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Income and emotional well-being: Evidence for well-being plateauing around $200,000 per year

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  • Bennedsen, Mikkel

Abstract

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? Using a data-driven approach to detect the placement of the threshold, we find a flat relationship between household income and emotional well-being above a threshold around $200,000 per year. Our analysis relies on a number of 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.

Suggested Citation

  • Bennedsen, Mikkel, 2024. "Income and emotional well-being: Evidence for well-being plateauing around $200,000 per year," Economics Letters, Elsevier, vol. 238(C).
    • Handle: RePEc:eee:ecolet:v:238:y:2024:i:c:s0165176524002131
    DOI: 10.1016/j.econlet.2024.111730
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    References listed on IDEAS

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    1. Betsey Stevenson & Justin Wolfers, 2013. "Subjective Well-Being and Income: Is There Any Evidence of Satiation?," American Economic Review, American Economic Association, vol. 103(3), pages 598-604, May.
    2. Jushan Bai & Pierre Perron, 1998. "Estimating and Testing Linear Models with Multiple Structural Changes," Econometrica, Econometric Society, vol. 66(1), pages 47-78, January.
    3. Koenker,Roger, 2005. "Quantile Regression," Cambridge Books, Cambridge University Press, number 9780521845731.
    4. Andrew T. Jebb & Louis Tay & Ed Diener & Shigehiro Oishi, 2018. "Happiness, income satiation and turning points around the world," Nature Human Behaviour, Nature, vol. 2(1), pages 33-38, January.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Well-being; Income; Structural break; Quantile regression;
    All these keywords.

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being

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