INTERPERSONAL RELATIONS AND GROUP PROCESSES
Wealth and Happiness Across the World: Material Prosperity Predicts Life Evaluation, Whereas Psychosocial Prosperity Predicts Positive Feeling
University of Illinois at Urbana–Champaign and The Gallup Organization, Omaha, Nebraska
Singapore Institute of Management
James Harter and Raksha Arora
The Gallup Organization,Omaha, Nebraska
The Gallup World Poll, the first representative sample of planet Earth, was used to explore the reasons why happiness is associated with higher income, including the meeting of basic needs, fulfillment of psychological needs, increasing satisfaction with one’s standard of living, and public goods. Across the globe, the association of log income with subjective well-being waslinear but convex with raw income, indicating the declining marginal effects of income on subjective well-being. Income was a moderately strong predictor of life evaluation but a much weaker predictor of positive and negative feelings. Possessing luxury conveniences and satisfaction with standard of living were also strong predictors of life evaluation. Although the meeting of basic and psychologicalneeds mediated the effects of income on life evaluation to some degree, the strongest mediation was provided by standard of living and ownership of conveniences. In contrast, feelings were most associated with the fulfillment of psychological needs: learning, autonomy, using one’s skills, respect, and the ability to count on others in an emergency. Thus, two separate types of prosperity—economic and social psychological— best predict different types of well-being. Keywords: income, subjective well-being, money, wealth, happiness
Does money increase happiness? Behavioral scientists have studied this popular question, and several conclusions have emerged. For example, people in wealthy nations on average are considerably happier than those in very poor nations, and there is a smallerbut positive association within nations between income and happiness (see Diener & Biswas-Diener, 2002, for a review). There is much conjecture but little scientific understanding of why income and well-being are associated. In this study, we provide initial answers to several fundamental questions about the relations of money and happiness. First, we examined whether income is equally related todifferent types of well-being. Although there are clear demarcations between life evaluations, positive emotions, and negative emotions, past work on income and well-being has focused mostly on global evaluations of life, whereas positive and negative feelings have been largely ignored.
Ed Diener, Department of Psychology, University of Illinois at Urbana– Champaign, and The GallupOrganization, Omaha, Nebraska; Weiting Ng, Psychology Programmes, Singapore Institute of Management, Singapore; James Harter and Raksha Arora, The Gallup Organization. James Harter is an employee and stockholder of The Gallup Organization, whose data are used in this article. Correspondence concerning this article should be addressed to Ed Diener, Department of Psychology, University of Illinois, 603 EastDaniel Street, Champaign, IL 61820. E-mail: email@example.com
Second, we analyzed possible mediators of the relation between income and well-being, which also have been largely ignored in large-scale surveys. For example, we examined whether the association of income with well-being is mediated by the fact that wealthy people are more likely to have their physical and/or psychological needs metor whether wealthy people are more satisfied because they have more of their material desires fulfilled. Another purpose of the present study is to analyze how universal the relation between money and well-being is by determining the consistency of the relation across various groups. If the relations vary, it would suggest that context and culture can influence the relation between income and...
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