Income, leisure, and happiness

Abstract

The income-leisure trade-off, whilst prominent in textbooks, is largely absent in the incomehappiness debate. Multilevel or hierarchical linear modeling is introduced and used to investigate the income-leisure-happiness nexus. Leisure has a positive effect on happiness, but lowers the effect of per-capita GDP on self-reported happiness. This is in contrast to existing within-country evidence, and a likely explanation is that per-capita income proxies for leisure—the two are positively correlated. Further at odds with this previous research, no sex differences are found with respect to the effect of income and leisure on happiness.