This article reviews, critiques, and integrates three psychological perspectives on the relationship between wealth and subjective well-being. First, the comparative perspective holds that life satisfaction results from a comparison of one's own financial position to that of some reference group or material norm. Second, the goal attainment perspective looks at money as a potential source of well-being by enabling people to attain goals they set. Finally, the hedonic perspective looks at how money leads to well-being by enabling people to use their time in more satisfying ways. In addition to providing a critical analysis, this article integrates these three perspectives into a single composite model. This model explains the mechanisms linking income and other material resources with the cognitive and affective elements of subjective well-being. The model also clarifies why income has only a modest relationship to subjective well-being.
Get full access to this article
View all access options for this article.
References
1.
Abramson, Paul R. , and Ronald Inglehart. 1995. Value change in global perspective. Ann Arbor: University of Michigan Press.
2.
Ackerman, Norleen , and Beatrice Paolucci. 1983. Objective and subjective income adequacy: Their relationship to perceived life quality measures. Social Indicators Research12: 25-48.
3.
Ahuvia, Aaron C. , and Nancy Wong. 1995. Materialism: Origins and implications for personal well-being. Published in proceedings of the 1995 European Conference for the Association of Consumer Research, Copenhagen, Denmark.
4.
Ahuvia, Aaron C. , and Nancy Wong. 1998. Three types of materialism: Their relationship and origins. Manuscript under review.
5.
Andrews, Frank, M.1991. Stability and change in levels and structure of subjective well-being: USA 1972 and 1988. Social Indicators Research25: 1-30.
6.
Andrews, Frank M. , and Stephen B. Withey. 1976. Social indicators of well-being: Americans' perception of life quality. New York: Plenum.
7.
Argyle, Michael . 1987. The psychology of happiness. London: Methuen.
8.
Argyle, Michael . 1996. Subjective well-being. In In pursuit of the quality of life, edited by Avner Offer, 18-45. New York: Oxford University Press.
9.
Belk, Russell W.1985. Materialism: Trait aspects of living in the material world. Journal of Consumer Research12 (December): 265-280.
10.
Bradburn, Norman . 1969. The structure of psychological well-being. Chicago: Aldine.
11.
Brickman, Philip , Dan Coates, and Ronnie Janoff-Bulman. 1978. Lottery winners and accident victims: Is happiness relative?Journal of Personality and Social Psychology36 (8): 917-927.
12.
Brunstein, Joachim C.1993. Personal goals and subjective well-being: A longitudinal study. Journal of Personality and Social Psychology65 (November): 1061-1070.
13.
Campbell, A.1981. The sense of well-being in America: Recent patterns and trends. New York: McGraw-Hill.
14.
Campbell, A. , P. E. Converse, and W. L. Rodgers. 1976. The quality of American life. New York: Russell Sage.
15.
Cantril, Hadley . 1965. The patterns of human concerns. New Brunswick, NJ: Rutgers University Press.
16.
Carver, Charles S. , and Eryn Baird. 1998. The American dream revisited: Is it what you want or why you want it that matters?Psychological Science9 (July): 289-292.
17.
Cialdini, Robert B.1976. Basking in reflected glory: Three (football) field studies. Journal of Personality and Social Psychology34 (September): 366-375.
18.
Clark, Andrew E. , and Andrew J. Oswald. 1994. Unhappiness and unemployment. Economic Journal104: 648-659.
19.
Clark, Andrew E. , and Andrew J. Oswald. 1996. Satisfaction and comparison income. Journal of Public Economics61: 359-381.
20.
Csikszentmihalyi, Mihaly . 1990. Flow: The psychology of optimal experience. New York: Harper and Row.
21.
Csikszentmihalyi, Mihaly , and Judith LeFevre. 1989. Optimal experience in work and leisure. Journal of Personality and Social Psychology56 (May): 815-822.
22.
Cummins, Robert A.1995. On the trail of the gold standard for subjective well-being. Social Indicators Research35: 179-200.
23.
Cummins, Robert A. . 1998. The second approximation to an international standard for life satisfaction. Social Indicators Research43: 307-334.
24.
Day, Ralph L.1987. Relationships between life satisfaction and consumer satisfaction. In Marketing and the quality-of-life interface, edited by A. Coksun Samli, 289-311. New York: Quorum Books.
25.
Diener, Ed . 1984. Subjective well-being. Psychological Bulletin95 (May): 542-575.
26.
Diener, Ed , Marissa Diener, and Carol Diener. 1995. Factors predicting the subjective well-being of nations. Journal of Personality and Social Psychology69 (November): 851-864.
