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Social Indicators Research

, Volume 57, Issue 2, pp 119–169 | Cite as

Will Money Increase Subjective Well-Being?

  • Ed Diener
  • Robert Biswas-Diener
Article
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Abstract

Four replicable findings have emerged regarding the relation between income and subjective well-being (SWB): 1. There are large correlations between the wealth of nations and the mean reports of SWB in them, 2. There are mostly small correlations between income and SWB within nations, although these correlations appear to be larger in poor nations, and the risk of unhappiness is much higher for poor people, 3. Economic growth in the last decades in most economically developed societies has been accompanied by little rise in SWB, and increases in individual income lead to variable outcomes, and 4. People who prize material goals more than other values tend to be substantially less happy, unless they are rich. Thus, more money may enhance SWB when it means avoiding poverty and living in a developed nation, but income appears to increase SWB little over the long-term when more of it is gained by well-off individuals whose material desires rise with their incomes. Several major theories are compatible with most existing findings: A. The idea that income enhances SWB only insofar as it helps people meet their basic needs, and B. The idea that the relation between income and SWB depends on the amount of material desires that people's income allows them to fulfill. We argue that the first explanation is a special case of the second one. A third explanation is relatively unresearched, the idea that societal norms for production and consumption are essential to understanding the SWB-income interface. In addition, it appears high SWB might increase people's chances for high income. We review the open issues relating income to SWB, and describe the research methods needed to provide improved data that will better illuminate the psychological processes relating money to SWB.

Keywords

Life Satisfaction Russell Sage Foundation Income Change Social Indicator Research Experience Sampling Method 
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© Kluwer Academic Publishers 2002

Authors and Affiliations

  • Ed Diener
    • 1
  • Robert Biswas-Diener
    • 2
  1. 1.Department of PsychologyUniversity of Illinois, Urbana-ChampaignChampaignUSA
  2. 2.Portland

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