IDEAS home Printed from https://ideas.repec.org/p/mag/wpaper/26002.html

Connecting the dots: continuity in the relationship between income and emotional well-being

Author

Listed:
  • Manja Derlin

    (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg)

  • Carina Keldenich

    (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg)

  • Andreas Knabe

    (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg)

Abstract

We examine how functional-form assumptions affect conclusions about the existence of satiation in the relationship between income and emotional well-being. Previous studies have estimated a piecewise log-linear model with one structural break in both intercept and slope, which may lead to discontinuities in the estimated relationship. We show that imposing continuity in this type of model in OLS and quantile regressions substantially alters inferences about income satiation. At commonly applied thresholds, satiation disappears. The threshold shifts upwards when determined by best statistical fit and satiation re-emerges only at very high incomes. These findings demonstrate that the presence and location of satiation are highly sensitive to modeling choices.

Suggested Citation

  • Manja Derlin & Carina Keldenich & Andreas Knabe, 2026. "Connecting the dots: continuity in the relationship between income and emotional well-being," FEMM Working Papers 26002, Otto-von-Guericke University Magdeburg, Faculty of Economics and Management.
    • Handle: RePEc:mag:wpaper:26002
    as

    Download full text from publisher

    File URL: https://www.fww.ovgu.de/fww_media/femm/femm_2026/2026_02.pdf
    File Function: First version, 2011
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Andrew T. Jebb & Louis Tay & Ed Diener & Shigehiro Oishi, 2018. "Happiness, income satiation and turning points around the world," Nature Human Behaviour, Nature, vol. 2(1), pages 33-38, January.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mohsen Joshanloo, 2026. "Social Capital vs. Financial Capital as Predictors of Future Subjective Well-being: A 22-Year Within-person Analysis," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 181(1), pages 1-23, January.
    2. Tofallis, Chris, 2020. "Which formula for national happiness?," Socio-Economic Planning Sciences, Elsevier, vol. 70(C).
    3. Bruce Headey & Gisela Trommsdorff & Gert G. Wagner, 2022. "Alternative Recipes for Life Satisfaction: Evidence from Five World Regions," Applied Research in Quality of Life, Springer;International Society for Quality-of-Life Studies, vol. 17(2), pages 763-794, April.
    4. Edika Quispe-Torreblanca & Jan-Emmanuel De Neve & Gordon D. A. Brown, 2026. "Social status and the relationship between income rank and well-being in 109 nations," Nature Communications, Nature, vol. 17(1), pages 1-16, December.
    5. Holt, Stephen B. & Wang, Rui & Gershenson, Seth, 2020. "Stress Test: Examining the Evolution of Teachers' Mental Health Over Time," IZA Discussion Papers 13361, IZA Network @ LISER.
    6. Folk, György, 2019. "Weal: the universal core of human well-being," MPRA Paper 97082, University Library of Munich, Germany.
    7. KangJae Jerry Lee & Seonghee Cho & Eui Kyung Kim & Sunhwan Hwang, 2020. "Do More Leisure Time and Leisure Repertoire Make Us Happier? An Investigation of the Curvilinear Relationships," Journal of Happiness Studies, Springer, vol. 21(5), pages 1727-1747, June.
    8. Fengyu Wu, 2021. "Modern Economic Growth, Culture, and Subjective Well-Being: Evidence from Arctic Alaska," Journal of Happiness Studies, Springer, vol. 22(6), pages 2621-2651, August.
    9. Nik Ahmad Sufian Burhan & Mohamad Fazli Sabri & Heiner Rindermann, 2023. "Cognitive ability and economic growth: how much happiness is optimal?," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 70(1), pages 63-100, March.
    10. Kaiser, Caspar, 2018. "People do not adapt to income changes: A re-evaluation of the dynamic effects of (reference) income on life satisfaction with GSOEP and UKHLS data," INET Oxford Working Papers 2018-07, Institute for New Economic Thinking at the Oxford Martin School, University of Oxford.
    11. Godfred Matthew Yaw Owusu & Gabriel Korankye & Octavia Ama Serwaa Otchere & Maryam Kriese, 2022. "Money on the mind: emotional and non-cognitive predictors and outcomes of financial behaviour of young adults," SN Business & Economics, Springer, vol. 2(11), pages 1-22, November.
    12. Atilano Pena-López & Paolo Rungo & Beatriz López-Bermúdez, 2021. "The "Efficiency" Effect of Conceptual Referents on the Generation of Happiness: A Cross-National Analysis," Journal of Happiness Studies, Springer, vol. 22(6), pages 2457-2483, August.
    13. Mia Heide & Michael Z. Hauschild & Morten Ryberg, 2023. "Reflecting the importance of human needs fulfilment in absolute sustainability assessments: Development of a sharing principle," Journal of Industrial Ecology, Yale University, vol. 27(4), pages 1151-1164, August.
    14. David Kapaon & Carlos Riumallo-Herl & Elyse Jennings & Shafika Abrahams-Gessel & Keletso Makofane & Chodziwadziwa Whiteson Kabudula & Guy Harling, 2024. "Social support receipt as a predictor of mortality: A cohort study in rural South Africa," PLOS Global Public Health, Public Library of Science, vol. 4(9), pages 1-20, September.
    15. Peter Valet, 2023. "Perceptions of Pay Satisfaction and Pay Justice: Two Sides of the Same Coin?," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 166(1), pages 157-173, February.
    16. Dolan, Paul & Foy, Chloe & Kavetsos, Georgios & Kudrna, Laura, 2021. "Faster, higher, stronger… and happier? Relative achievement and marginal rank effects," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 95(C).
    17. Fernando Bruna & Paolo Rungo, 2020. "A note on the concavity of the happiness function in family support," Economics Bulletin, AccessEcon, vol. 40(2), pages 1122-1131.
    18. Montero, Rodrigo & Correa Mautz, Felipe, 2023. "Elaboración de un índice de desarrollo económico regional según un enfoque de bienestar para las regiones de Chile," Documentos de Proyectos 49050, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    19. Barbara Pertold-Gebicka & Dominika Spolcova, 2019. "Family Size and Subjective Well-being in Europe: Do More Children Make Us (Un)Happy?," Working Papers IES 2019/24, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Aug 2019.
    20. V. K. Shrotryia & Shashank Vikram Pratap Singh, 2020. "Measuring Progress Beyond GDP: A Theoretical Perspective," Emerging Economy Studies, International Management Institute, vol. 6(2), pages 143-165, November.

    More about this item

    Keywords

    ;
    ;
    ;

    JEL classification:

    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mag:wpaper:26002. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: IT Administrators at FWW (email available below). General contact details of provider: https://edirc.repec.org/data/fwmagde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.