27.
Diener, Ed , and Robert A. Emmons. 1984. The independence of positive and negative affect. Journal of Personality and Social Psychology47 (November): 1105-1117.
28.
Diener, Ed , and Frank Fujita. 1995. Resources, personal strivings and subjective well-being: A nomothetic and idiographic approach. Journal of Personality and Social Psychology68 (May): 926-935.
29.
Diener, Ed , Jeff Horwitz, and Robert A. Emmons. 1985. Happiness of the very wealthy. Social Indicators Research16: 263-274.
30.
Diener, Ed , and Randy J. Larsen. 1993. The experience of emotional well-being. In The handbook of emotions, edited by M. Lewis and J. M. Haviland, 405-415. New York: Guilford.
31.
Diener, Ed , Randy J. Larsen, Steven Levine, and Robert A. Emmons. 1985. Intensity and frequency: Dimensions underlying positive and negative affect. Journal of Personality and Social Psychology48 (5): 1253-1265.
32.
Diener, Ed , Ed Sandvik, Larry Seidlitz, and Marissa Diener. 1993. The relationship between income and subjective well-being: Relative or absolute?Social Indicators Research28 (March): 195-223.
33.
Diener, Ed , Heidi Smith, and Frank Fujita. 1995. The personality structure of affect. Journal of Personality and Social Psychology69 (July): 130-141.
34.
Douthitt, Robin A. , Maurice MacDonald, and Randolph Mullis. 1992. The relationship between measures of subjective and economic well-being: A new look. Social Indicators Research26 (June): 407-422.
35.
Drakopoulos, S. A. , and I. Theodossiou. 1997. Job satisfaction and target earnings. Journal of Economic Psychology18: 692-704.
36.
Duncan, Otis D.1975. Does money buy satisfaction?Social Indicators Research2: 267-274.
37.
Easterlin, Richard A.1974. Does economic growth improve the human lot? Some empirical evidence. In Nations and households in economic growth, edited by P. A. David and M. W. Reder, 89-125. New York: Academic Press.
38.
Easterlin, Richard A. . 1995. Will raising the incomes of all increase the happiness of all?Journal of Economic Behavior and Organization27: 35-47.
39.
Emmons, Robert A.1996. Striving and feeling: Personal goals and subjective well-being. In The psychology of action: Linking cognition and motivation to behavior, edited by Peter M. Gollwitzer and John A. Bargh, 313-337. New York: Guilford.
40.
Emmons, Robert A. . 1997. Striving for significance: Personal goals, ultimate concerns, and subjective well-being. Paper presented at the first conference of the International Society of Quality of Life Studies, Charlotte, North Carolina, November 21.
41.
Festinger, Leon . 1954. A theory of social comparison. Human Relations7 (2): 117-140.
42.
Friedman, Douglas C. 1997. Does a full wallet bring good cheer? The effects of income and consumer behavior on subjective well-being. Published in the proceedings of the Society of Consumer Psychology Conference, St. Petersburg, FL, February 13-15.
43.
Ger, Guliz . 1997. Human development and humane consumption: Well-being beyond the good life. Journal of Public Policy and Marketing16 (spring): 110-125.
44.
Ger, Guliz , and Russell W. Belk. 1996. Cross-cultural differences in materialism. Journal of Economic Psychology17 (February): 55-77.
45.
Gershuny, Jonathan , and Brendan Halpin. 1996. Time use, quality of life, and process benefits. In In pursuit of the quality of life, edited by Avner Offer, 188-210. New York: Oxford University Press.
46.
Graef, R. , S. McManama Gianinno, and Mihaly Csikszentmihalyi. 1981. Energy consumption in leisure and perceived happiness. In Consumers and energy conservation, edited by J. D. Clayton and others. New York: Praeger.
47.
Hagerty, Michael . 1998. Unifying livability and comparison theory: Cross-national time-series analysis of life-satisfaction. Social Indicators Research. Forthcoming.
48.
Harris, Louis , and Associates. 1975. The myth and reality of aging in America. Washington DC: The National Council on Aging.
49.
Hatcher, Simon . 1994. Debt and deliberate self-poisoning. British Journal of Psychiatry164 (January): 111-114.
50.
Headey, Bruce , Jonathan Kelley, and Alex Wearing. 1993. Dimensions of mental health: Life satisfaction, positive affect, anxiety and depression. Social Indicators Research29 (May): 63-82.
51.
Hollander, Stanley C.1987. Retailing and the quality-of-life. In Marketing and the quality-of-life interface, edited by A. Coskun Samli, 188-204. New York: Quorum Books.
