SpringerLink
Log in

Income and Life Satisfaction: A ‘Wave Formation’ Framework

  • Research Paper
  • Published:
Journal of Happiness Studies Aims and scope Submit manuscript

Abstract

Previous research on the relation between wealth and life satisfaction has found conflicting results. The current study aims to bring a “wave formation” framework to the subjective well-being literature to understand the features of non-linearity in the income-life satisfaction association. The study compares individuals’ life satisfaction at various wealth levels, moving their way up or down through the income stratum. We hypothesize that when someone with increasing income reaches the top of one stratum their satisfaction is high, but when they move from the top of one stratum to the bottom of the next their satisfaction declines, leading to a wave pattern. Using a cross-sectional design for the dataset of 1654 respondents in Azerbaijan, we apply the Ordered Logit method to identify the income borders of ups-and-downs in the “wave." Threshold levels for each wave element are then calculated separately for males and females after controlling for a set of individual-specific factors. Empirical results support the hypothesis, with life satisfaction following a wave formation. The research findings have implications for policymakers and future research.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Subscribe and save

Springer+ Basic
EUR 32.99 /Month
  • Get 10 units per month
  • Download Article/Chapter or Ebook
  • 1 Unit = 1 Article or 1 Chapter
  • Cancel anytime
Subscribe now

Buy Now

Price includes VAT (France)

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1
Fig. 2
Fig. 3

Source: Authors’ own calculations

Similar content being viewed by others

Notes

  1. Income levels: [100–150], [151–200], [201–250], [251–300], [301–350], [351–400], [401–450], [451–500], [501–550], [551–600], [601–650], [651–700], [701–750], [751–800], [801–850], [851–900], [901–950], [951–1000], [1001–1050], [1051–1100], [1101–1150], [1151–1200], [1201–1250], [1251–1300], [1301–1350], [1351–1400], [1401–1450], [1451–1500], [1501–1550], [1551–1600], [1601–1650], [1651–1700], [1701–1750], [1751–1800], [1801–1850], [1851–1900], [1901–1950], [1951–2000], [2001–2050], [2051–2100], [2101–2150].

  2. https://president.az/articles/31212 (Accessed December 1, 2020).

  3. https://www.stat.gov.az/news/macroeconomy.php?page=1?lang=en (Accessed December 1, 2020).

References

  • ASERC (2018). Social survey-1. Unpublished dataset.

  • Bomhoff, E. J., & Siah, A. K. L. (2019). The relationship between income, religiosity and health: Their effects on life satisfaction. Personality and Individual Differences, 144, 168–173.

    Article  Google Scholar 

  • Boyce, C. J., Brown, G. D., & Moore, S. C. (2010). Money and happiness: Rank of income, not income, affects life satisfaction. Psychological Science, 21(4), 471–475.

    Article  Google Scholar 

  • del Mar Salinas-Jiménez, M., Artés, J., & Salinas-Jiménez, J. (2010). Income, motivation and satisfaction with life: An empirical analysis. Journal of Happiness Studies, 11(6), 779–793.

    Article  Google Scholar 

  • Diener, E. (1984). Subjective well-being. Psychological Bulletin, 95(3), 542.

    Article  Google Scholar 

  • Diener, E., & Biswas-Diener, R. (2002). Will money increase subjective well-being? Social Indicators Research, 57(2), 119–169.

    Article  Google Scholar 

  • Diener, E., Diener, C., Choi, H., & Oishi, S. (2018). Revisiting “most people are happy”—and discovering when they are not. Perspectives on Psychological Science, 13(2), 166–170.

    Article  Google Scholar 

  • Diener, E., Ng, W., Harter, J., & Arora, R. (2010). Wealth and happiness across the world: Material prosperity predicts life evaluation, whereas psychosocial prosperity predicts positive feeling. Journal of Personality and Social Psychology, 99(1), 52.

    Article  Google Scholar 

  • Diener, E., Sandvik, E., Seidlitz, L., & Diener, M. (1993). The relationship between income and subjective well-being: Relative or absolute? Social Indicators Research, 28(3), 195–223.

    Article  Google Scholar 

  • Diener, E., & Seligman, M. E. (2004). Beyond money: Toward an economy of well-being. Psychological Science in the Public Interest, 5(1), 1–31.

    Article  Google Scholar 

  • Diener, E., Tay, L., & Oishi, S. (2013). Rising income and the subjective well-being of nations. Journal of Personality and Social Psychology, 104(2), 267.

    Article  Google Scholar 

  • Easterlin, R. A. (1974). Does economic growth improve the human lot? Some empirical evidence. In Nations and households in economic growth (pp. 89–125). Academic Press.

  • Ferrer-i-Carbonell, A. (2005). Income and well-being: An empirical analysis of the comparison income effect. Journal of Public Economics, 89(5–6), 997–1019.

    Article  Google Scholar 

  • Gere, J., & Schimmack, U. (2017). Benefits of income: Associations with life satisfaction among earners and homemakers. Personality and Individual Differences, 119, 92–95.

    Article  Google Scholar 

  • Grace, B. Y., Lee, D. J., Sirgy, M. J., & Bosnjak, M. (2019). Household income, satisfaction with standard of living and subjective well-being. The moderating role of happiness materialism. Journal of Happiness Studies, 1–22.

