Happiness and Income

The main goal of this study is to examine the relationship between the components of subjective well being (which are happiness and life satisfaction), income and some other socio-demographic factors. In this paper, questionnaire method is used as a data collection tool. The data set is analyzed by the ordered probit estimation method. One of the most important findings of this study is that happiness and life satisfaction are affected by income in a different way. An increase in income level does not have a statistically significant effect on happiness, however it has a statistically significant effect on life satisfaction. We also find that relative income is more valuable than the absolute income for people and their income aspiration level increases with an increase in income level.