Money Matters

Which would you prefer: An $80,000 job with reasonable work hours and seven and a half hours of sleep each night, or a $140,000 job with long work hours and just six hours of sleep? A new [Cornell] study … found that most people would pick the higher-paying job with more hours and less sleep.

Such a finding would be wholly unsurprising … if it weren’t for … surveys … telling us for years now that people are valuing more vacation time or more flexible hours over better pay. People leave jobs not just because they aren’t paid enough, study after study tells us, but because they don’t get the attention they should, they don’t like their boss, or they don’t feel they have enough development opportunities. … Researchers found that beyond a household income of $75,000 a year, money apparently “does nothing for happiness, enjoyment, sadness or stress.” …

[But] after years of research that seems to say more and more money is mattering less and less, … it still matters plenty. The Cornell study asked more than 2,600 participants to consider which option would make them happier, and even asked them if they thought their responses might be in error. Just 7 percent said they thought they were making a mistake, and only 23 percent admitted they might regret making such a choice between money and lifestyle. (more; study)

That study finds, however, that even though money matters, expected happiness is still the single best predictor of choices:

The aspects that systematically contribute most to explaining choice, controlling for own [subjective well-being], are sense of purpose, control over life, family happiness, and social status. …  Across our scenarios, populations, and methods, [subjective well-being] is by far the single best predictor of choice. (more)

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  • Anonymous

    Did we just hear data about individual’s predictions of their own happiness, without comparison to the true experienced happiness in the future? Odds of the two matching up exactly: Virtually zero.

    Perhaps we should leave job selection to a futurarchy.

  • GudEnuf

    This test means nothing unless the subjects knew that the higher paying job would give them less happiness. Your average WEIRD is still under the pretense that money buys more happiness than sleep.

  • Curt Adams

    Becoming a doctor is somewhat like the high-income choice in the tradeoff. That is the goal of the majority of people I’ve encountered in biology classes, and many are obsessed with it and will spend years on second tries if they fail the first time at getting into medical school. All the same, those who make it don’t end up happier; doctors are actually a relatively unhappy group. This all matches previous research on happiness, which finds that although money beyond a comfortable middle-class existence doesn’t make people happier, people think it does. So the upshot is that people just aren’t very good at figuring out what makes them happy.

  • AnonymousX

    Saved money can buy phases of freedom later (free months or even years). You can realize projects and lifestyle phases you couldn’t pull off during holidays or weekends.

    So a revealed preference to accept higher payment and more work hours can be based on a freedom-maximizing strategy rather than, say, desire for luxury goods etc.

    • John Maxwell

      Yes, my answer to this question is roughly work the higher-paying job for as long as I can bear it while living on a shoestring.

      • AnonymousX

        …and hope that your investments or fiat currency savings are still worth something when you’re done.

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  • Philo

    There must be something about how the survey question was framed that led people to say they would prefer the higher-paying less-sleep job, when actual revealed preference shows otherwise.

    Even as framed, the question would elicit my preference for the lower-paying more-sleep job: I could not long survive on 6 hours sleep per night.

  • Faze

    Maybe it’s not the money at all. A 75K job that lets you sleep late sounds pretty humdrum. But a 140K job that demands all your time must be a pretty important position, where you as an individual make a crucial contribution to the success of the enterprise. The better paying job might also sounds like a more satisfying job.

    • Someone from the other side

      As someone in the second type of job (although I try to get 7 hours of sleep, 6 leaves me cranky) I can attest that there is something to that – but it is by no means a universal truth: there are plenty of boring 140K jobs that have long hours whereas conversely I am still looking for a 100K (or even 80K) job with decent hours that it is at least moderately interesting… It seems like interesting jobs invariably come with bad hours – quite irrespective of the amount of responsibility you actually bear.

  • Matthew Fallshaw
    See discussion of Wolfers and Stevenson’s work – that income above $75k *does* contribute to happiness isn’t nearly as sticky or newsworthy, but it’s pretty well supported.

    • Jayson Virissimo

      Thanks for the link. I assumed the Easterlin paradox was consensus among economists. I have now updated my beliefs.

  • A

    I am pretty sure that the result of this would be different in European countries, specially in Southern ones.

  • Someone from the other side

    Across our scenarios, populations, and methods, [subjective well-being] is by far the single best predictor of choice.

    Which leaves me with the age old question how to improve subjective well-being…

  • Ian

    I would pick the higher paying job with less sleep

  • I think the key here is people are valuing free time later in life. I for example quit a $40K a year 8×5 job to go to Iraq for three years at $240K a year 14×7. Sure my life sucked for those three years but I was able to fund my entire bachelors, buy a reasonable suburban house, and put my kid through private school without incurring any debt all at the age of 34. I foresee my life here on out (making a reasonable $70K per year) pretty enjoyable giving I have no college debt or mortgage.

  • People probably treat the higher pay as evidence that their boss will respect them more.

    If it’s often something else, such as the boss paying extra for the privilege of mistreating the employee, then the evidence for that deserves more publicity.

  • Jason

    It’s not just $140k v. $80k. $140k jobs are on higher tracks and typically lead to much higher salaries down the future. Plus people over-estimate their ability to evade the job requirements/restrictions (sure it might take others so long to do it, but I’ll do it faster).

    If it was the exact same job with the same prestige, but you could buy some of your hours back for a reduced salary, I think you would see a different result.

  • Jon H

    Should have stipulated a minimum amount of time at the job. Some people probably were thinking they could take the higher-paying, longer-hours job, push hard to work long enough to earn $80k, then take the rest of the year off. It’s hypothetical, so why not?