Does income causally affect multi-dimensional well-being? A national longitudinal panel study

We investigate the popular hypothesis that income improves well-being by combining national-scale longitudinal data with the outcome-wide framework of causal epidemiology. We first consider theories of income and well-being, the conceptual challenge of defining well-being, and the inferential challenge in testing hypotheses using observational data. We then conducted three studies that attempt to address these challenges. Contrary to the hypothesis that income improves well-being globally, Study 1 finds that the scope of self-reported improvement in well-being is limited to life satisfaction, permeability of individual, power dependence, satisfaction with living standard, satisfaction with future security and occupational status. This observation raises the measurement challenge of self-reported household income. In Study 2, we repeat the approach in Study 1 using an objective measure of occupational status as the exposure. We find that increases in occupational status increases well-being across a broader bandwidth of wellbeing outcomes than does an increase in self-reported income. In Study 3, we investigate whether a subjective measure of wealth, namely satisfaction with standard of living, improves multi-dimensional well-being outcomes. And if so, which? Results are broadly consistent with Study 1 and 2. However, it is subjective satisfaction with one’s standard of living that has the strongest effects.