Links between money and happiness uncovered

09 Mar 2016 09:30:00.000

PA 55/16

Changes in income do not affect most peoples’ happiness, most of the time, according to a new study carried out in collaboration with The University of Nottingham.

The research, led by the University of Stirling, which examined levels of life satisfaction and income changes in more than 18,000 adults over a nine year period, revealed that income change is only important when individuals with specific personality characteristics experience a loss in income.

The study: ‘Individual Difference in Loss Aversion’ published today in Personality and Social Psychology Bulletin (PSPB) found that for most people, stable levels of happiness are likely to rest on avoiding loss, rather than aiming for continual financial gain.

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The study, involving two separate samples from Germany and the UK, asked participants annually about their income level and how satisfied they were with life. Participants also answered questions at the start of the study on their personality.

Professor Eamonn Ferguson, an expert in health psychology, in the School of Psychology at The University of Nottingham, said: “Losing income leads to a greater reduction in well-being than gaining income improves our well-being. This negative effect of losing income is stronger for people who are hardworking, methodical, and conscientious, characteristics normally associated with success in many area of life. Thus vulnerability to income loss is greatest for traits linked to success.” 

Results revealed that regardless of a person’s personality, income increases did not affect life satisfaction at all. When people lost income, however, there was a reduction in their life satisfaction. This reduction was far greater for those who reported themselves as being conscientious, namely they were thorough in their attitudes to life and work, energetic, and effective and efficient in how they did things.

Leading the research, Dr Christopher Boyce of the Behavioural Science Centre at the University of Stirling, said: “It is often assumed that as our income rises, as does our life satisfaction, however we have discovered this is not the case. Income only effects well-being when it is lost by people who are highly conscientious.

“Although we knew that increases in income do not affect levels of life satisfaction to the same extent as losses, we have now been able to show for the first time for whom these losses matter the most.

“Our study, which accounted for shifting circumstances such as entering or leaving work, and changes to health and household make up, found that for people that were only even moderately conscientious, a loss of income had a negative impact at least two and a half times greater than for less conscientious individuals.

 “Our research suggests that when it comes to well-being, income doesn’t matter for most people most of the time. What really matters is when income is lost and this is only important for certain types of people.

“As such, continually increasing our income is not an important factor for achieving greater happiness and well-being for most people living in economically developed countries. Instead, we should aim for greater financial stability and look at protecting those individuals who experience negative income shocks.”

Data used in the study was made available by the German Institute for Economic Research and the ESRC Data Archive. The study was funded by funded by The Economic and Social Research Council (ESRC). 

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Notes to editors: The University of Nottingham has 43,000 students and is ‘the nearest Britain has to a truly global university, with a “distinct” approach to internationalisation, which rests on those full-scale campuses in China and Malaysia, as well as a large presence in its home city.’ (Times Good University Guide 2016). It is also one of the most popular universities in the UK among graduate employers and the winner of ‘Outstanding Support for Early Career Researchers’ at the Times Higher Education Awards 2015. It is ranked in the world’s top 75 by the QS World University Rankings 2015/16, and 8th in the UK by research power according to the Research Excellence Framework 2014. It has been voted the world’s greenest campus for three years running, according to Greenmetrics Ranking of World Universities.

Impact: The Nottingham Campaign, its biggest-ever fundraising campaign, is delivering the University’s vision to change lives, tackle global issues and shape the future. More news…

Story credits

More information is available from Professor Eamonn Ferguson in the School of Psychology at The University of Nottingham on +44 (0)115 95 15327,; or Corrie Campbell, Communications Officer at the University of Stirling on 01786 466 169 or
Lindsay Brooke

Lindsay Brooke - Media Relations Manager

Email: Phone: +44 (0)115 951 5751 Location: University Park

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