Income and Non Income Effects on Happiness: A Survey

Abstract

Well-being of individuals in the society depends on some salient factors such as household‟s income generated from employment. Individual‟s preference which is assumed to be „rational‟ is constraint by its income. In economics, „utility‟ derived by an individual is a function of his income. This notion subjected individuals‟ well-being to income earned by individuals. This paper aims at adding to the existing literature on a more expansive notion on well-being through an empirical analysis of income and non-income factors. Data on income, non-income factors such as happiness, education, gender, marital status, health, religion and employment status were extracted through survey method. Finding from Binary Logistic Model regression and others revealed that individuals maximize utility not only through income but also through non-income factors. The paper also discovers that people with higher income, good health and gainfully employed are happier than those with low-income, poor health and those with low level of educational training. It found that marriage was statistically insignificant to happiness. Large number of unmarried respondents may be a contributory factor to such result.

Key words: Income, happiness, well-being, utility, rationality