Researcher: Money makes people happy, especially if they're paid by the hour

Jan 25, 2010 BY CHRISTINE BLACKMAN

(PhysOrg.com) -- Income has a greater impact on the happiness of people paid by the hour than people paid by salary.

Money makes people happy, and more so for workers paid by the hour than by salary, according to researchers at Stanford and the University of Toronto. The relationship between and happiness is stronger for people paid by the hour because they are more often reminded of how much they earn, and this makes money more salient in their thinking.

"If you are paid by the hour or account for your time on a timesheet, you begin to see the world in terms of money and in terms of economic evaluation," said Jeffrey Pfeffer, the Thomas D. Dee II Professor of at the Stanford Graduate School of Business. "To the extent that time becomes like money and money becomes more salient, the linkage between how much you earn and your happiness increases."

Hourly paid employees know the exact worth of each hour of work. They think about their regularly and begin comparing the value of their time to the amount of their happiness.

Pfeffer and Sanford DeVoe of the University of Toronto studied data from American and British surveys of income, hourly vs. salary pay status and general happiness. The surveys showed that pay determines the happiness of hourly workers more than it does for people paid by salary.

Money linked to wage awareness

The researchers ran their own experiments to demonstrate that even salaried people would rely more on income to evaluate their happiness if they were made aware of their implicit hourly wage. They asked people to assess their happiness, requiring a random set of the participants to first calculate their hourly earnings. They rated statements such as "I am satisfied with my life" and answered questions such as "Have you been feeling unhappy and depressed?"

Salaried participants who made the calculations used their income to rate happiness about as much as did hourly paid participants.

"If they're thinking about their income, then all of a sudden, even people who are paid by become much more like hourly paid workers; they think of their time in terms of money, the connection between income and happiness goes up and they become economic evaluators of their use of time in their life," Pfeffer said.

The study shows that organizational practices such as paying people by the hour affect employees beyond the workplace, Pfeffer said. Workers begin to think differently about money, time and . "How organizations pay people has profound effects outside of that organizational context. If you're paid by the hour, you come to see your time in a certain way that doesn't change when you walk out of your employer's door."

The study was published Dec. 1, 2009, in the Personality and Social Psychology Bulletin.

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zamikazi
not rated yet Jan 25, 2010
I can understand where the research is coming from but I have to disagree personally.

I tend to get work done in really short periods of time and end up having to fudge my hours so I can get my worth. I much prefer salary for that reason.
JRDarby
not rated yet Jan 25, 2010
I can understand where they're coming from. Whether you appeal to Abraham Maslow's hierarchy of needs or Wilson/Leary's 8-circuit model, security/bio-survival always take precedence over other needs.

I think it's hard to argue that a wage-laborer survival is as certain or more certain as a salaried employee. Thus "If you are paid by the hour or account for your time on a timesheet, you begin to see the world in terms of money and in terms of economic evaluation" because your survival and security are tied to your wages and you rearrange your thinking around this.
Royale
not rated yet Jan 26, 2010
I would like to add something to consider. When I was working hourly. (Mowing lawns for a big company) I was very happy. I attribute that more to manual labor and higher feelings of getting something "concrete" done. We should take this into account when thinking about hourly employees. How many of them work manual labor jobs? Because honestly I felt a better sense of self worth then at the end of the day than i do now, getting payed double and enjoying what i do. Just a thought...
fhtmguy
not rated yet Jan 26, 2010
I would respectfully submit that if you are happy mowing lawns that's great, but I believe that you just havent made enough money to experience the happiness that is felt by the people that hired you to cut their grass. Money does make people happier. Usually broke people are the ones that say money doesn't make you happy. What else can they tell themselves???? I understand people working more than 40 hours a week but earn a "salary" may feel slighted. Once I became a business owner I didn't mind working the extra hours to succeed because there was a sense of accomplishment that somewhat outweighed the money factor. Freedom of ownership is something 95% of Americans don't understand. With all that said, once you can afford to pay somebody to cut your lawn you have a hard time going back to cutting it yourself. My opinion is attributed to the fact that I have found a way motivated people can attain finanacial indepenendence. The problem becomes people arent willing to do what it takes.
Royale
not rated yet Jan 27, 2010
All I really meant was that they should take into account how many jobs are manual labor from the numbers they used, since exercise boosts endorphins naturally I would think those hourly people would say that they're happier generally. that was my only real point there.

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