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November 28, 2005

What Makes Us Happy: on the Job

Stumbling and Mumbling directs us to John Helliwell on the value of job satisfaction:

Pricing job satisfaction : A new paper from the NBER puts a price on job satisfaction - and it's huge... John Helliwell and Haifang Huang:

To reduce job satisfaction from 9 to 8 on the 10-point scale... would, for a family with $65,000 income, have to be matched by an income increase of more than $30,000 a year [to leave life satisfaction unchanged]... Moving from the middle to the 75% percentile in job satisfaction would have a personal income equivalence, for someone of median income, of $17,000 per annum. These dollar amounts would be correspondingly lower for families with lower incomes.

What aspect of job satifaction is most valuable? It's not autonomy, in the sense of being able to make lots of decisions on one's own. Controlling for other things, this is negatively correlated with happiness. Responsibility, it seems, is a burden. Instead, it's task variety, skill intensity and having enough time to do the job that makes us happy. What's really important, though, is working somewhere where workers trust bosses....

There is, though, a caveat here. One reason why it requires huge rises in income to compensate us for falls in job satisfaction is that our happiness doesn't rise much with incomes. Indeed, it is relative income, more so than absolute income, that makes us happy...

Posted by DeLong at November 28, 2005 12:27 PM