Income and Happiness : Does the relationship vary with age?

The purpose of this study was to examine the relationship between income and happiness across three age groups: young (18-30 years), middle (31-64 years), and old (65 or older). Theory suggests that income has a positive effect on an individual’s sense of happiness. The data set in this study contains survey data conducted by European Social Survey on randomly selected Swedish citizens between the years 2010, 2012, 2014, 2016, and 2018. The method used in this analysis is performed using a Generalized Ordered Logit model with happiness as the dependent variable. The result shows, after controlling for sociodemographic variables, that income has a positive significant association with happiness in all three age groups. Those with a higher income were more likely to be very happy compared to those in the lowest income group. The study also finds that, for some income levels, there exists a difference in how happiness is affected by income between the middle and old age group while no significant difference was found between the young and old age group