This paper uses data from the World Values Survey to investigate how an individual's self-reported happiness is related to (i) the level of her income in absolute terms, and (ii) the level of her income relative to other people in her country. The main findings are that (i) both absolute and relative income are positively and significantly correlated with happiness, (ii) quantitatively, changes in relative income have much larger effects on happiness than do changes in absolute income, and (iii) the effects on happiness of both absolute and relative income are small when compared to the effects several non-pecuniary factors.

Is emotional well-being monotonically increasing in the level of income or does it reach a plateau at some income threshold, whereafter additional income does not contribute to further well-being? Conflicting answers to this question has been suggested in the academic literature. In a recent paper, using an income threshold of $100,000 per year, Killingsworth et al. (2023) appears to have resolved these conflicts, concluding that emotional well-being is monotonically increasing in income for all but the unhappiest individuals. In this paper, we show that this conclusion is sensitive to the placement of the income threshold at which the relationship between emotional well-being and income is allowed to plateau. Using standard econometric methods, we propose a data-driven approach to detect the placement of the threshold. Using this data-driven income threshold, a flat relationship between household income and emotional well-being above a threshold around $200,000 per year is found. While our analysis relaxes the assumption of a pre-specified income threshold, it relies on a number of other assumptions, which we briefly discuss. We conclude that although the analysis of this paper provides some evidence for well-being plateauing around $200,000 per year, more research is needed before any definite conclusions about the relationship between emotional well-being and income can be drawn.

satisfaction, but people's day-to-day emotional well-being only rose with earnings until a threshold annual household pre-tax income of $75,000. This particular The economics of happiness or happiness economics is the theoretical, qualitative and quantitative study of happiness and quality of life, including positive and negative affects, well-being, life satisfaction and related concepts – typically tying economics more closely than usual with other social sciences, like sociology and psychology, as well as physical health. It typically treats subjective Much of the research regarding happiness and leisure relies on subjective well-being (SWB) as an appropriate measure of happiness. Research has demonstrated a wide variety of contributing and resulting factors in the relationship between leisure and happiness. These include psychological mechanisms, and the types and characteristics of leisure activities that result in the greatest levels of subjective happiness. Specifically, leisure may trigger five core psychological mechanisms including detachment-recovery from work, autonomy in leisure, mastery of leisure activities, meaning-making in leisure activities, and social affiliation in leisure (DRAMMA). Leisure activities that are physical, relational, and performed outdoors are correlated with greater feelings of satisfaction with free time. Research across 33 different countries shows that individuals who feel they strengthen social relationships and work on personal development during leisure…