How Hourly or Salary Pay Affects Happiness
Happiness depends on if you are paid hourly or by salary.
Posted Dec 17, 2009
Will more money make you happier? Well, that depends on if you are paid hourly or by salary according to a new study published in Personality and Social Psychology Bulletin. Researchers from the University of Toronto and Stanford University have found that income was more strongly associated with happiness for individuals paid by the hour than by salary.
Sanford E. DeVoe from the University of Toronto and Jeffrey Pfeffer from Stanford University argue that the influence of organizational practices, such as being paid by the hour, affects the strength of the relationship between income and happiness.
In the first two studies the researchers used survey data from a nationally representative sample from the United States to analyze respondents’ income, hourly status, and overall happiness. They found that income was uncorrelated with happiness for salaried employees but significantly correlated with happiness for employees paid hourly.
In the third study, DeVoe and Pfeffer used longitudinal data from a nationally representative survey of British employees to see if the relationship between income and happiness varied by hourly status when all other individual differences are held constant. The results indicated that changes in income are more strongly associated with changes in well-being when people are paid hourly.
In the last study, the researcher experimentally manipulated the saliency of an individual’s hourly wage rate to see if this influenced the strength of the relationship between income and happiness. Participants were randomly assigned to the control condition (where they self-rated their well-being) or the “calculate hourly” condition (where they were asked to calculate their hourly wage from their yearly earnings and total hours worked and then self-rated their well-being). This study indicates that the salience of someone’s hourly wage rate caused non-hourly paid participants to exhibit a stronger connection between income and happiness.
Past research has indicated that when evaluating one’s subjective well-being, salient information can influence the evaluation. This information can either be temporarily or chronically available. DeVoe and Pfeffer suggest that being paid by the hour promotes a chronic economic evaluation of time, making this information salient to an individual’s evaluation of his/her happiness.
It would seem that money influences our happiness especially when it is chronically salient. But, as the comedian Jackie Mason said, "Money is not the most important thing in the world. Love is…Fortunately, I love money."
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DeVoe et al. When Is Happiness About How Much You Earn? The Effect of Hourly Payment on the Money--Happiness Connection. Personality and Social Psychology Bulletin, 2009; 35 (12)