. Blanchflower, D., & Oswald, A. (2004). Wellbeing over time in Britain and the USA. Journal of Public Economics, 88, 1359–1386.CrossRefGoogle Scholar
  3. Clark, A., Diener, E., Georgellis, Y., & Lucas, R. (2008b). Lags and leads in life satisfaction: A test of the baseline hypothesis. Economic Journal, 118(June), F222–F243.CrossRefGoogle Scholar
  4. Clark, A., Frijters, P., & Shields, M. (2008a). Relative income, happiness and utility: An explanation of the Easterlin paradox and other puzzles. Journal of Economic Literature, 46, 95–144.CrossRefGoogle Scholar
  5. Clark, A., Georgellis, Y., & Sanfey, P. (2001). Scarring: The psychological impact of past unemployment. Economica, 68(270), 221–242.CrossRefGoogle Scholar
  6. Clark, A., & Lelkes, O. (2005). Deliver us from evil: Religion as insurance. Papers on Economics of Religion, PER 06/03, European Network of Economics of Religion.Google Scholar
  7. Clark, A., & Oswald, A. (1996). Satisfaction and comparison income. Journal of Public Economics, 61, 359–381.CrossRefGoogle Scholar
  8. Cohen, S., & Willis, T. A. (1985). Stress, social support and the buffering hypothesis. Psychological Bulletin, 98, 310–357.CrossRefGoogle Scholar
  9. Diener, E., Suh, E., Lucas, R., & Smith, H. (1999). Subjective well-being: Three decades of progress. Psychological Bulletin, 125, 276–302.CrossRefGoogle Scholar
  10. Easterlin, R. (1974). Does economic growth improve the human lot? Some empirical evidence. In P. A. David & M. W. Reder (Eds.), Nations and households in economic growth (pp. 89–125). London: Academic Press.Google Scholar
  11. Easterlin, R. (1995). Will raising the income of all increase the happiness of all? Journal of Economic Behavior and Organization, 27(1), 35–47.CrossRefGoogle Scholar
  12. Easterlin, R. (2001). Income and happiness: Toward a unified theory. Economic Journal, 111, 464–484.CrossRefGoogle Scholar
  13. Ellison, C. G. (1991). Religious involvement and subjective well-being. Journal of Health and Social Behavior, 32, 80–99.CrossRefGoogle Scholar
  14. Fernandez, R., & Kulik, J. (1981). A multilevel model of life satisfaction: Effects of individual characteristics and neighborhood composition. American Sociological Review, 46, 840–850.CrossRefGoogle Scholar
  15. Ferrer-i-Carbonell, A. (2005). Income and well being: An empirical analysis of the comparison income effect. Journal of Public Economics, 89, 997–1019.CrossRefGoogle Scholar
  16. Ferrer-i-Carbonell, A., & Frijters, P. (2004). How important is methodology for the estimates of the determinants of happiness? Economic Journal, 114, 641–659.CrossRefGoogle Scholar
  17. Frey, B., & Stutzer, A. (2000). Happiness, economy and institutions. Economic Journal, 110, 918–938.CrossRefGoogle Scholar
  18. Frijters, P., Haisken-DeNew, J. P., & Shields, M. A. (2004). Money does matter! Evidence from increasing real income and life satisfaction in East Germany following reunification. American Economic Review, 94(3), 730–740.CrossRefGoogle Scholar
  19. Frijters, P., Haisken-DeNew, J. P., & Shields, M. A. (2005). The causal effect of income on health: Evidence from German reunification. Journal of Health Economics, 24, 997–1017.CrossRefGoogle Scholar
  20. Gerlach, K., & Stephan, G. (1996). A paper on unhappiness and unemployment in Germany. Economics Letters, 52, 325–330.CrossRefGoogle Scholar
  21. Gruber, J. (2005). Religious market structure, religion participation: Is religion good for you? Advances in Economic Analysis and Policy, 5(1), 1454.Google Scholar
  22. Hartog, J., & Oosterbeek, H. (1998). Health, wealth and happiness: Why pursue a higher education? Economics of Education Review, 17(3), 245–256.CrossRefGoogle Scholar
  23. Heady, B. (1991). An economic model of subjective well-being: Integrating economic and psychological theories. Social Indicators Research, 28, 97–116.CrossRefGoogle Scholar
  24. Kasser, T., & Ryan, R. M. (1996). Further examining the American dream: Differential correlates of intrinsic and extrinsic goals. Personality and Social Psychology Bulletin, 22, 280–287.CrossRefGoogle Scholar
  25. Lucas, R., Clark, A., Georgellis, Y., & Diener, E. (2003). Re-examining adaptation and the set point model of happiness: Reactions to changes in marital status. Journal of Personality and Social Psychology, 84, 527–539.CrossRefGoogle Scholar
  26. Lucas, R., Clark, A., Georgellis, Y., & Diener, E. (2004). Unemployment alters the set point of life satisfaction. Psychological Science, 15(1), 8–13.CrossRefGoogle Scholar
  27. Lynn, P., Hader, S., Gabler, S., & Laaksonen, S. (2004). Methods for achieving equivalence of samples in cross-national surveys: The European Social Survey experience. ISER Working Paper 2004–09. Colchester, University of Essex.Google Scholar
  28. McBride, M. (2001). Relative-income effects on subjective well-being in the cross-section. Journal of Economic Behavior and Organization, 45, 251–278.CrossRefGoogle Scholar
  29. Moulton, B. (1990). An illustration of a pitfall in estimating the effects of aggregate variables on micro units. Review of Economics and Statistics, 72, 334–338.CrossRefGoogle Scholar
  30. Rojas, M. (2005). A conceptual-referent-theory of happiness. Heterogeneity and its consequences. Social Indicators Research, 74(2), 261–294.CrossRefGoogle Scholar
  31. Rojas, M. (2007). Heterogeneity in the relationship between income and happiness: A conceptual-referent-theory explanation. Journal of Economic Psychology, 28, 1–14.CrossRefGoogle Scholar
  32. Schmuck, P., Kasser, T., & Ryan, R. (2000). Intrinsic and extrinsic goals: Their structure and relationship to well-being in German and U.S. college students. Social Indicators Research, 50(2), 225–241.CrossRefGoogle Scholar
  33. Stutzer, A. (2004). The role of income aspirations in individual happiness. Journal of Economic Behavior and Organization, 54, 89–109.CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media B.V. 2008

Authors and Affiliations

  • Yannis Georgellis
    • 1
    Email author
  • Nicholas Tsitsianis
    • 2
  • Ya Ping Yin
    • 2
  1. 1.Department of Economics and Finance, School of Social SciencesBrunel UniversityUxbridgeUK
  2. 2.Department of Accounting Finance and Economics, Business SchoolUniversity of HertfordshireHatfieldUK

Personalised recommendations