Sunday, January 27, 2013

Happier Children Earn Higher Wages When They Become Adults

There is quite a bit of debate about the scientific validity of the proverb “money can’t buy happiness”, because studies on this topic have yielded discordant results. Some studies support the idea that richer people are happier on average than poor people, but there are also reports that while the median income in the US has grown in recent decades, average happiness among Americans has hardly changed.

The researchers Jan-Emmanuel De Neve and Andrew Oswald decided to study the link between happiness and income from a very different angle. Instead of asking whether more money leads to more happiness, they reversed the question and asked whether more happiness leads to more money. In the paper “Estimating the influence of life satisfaction and positive affect on later income using sibling fixed effects” published in the Proceedings of the National Academy of Sciences, De Neve and Oswald use in-home surveys and interviews of about 15,000 adolescents and young adults in the US, assessing their “positive affect” (a technical term to indicate “happiness” or “well-being”) at ages 16, 18 and 22. The researchers then analyzed the annual earnings of these adolescents or young adults once they reached the age 29. They found that the degree of happiness at the young age had a major role in predicting their future income. For example, 16-year-olds who scored in the lowest happiness category went on to earn about $28,000 per year at age 29, while those who scored in the highest happiness category earned roughly $38,000!

Since happiness at a young age could merely reflect the family environment or family income, the researchers also corrected for this by directly comparing the happiness of siblings growing up in the same family. It turned out that the same relationship between happiness at a young age and higher future income held true. Happier siblings who grew up in the same family were far more likely to earn more money as adults than their less happy siblings. The researchers also tried to uncover possible reasons for why happier adolescents go on to earn more money as adults. Their statistical analysis found that a higher likelihood of obtaining a college degree, getting hired and promoted, having an optimistic outlook and being an extrovert were all possible mediating factors that led to the higher income of happier children. How the happiness of the younger child impacted these factors could not be determined and the study also did not provide data on whether happiness at younger ages was associated with better academic performance. 
            This was an observational study which evaluated statistical associations, but could not assess direct cause-effect relationships nor did it test whether an intervention at a young age can actually make a difference. If we found ways to help children become happier at age 16 (as a parent, I know that this can be quite challenging!), would that necessarily mean that they would earn more money when they grow up? We need more research to definitively answer this question and then identify the potential interventions that would be effective. One has to also bear in mind that this study was conducted in US adolescents and may not apply to other societies or cultures. The fact that extraversion and optimism were associated with a higher income is a reminder that introverts often face challenges at work and may lose out in terms of promotions and earnings to colleagues who exude a lot of optimism and cheerfulness. If this study had been conducted in other societies where there isn't such peer pressure to be cheerful and optimistic, the results may have been very different.   
As a society, we should try to maximize the happiness of children, purely for ethical and altruistic reasons and not because it makes them better earners. However, we live in an environment where terms such as “fiscal responsibility” are thrown around as an excuse to cut budgets for schools and for important educational and community programs. This study provides some data to show that investing in the happiness of children may indeed be “fiscally responsible” and yield returns that can be measured in actual dollars. 

Image credit: Le bonheur de vivre (The Joy of Life) by Henri Matisse, 1905. The painting is in the public domain in the US. De Neve JE, & Oswald AJ (2012). Estimating the influence of life satisfaction and positive affect on later income using sibling fixed effects. Proceedings of the National Academy of Sciences of the United States of America, 109 (49), 19953-8 PMID: 23169627


  1. I feel that not enough information is provided on the blog. On face value it sounds like being happy as adolescents is associated with higher income as a young adult but, I need to know more about extraneous variables. Did extraneous variables influence theses results? Some questions I have are such as: Did they grow up with two parents that have college degrees? Did the parents have a good income or an income that made them struggle? Did the adolescents grow up in families that had family traditions, shared values and religious affiliation? Has this study ever been replicated? Is this emotional state of happiness related to extraneous variables related to upbringing and family dynamic.

    1. This blog is just a summary of the study and does not contain all the details of the study itself, which consists of 3 tables, as well as 9 tables in the data supplement.

      It has obviously not been replicated, because it was only published a couple of months ago and it takes years to replicate scientific studies.

      As with most observational studies,it relies on the few variables that are assessed in the surveys and cannot answer all possible questions, such as parental education, religiosity, etc. I do not think that one can expect one single study to address all of the questions.

      The strength of the study lies in this new approach of reversing the traditional question ("Does money lead to happiness?" and instead asking "Does happiness lead to money?"). The second strength is its inclusion of siblings as controls, because they grew up with the same parents, the same income, the same family traditions, etc. Despite all these commonalities, the happier siblings ended up earning more money.

  2. I have recently been introduced to psychology and just finished reading about the Humanistic Perspective. I feel this study has a lot to do with that perspective because it deals with happiness at a young age and the influence that happiness has on a child at that age. If a child has good relationships and good motivation at a young age they would tend to be more motivated and determined to do well later on in life. Therefore they would work harder to their full potential and earn the higher wages as an adult.

  3. I don't necessarily think that money leads to happiness but I do believe having money leads to the opportunity to provide your kids with as much as and advantage to succeed in school and life. As a U.S veteran I do support the idea of trying to understand what the ingredients to happiness are so we can apply this knowledge to people suffering from depression and maybe even PTSD.

  4. Most happy kids are socially-connected. That's probably why happy kids are likely to make more money when they become adults.