52.
Inglehart, Ronald . 1977. The silent revolution: Changing values and political styles among Western publics. Princeton, NJPrinceton University Press.
53.
Inglehart, Ronald . 1990. Culture shift in advanced industrial society. Princeton, NJ: Princeton University Press.
54.
Inglehart, Ronald , and Jacques-Rene Rabier. 1986. Aspirations adapt to situations-but why are the Belgians so much happier than the French? A cross-cultural analysis of the subjective quality of life. In Research on the quality of life, edited by F. M. Andrews, 1-56. Ann Arbor, MI: Institute for Social Research.
55.
Jackson, Robert L.1979. Material good need fulfillment as a correlate of self-esteem. The Journal of Social Psychology108 (June): 139-140.
56.
Kahneman, Daniel , and Amos Tversky. 1979. Prospect theory: An analysis of decision under risk. Econometrica47: 263-291.
57.
Kasser, Tim . 1997. Two versions of the American dream: Which goals and values make for a high quality of life? Paper presented at ISQOLS, Charlotte, North Carolina, November 20-22.
58.
Kasser, Tim , and Richard M. Ryan. 1993. A dark side of the American dream: Correlates of financial success as a central life aspiration. Journal of Personality and Social Psychology65 (August): 410-422.
59.
Kasser, Tim , and Richard M. Ryan. 1996. Further examining the American dream: Differential correlates of intrinsic and extrinsic goals. Personality and Social Psychology Bulletin22 (March): 280-287.
60.
Kasser, Tim , and Richard M. Ryan. 1998. Be careful what you wish for: Optimal functioning and the relative attainment of intrinsic and extrinsic goals. Working paper.
61.
Kasser, Tim , Richard M. Ryan, Melvin Zax, and Arnold J. Sameroff. 1995. The relations of maternal and social environments to late adolescents' materialistic and prosocial values. Developmental Psychology31 (November): 907-914.
62.
Katona, George . 1975. Psychological economics. New York: Elsevier.
63.
Keyfitz, Nathan . 1982. Development and the elimination of poverty. Economic Development and Cultural Change30: 649-670.
64.
Kruglanski, Arie W. , and Ofra Mayseless. 1990. Classic and current social comparison research: Expanding the perspective. Psychological Bulletin108 (2): 195-208.
65.
La Barbera, Priscilla A. , and Zeynep Gurhan. 1997. The role of materialism, religiosity, and demographics in subjective well-being. Psychology & Marketing14 (January): 71-97.
66.
Lance, Charles E. , Alison G. Mallard, and Alex C. Michalos. 1995. Tests of the causal directions of global-life facet satisfaction relationships. Social Indicators Research34: 69-92.
67.
Lane, Robert E.1991. The market experience. New York: Cambridge University Press.
68.
Lane, Robert E.1992. Work as "disutility" and money as "happiness": Cultural origins of a basic market error. The Journal of Socio-Economics21 (spring): 43-64.
69.
Lane, Robert E. . 1993. Does money buy happiness?The Public Interest113 (fall): 56-65.
70.
Larson, Reed . 1978. Thirty years of research on the subjective well-being of older Americans. Journal of Gerontology33 (January): 109-125.
71.
Lasch, Christopher . 1991. The true and only heaven: Progress and its critics. New York: Norton.
72.
Lazarus, Richard S.1984. On the primacy of cognition. American Psychologist39 (February): 124-129.
73.
Lazarus, Richard S. . 1991. Cognition and motivation in emotion. American Psychologist46 (April): 352-367.
74.
Lea, Stephen E. G. , Paul Webley, and Catherine M. Walker. 1995. Psychological factors in consumer debt: Money management, economic socialization, and credit use. Journal of Economic Psychology13 (December): 111-134.
75.
Lebergott, Stanley . 1993. Pursuing happiness: American consumers in the twentieth century. Princeton, NJ: Princeton University Press.
76.
Leelakulthanit, Orose , and Ralph Day. 1993. Cross-cultural comparisons of quality of life of Thais and Americans. Social Indicators Research30 (September): 49-70.
77.
Leelakulthanit, Orose , Ralph Day, and Rockney Walters. 1991. Investigating the relationship between marketing and overall satisfaction with life in a developing country. Journal of Macromarketing11 (spring): 3-23.
78.
Lucas, Richard E. , Ed Diener, and Eunkook Suh. 1996. Discriminant validity of well-being measures. Journal of Personality and Social Psychology71 (September): 616-628.
79.
