From wealth to well-being? Money matters but less than people think.

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From wealth to well-being? Money matters but less than people think.

While numerous studies have documented the modest (though reliable) link between household income and well-being we examined the accuracy of laypeople's intuitions about this relationship by asking people from across the income spectrum to report their own happiness and to predict the happiness of others (Study 1) and themselves (Study 2) at different income levels. Data from two national surveys revealed that while laypeople's predictions were relatively accurate at higher levels of income they greatly overestimated the impact of income on life satisfaction at lower income levels expecting low household income to be coupled with very low life satisfaction. Thus people may work hard to maintain or increase their income in part because they overestimate the hedonic costs of earning low levels of income.

Citation: 
The Journal of Positive Psychology Vol. 4, No. 6, November 2009, 523–527

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