New study shows why unemployment is sometimes associated with an increase in happiness

New study shows why unemployment is sometimes associated with an increase in happiness

Research published in the Journal of Happiness Studies helps explain why some unemployed individuals do not experience a life satisfaction decrease and may even experience an increase in life satisfaction. The new study provides evidence that the main benefit of employment is related to income.

Jianbo Luo, the author of the study, conducted the research to better understand the relationship between unemployment and subjective well-being.

“My interests are triggered by two contradictory phenomena. On the one hand, consensus has been reached in empirical work that unemployment reduces happiness. Various scholars believe that the decrease is due to the non-pecuniary benefits of employment (such as increased social capital),” he explained.

“On the other hand, lottery winners who win sufficiently large sums of money tend to resign and immediately withdraw from the workforce, implying that the main benefit of employment is related to money.”

For his study, Luo examined data on 76,000 individuals from the German Socio-Economic Panel, a nationally-representative longitudinal study of private households that has been conducted every year since 1984.

In addition to including information about employment status, the study contained various objective and subjective measures of material deprivation, such as monthly net income and financial satisfaction.

Luo found that unemployment was not associated with reductions in subjective well-being among those who still had a household income substantially greater than the minimum required for their current living standard and those who did not suffer a decrease in their subjective financial satisfaction.

“Although the unemployed generally feel less happy, the unemployed without financial problems will feel an increase in happiness. This implies that the main benefit of employment is pecuniary,” he told PsyPost.

Luo’s previous research also indicates that employment increases happiness mainly because of the earned income.

“First, what is the root cause of the relationship between unemployment and happiness? My paper, entitled ‘Unemployment and Unhappiness: The Role of Pecuniary Factors‘, states the root cause is pecuniary.”

“Second, why does happiness adapt to various life events (such as marriage) but not to unemployment? My paper, entitled ‘Unemployment and Happiness Adaptation: The Role of the Living Standard‘, shows that the limited adaptation is due to the fact that the unemployed have insufficient income to support their living standard, upon unemployment entry and in the long-run.”