Lyubomirsky, Sonja , and Lee Ross. 1997. Hedonic consequences of social comparison: A contrast of happy and unhappy people. Journal of Personality and Social Psychology73 (6): 1141-1157.
80.
MacDonald, Maurice , and Robin A. Douthitt. 1992. consumption theories and consumers' assessments of subjective well-being. Journal of Consumer Affairs26 (winter): 243-261.
81.
McGregor, Ian , and Brian R. Little. 1998. Personal projects, happiness, and meaning: On doing well and being yourself. Journal of Personality and Social Psychology74 (2): 494-512.
82.
Meadow, Lee H. , John T. Metzer, Don R. Rahtz, and Joseph M. Sirgy. 1992. A life satisfaction measure based on judgment theory. Social Indicators Research26 (1): 23-59.
83.
Michalos, Alex C.1985. Multiple discrepancies theory (MDT). Social Indicators Research16: 347-413.
84.
Michalos, Alex C. . 1989. Discrepancies between perceived income needs and actual incomes. Social Indicators Research21: 293-296.
85.
Mookherjee, Harsha N.1992. Perceptions of well-being by metropolitan and nonmetropolitan populations in the United States. Journal of Social Psychology132 (4): 513-524.
86.
Mookherjee, Harsha N. . 1998. Perceptions of well-being among the older metropolitan and nonmetropolitan populations in the United States. Journal of Social Psychology138: 72-82.
87.
Moore, Roy L. , and George P. Moschis. 1981. The effects of family communication and mass media use on adolescent consumer learning. Journal of Communication31: 42-51.
88.
Moschis, George P. , and Roy L. Moore. 1979. Family communication and consumer socialization. In Advances in consumer research, vol. 6, edited by W. L. Wilkie, 359-363. Ann Arbor, MI: Association for Consumer Research.
89.
Mullis, Randolph J.1992. Measures of economic well-being as predictors of psychological well-being. Social Indicators Research26 (March): 119-135.
90.
Myers, David G.1992. The pursuit of happiness: Who is happy-and why. New York: William Morrow.
91.
Myers, David G. , and Ed Diener. 1995. Who is happy?Psychological Science6 (January): 10-19.
92.
Neto, Felix . 1995. Predictors of satisfaction with life among second generation migrants. Social Indicators Research35 (May): 93-116.
93.
Offer, Avner . 1996. Introduction. In In pursuit of the quality of life, edited by Avner Offer, 1-17. New York: Oxford University Press.
94.
O'Guinn, Thomas C. , and L. J. Shrum. 1997. The role of television in the construction of consumer reality. Journal of Consumer Research23 (4): 278-294.
95.
Oropesa, R. S.1995. Consumer possessions, consumer passions and subjective well-being. Sociological Forum10 (June): 215-244.
96.
Ortony, Andrew , Gerald L. Clore, and Allan Collins. 1988. The cognitive structure of emotions. New York: Cambridge University Press.
97.
Oswald, Andrew J.1997. Happiness and economic performance. The Economic Journal107 (November): 1815-1831.
98.
Poiesz, Theo B. C. , and Jasper von Grumbkow. 1988. Economic well-being, job satisfaction, income evaluation and consumer satisfaction: An integrative attempt. In Handbook of economic psychology, edited by W. F. van Raaij, G. M. van Veldhoven, and K. E. Warneryd, 571-593. Dordrecht, The Netherlands: Kluwer Academic.
99.
Princen, Thomas . 1997. The shading and distancing of commerce: When internalization is not enough. Ecological Economics20: 235-253.
100.
Rice, Robert W. , Suzanne M. Phillips, and Dean B. McFarlin. 1990. Multiple discrepancies and pay satisfaction. Journal of Applied Psychology75 (4): 386-393.
101.
Richins, Marsha L.1996. Materialism, desire, and discontent: Contributions of idealized advertising images and social comparison. In Marketing and consumer research in the public interest, edited by R. P. Hill, 109-132. Thousand Oaks, CA: Sage.
102.
Richins, Marsha L. , and Scott Dawson. 1992. A consumer values orientation for materialism and its measurement: Scale development and validation. Journal of Consumer Research19 (December): 303-316.
103.
Richins, Marsha L. , and Floyd W. Rudmin. 1994. Materialism and economic psychology. Journal of Economic Psychology15 (June): 217-231.
104.
Rindfleisch, Aric , James E. Burroughs, and Frank Denton. 1997. Family structure, materialism, and compulsive consumption. Journal of Consumer Research23 (March): 312-325.
105.
