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Personality and the marginal utility of income: Personality interacts with increases in household income to determine life satisfaction

Author

Listed:
  • Christopher J. Boyce

    (PSE - Paris-Jourdan Sciences Economiques - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

  • Alex M. Wood

    (School of Psychological Sciences - University of Manchester [Manchester])

Abstract

Economics implicitly assumes that the marginal utility of income is independent of an individual's personality. We show that this is wrong. This is the first demonstration that there are strong personality-income interactions. In an analysis of 13,615 individuals over 4-years we show that individuals who have high levels of conscientiousness obtain more satisfaction to their lives from increases to their household income. There are strong gender differences and women that are open-to-experiences, introverted or neurotic get lower satisfaction from household income increases. Our findings have important implications for the use of financial incentives to influence behavior. In the future, public policy may benefit from being personality-specific.

Suggested Citation

  • Christopher J. Boyce & Alex M. Wood, 2011. "Personality and the marginal utility of income: Personality interacts with increases in household income to determine life satisfaction," Post-Print halshs-00754542, HAL.
    • Handle: RePEc:hal:journl:halshs-00754542
    DOI: 10.1016/j.jebo.2011.01.004
    as

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