How much happiness does money buy? Income and subjective well-being in New Zealand

The relationship of household income with multiple aspects of subjective well-being was examined in a New Zealand telephone probability sample conducted in 2008 (N = 5197). Consistent with previous research, household income had positive logarithmic associations with subjective quality of life and happiness. The logarithmic function was steeper for quality of life than for happiness, indicating that income is linked more strongly to people's evaluations of their life than to their happiness. Analyses also indicated that the income well-being association was strongest for people earning below the median (NZ$ 65,000) and tended to plateau for people in the upper quartile (NZ$ 125,000). Contrary to previous research, income was negatively correlated with self-reported daily stress, after adjusting for relevant demographics (e.g., age and household crowding). This association was also logarithmic, and income was more predictive of reductions in stress for those earning below the median. Finally, we tested a log-mediation model in which the relationship between income and multiple components of well-being were mediated by the perceived ability to meet everyday life necessities. This mediator explained 55-60% of the association of income with both happiness and life quality, and fully mediated the effect of income on reduced stress. These are some of the first results to document the relationship between household income and subjective well-being in New Zealand. They also come at a time when concerns about the ability to meet everyday needs are particularly relevant to many New Zealanders in the wake of the global financial crisis.