Income, Leisure, and Happiness

The income-leisure trade-off, whilst prominent in textbooks, is largely absent in the income-happiness 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