Roborgh, Peter , and Barrie G. Stacey. 1987. Happiness and radical career change among New Zealanders. Journal of Psychology121 (September): 501-512.
106.
Roper Starch Worldwide . 1994. Survey of America's inner financial life. New York: Roper Starch Worldwide.
107.
Ryff, Carol D.1989. Happiness is everything, or is it? Explorations of the meaning of psychological well-being. Journal of Personality and Social Psychology57 (December): 1069-1081.
108.
Ryff, Carol D. , and Corey Lee M. Keyes. 1995. The structure of psychological well-being revisited. Journal of Personality and Social Psychology69 (October): 719-727.
109.
Schyns, Peggy . 1998. Cross national differences in happiness: Economic and cultural factors explored. Social Indicators Research43: 3-26.
110.
Schyns, Peggy . Forthcoming. The relationship between changes in income and life-satisfaction in West-Germany and the Russian Federation: Relative, absolute, or a combination of both?
111.
Scitovsky, Tibor . 1992. The joyless economy: The psychology of human satisfaction: Revised edition. New York: Oxford University Press.
112.
Sen, Amartya . 1993. Capability and well-being. In The quality of life, edited by M. C. Nussbaum and A. Sen. New York: Oxford University Press.
113.
Sheldon, Kennon M. , and Tim Kasser. In press. Pursuing personal goals: Skills enable progress, but not all progress is beneficial. Personality and Social Psychology Bulletin.
114.
Sirgy, Joseph M.1998. Materialism and quality of life. Social Indicators Research43: 227-260.
115.
Sirgy, Joseph M. , Lee H. Meadow, and Coskun A. Samli. 1995. Past, present, and future: An overview of quality of life research in marketing. In New dimensions in marketing/quality-of-life research, edited by Joseph Sirgy and Coskun Samli, 335-364. Westport, CT: Quorum Books.
116.
Suh, Eunkook , Ed Diener, Shigehiro Oishi, and Harry Triandis. 1998. The shifting basis of life satisfaction judgments across cultures: Emotions versus norms. Journal of Personality and Social Psychology74 (2): 482-493.
117.
Suranyi-Unger, Theodore . 1981. Consumer behavior and consumer well-being: An economist's digest. Journal of Consumer Research8 (September): 132-143.
118.
Tokunaga, Howard . 1993. The use and abuse of consumer credit: Application of psychological theory and research. Journal of Economic Psychology14 (June): 285-316.
119.
Van Praag, B. M.S.1993. The relativity of the welfare concept. In The quality of life, edited by M. C. Nussbaum and A. Sen, 362-385. Oxford, UK: Clarendon.
120.
Van Raaij, W. Fred . 1981. Economic psychology. Journal of Economic Psychology1 (March): 1-24.
121.
Veenhoven, Ruut . 1991. Is happiness relative?Social Indicators Research24: 1-34.
122.
Veenhoven, Ruut . 1993. Is happiness a trait? Test of the theory that a better society does not make people any happier. Social Indicators Research32: 101-160.
123.
Veenhoven, Ruut . 1996. Developments in satisfaction-research. Social Indicators Research37: 1-46.
124.
Veenhoven, Ruut , with Joop Ehrhardt. 1995. The cross-national pattern of happiness: Test of predictions implied in three theories of happiness. Social Indicators Research34: 33-68.
125.
Walson, Christopher O. , and Vicki S. Fitzsimmons. 1993. Financial manager's perception of rural household economic well-being: Development and testing of a composite measure. Journal of Family & Economic Issues14 (fall): 193-214.
126.
Ward, Scott , and Daniel Wackman. 1971. Family and media influences on adolescent consumer learning. American Behavioral Scientist14: 415-427.
127.
Warneryd, Karl-Erik . 1988. Social influence on economic behavior. In Handbook of economic psychology, edited by W. F. van Raaij, G. M. van Veldhoven, and K. E. Warneryd, 207-248. Dordrecht, The Netherlands: Kluwer Academic.
128.
Watson, David , Lee A. Clark, and Auke Tellegen. 1988. Development and validation of brief measures of positive and negative affect: The PANAS scales. Journal of Personality and Social Psychology54 (June): 1063-1070.
129.
Westbrook, Robert A.1987. Product/consumption-based affective responses and postpurchase processes. Journal of Marketing Research44 (fall): 84-91.
130.
Wright, Newell D. , and Val Larsen. 1993. Materialism and life satisfaction: A meta-analysis. Journal of Consumer Satisfaction, Dissatisfaction, and Complaining Behavior6: 158-165.