  • Hagerty, M. R. (2000). Social comparisons of income in one’s community: Evidence from national surveys of income and happiness. Journal of Personality and Social Psychology, 78(4), 764.

    Article  Google Scholar 

  • Hou, F. (2014). Keep up with the Joneses or keep on as their neighbours: Life satisfaction and income in Canadian urban neighbourhoods. Journal of Happiness Studies, 15(5), 1085–1107.

    Article  Google Scholar 

  • Inglehart, R., & Klingemann, H. D. (2000). Genes, culture, democracy and happiness. Culture and subjective well-being, 165–183.

  • Johnson, W., & Krueger, R. F. (2006). How money buys happiness: Genetic and environmental processes linking finances and life satisfaction. Journal of Personality and Social Psychology, 90(4), 680.

    Article  Google Scholar 

  • Joshanloo, M. (2018). Income satisfaction is less predictive of life satisfaction in individuals who believe their lives have meaning or purpose: A 94-nation study. Personality and Individual Differences, 129, 92–94.

    Article  Google Scholar 

  • Kahneman, D., & Deaton, A. (2010). High income improves evaluation of life but not emotional well-being. Proceedings of the National Academy of Sciences, 107(38), 16489–16493.

    Article  Google Scholar 

  • Kahneman, D., Krueger, A. B., Schkade, D., Schwarz, N., & Stone, A. A. (2006). Would you be happier if you were richer? A focusing illusion. Science, 312(5782), 1908–1910.

    Article  Google Scholar 

  • Levin, K. A., Torsheim, T., Vollebergh, W., Richter, M., Davies, C. A., Schnohr, C. W., et al. (2011). National income and income inequality, family affluence and life satisfaction among 13 year old boys and girls: A multilevel study in 35 countries. Social Indicators Research, 104(2), 179–194.

    Article  Google Scholar 

  • Matz, S. C., Gladstone, J. J., & Stillwell, D. (2016). Money buys happiness when spending fits our personality. Psychological Science, 27(5), 715–725.

    Article  Google Scholar 

  • Oishi, S., & Diener, E. (2014). Can and should happiness be a policy goal? Policy Insights from the Behavioral and Brain Sciences, 1(1), 195–203.

    Article  Google Scholar 

  • Oishi, S., Kushlev, K., & Schimmack, U. (2018). Progressive taxation, income inequality and happiness. American Psychologist, 73(2), 157.

    Article  Google Scholar 

  • Oishi, S., Schimmack, U., & Diener, E. (2012). Progressive taxation and the subjective well-being of nations. Psychological Science, 23(1), 86–92.

    Article  Google Scholar 

  • Parekh, M. (2018). Quantifying satisfaction with regard to preferences—A spatial model. Journal of Behavioral Economics for Policy, 2(2), 25–29.

    Google Scholar 

  • Pavot, W., & Diener, E. (1993). Review of the satisfaction with life scale. Psychological Assessment, 5, 164–172.

    Article  Google Scholar 

  • Pavot, W., & Diener, E. (2009). Review of the satisfaction with life scale. In Assessing well-being (pp. 101–117). Dordrecht: Springer.

  • Plouffe, R. A., & Tremblay, P. F. (2017). The relationship between income and life satisfaction: Does religiosity play a role? Personality and Individual Differences, 109, 67–71.

    Article  Google Scholar 

  • Veenhoven, R. (1991). Is happiness relative? Social Indicators Research, 24(1), 1–34.

    Article  Google Scholar 

  • Yuan, H. (2016). Structural social capital, household income and life satisfaction: The evidence from Bei**g, Shanghai and Guangdong-Province, China. Journal of Happiness Studies, 17(2), 569–586.

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. UNEC Empirical Research Center, Azerbaijan State University of Economics (UNEC), Istiqlaliyyat 6, AZ1001, Baku, Azerbaijan

    Khatai Aliyev

  2. Department of World Economy, Baku Engineering University, Hasan Aliyev 120, AZ0101, Khirdalan, Azerbaijan

    Khatai Aliyev

  3. School of Public and International Affairs, ADA University, Ahmadbay Agha-Oglu 61, 1008, Baku, Azerbaijan

    Orkhan Nadirov

  4. Argyros School of Business and Economics, Chapman University, One University Dr.,, Orange, CA, 92866, USA

    Bruce Dehning

  5. Faculty of Management and Economics, Tomas Bata University, Mostni 5139, 76001, Zlin, Czech Republic

    Bruce Dehning

Authors
  1. Khatai Aliyev
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Orkhan Nadirov
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Bruce Dehning
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Khatai Aliyev.

Ethics declarations

Conflict of interest

We, co-authors of the submitted manuscript confirm that there is no any conflict of interests.

Ethical standard

Ethical standard is complied.

Informed consent

Each author has informed consent about submission.

Additional information

Publisher's Note

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Aliyev, K., Nadirov, O. & Dehning, B. Income and Life Satisfaction: A ‘Wave Formation’ Framework. J Happiness Stud 23, 847–860 (2022). https://doi.org/10.1007/s10902-021-00428-8

Download citation

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s10902-021-00428-8

Keywords

Search

Navigation