The Origins of Happiness

Income

Life- Satisfaction

Our first empirical analysis uses data from the British Co-

hort Study (BCS), which covers people born in one partic-

ular week of April 1970.^3 Adult well- being in the BCS is

measured by the following life- satisfaction question:

Here is a scale from 0– 10. On it “0” means that you

are completely dissatisfied and “10” means that you are

completely satisfied. Please tick the box with the num-

ber above it which shows how dissatisfied or satisfied

you are about the way your life has turned out so far.^4

Information on life- satisfaction is currently available for

the BCS sweeps that were carried out when the respon-

dents were aged 26, 30, 34, and 42. For the reasons that

were explained in Chapter 1,^5 we concentrate our analysis

here on the data for when the respondents were 34 and 42.

The standard deviation of life- satisfaction in this group is

1.9. So anything that alters life- satisfaction by 1 point is hav-

ing a large effect (shifting someone up 21 percentile points,

starting from the mean). Even an increase of 0.1 point in

life- satisfaction from the mean raises someone by 2 percen-

tile points.

Income and Life- Satisfaction

So how much extra life- satisfaction can extra income bring?

The closest relationship is between life- satisfaction (mea-

sured in natural units) and the logarithm of income.^6 This

means that the gain in happiness from an extra dollar of