When is Happiness About How Much You Earn? The Effect of Hourly Payment on the Money-Happiness Connection
Sanford E. Devoe
University of Toronto - Joseph L. Rotman School of Management
Stanford Graduate School of Business
May 1, 2009
Stanford University Graduate School of Business Research Paper No. 2024
We argue that the strength of the relationship between income and happiness can be influenced by exposure to organizational practices, such as being paid by the hour, that promote an economic evaluation of time use. Using cross-sectional data from the US, two studies found that income was more strongly associated with happiness for individuals paid by the hour compared to their non-hourly counterparts. Using panel data from the United Kingdom, Study 3 replicated these results for a multi-item General Health Questionnaire measure of subjective well-being. Study 4 showed that experimentally manipulating the salience of someone’s hourly wage rate caused non-hourly paid participants to evince a stronger connection between income and happiness, similar to those participants paid by the hour. Although there were highly consistent results across multiple studies employing multiple methods, overall the effect size was not large.
Number of Pages in PDF File: 48
Keywords: income, subjective well-being, hourly wage, organizational payment practices
JEL Classification: M10, M12, M52, M50working papers series
Date posted: June 17, 2009
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