Arnold and I have a running debate on the connection between material wealth and happiness. He’s skeptical of the whole subject; I’m not. He thinks that people’s behavior shows that money brings happiness; I’ve claimed that the standard conclusion that money doesn’t bring much extra happiness is introspectively plausible.

Nevertheless, I’ll admit that I’m a bit weird, so I’m especially eager to double-check my introspection against a more representative sample. Not so eager, of course, that I’ll track down a lot of data and replicate existing research. But fortunately, the General Social Survey website lets us do statistical analysis on the cheap.

I’m frankly surprised at what I found. In the GSS, the estimated effect of income on happiness is several times bigger than I would have guessed. Admittedly, my statistics cut a few corners. For example, the GSS gives people who refuse to state their income the highest possible coding, rather than excluding them from estimation, and I don’t bother to fix this. But if anything, this ought to obscure the happiness-income link.

Quick background: The GSS contains the variable HAPPY, which has three possible responses: 1=”very happy”; 2=”pretty happy”; 3=”not too happy.” Let’s call each of these categories “a step.”

Basic finding:

Without any control variables, moving from the lowest to the highest 1998 income category makes you about half a step happier.

Advanced findings:

  • Controlling for education and IQ does not reduce the effect of income. (Education slightly increases happiness, and IQ matters not).
  • Controlling for the happiness of your marriage drastically slashes the t-stat on income, but mainly because the number of observations shrinks. The coefficient still implies that moving from the lowest to the highest income category makes you about a quarter step happier. (By way of comparison, moving from a “not too happy” to a “very happy” marriage makes you almost a full step happier).
  • Controlling for both the happiness of your marriage and your job satisfaction, moving from the lowest to the highest income category makes you about a fifth of a step happier. (By way of comparison, moving from “very dissatisfied” with your job to “very satisfied” makes you about a half step happier).

    Bottom line: Either the GSS results are atypical, or the literature surveys I’ve read have understated the joy of income. Income isn’t as important to happiness as having a good marriage or a job you like, but even in a rich country like the U.S., people who earn more feel noticeably better about their lives.