Does happiness pay?

Abstract

Well-being research has supported the common sense view that income, health, and other factors affect happiness. We use panel data from Russia to assess the reverse causation — that happiness itself affects income, health, and other factors. We find that people who had higher "residual happiness" in 1995 – people who were happier after correcting for the usual determinants of well-being – made more money and were in better health in a survey 5 years later. Psychologists attribute a large part of well-being to factors such as self-esteem and optimism. The same factors appear to influence individuals' wealth and health.