Tuesday, April 03, 2012

Older Workers More Susceptible to Salary Envy than Younger Workers, Reducing Overall Happiness

According to a research paper presented at the 2012 Royal Economic Society Conference, the bigger salaries of high flying colleagues have been found to harm self-esteem and reduce life satisfaction in workers over 45, while knowing that your colleagues and peers earn more than you can actually raise your satisfaction levels of those under 45.

In "So Far So Good: Age, Sex, Happiness and Relative Income," Felix R. FitzRoy (University of St. Andrews), Michael A. Nolan (University of Hull), Max F. Steinhardt (Hamburg Institute of International Economics), and David Ulph (University of St. Andrews) investigated households in Germany and found, contrary to earlier research, that the generally negative effect that peer group income had on happiness of workers was restricted to older workers, who are usually less mobile and can foresee their lifetime income. Retired people were much less concerned about income comparison, probably because of more urgent aging and health issues.
Going beyond our cross-sectional focus here, these results may perhaps also provide an additional explanation for the observed trends in happiness in industrialized/developed countries. Due to ageing populations, and shrinking shares of young people (who are likely to experience gains in SWB from increasing reference income and economic growth), average happiness is more likely to stagnate.
Source: University of St. Andrews News Release (April 3, 2012)

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