Effects Of Hourly Wages On Happiness: Evidence From DeVoe And Pfeffers’ Study

The Study and Its Findings

Discuss about the Organization and Behavior for Satisfaction with Life Scale.

A person's well-being can be considered as the ultimate goal of life. The connection between money and happiness has always been a popular topic of debate where measuring happiness is a complicated process. It also becomes essential to study the effects of hourly wage on an individual’s happiness. DeVoe and Pfeffer have conducted four different studies to examine the effects of hourly wages on one’s happiness where the studies mostly revealed a strong relationship between income and happiness for those individuals who are paid by hours. All the four studies showed consistent results that how a person is paid depends on the subjective welfare evaluation. The results are discussed in this response article post critical evaluation of DeVoe and Pfeffers’ study regarding the effects of hourly wages on one’s money-happiness connection. Utility models show that money leads to happiness.

The authors’ aim is to study the effects of hourly wages on one’s happiness. Multiple data from the United Kingdom and the United States has been evaluated which shows evidence that an individual emphasizes more on his income when it is paid on an hourly basis while measuring happiness. Being paid by hours enables one to become well aware of the worth of an hour’s work. The arguments by the authors are that an individual’s happiness is affected when there is exposure to practices of organizations like being paid on an hourly basis which in turn facilitates proper economic evaluation of the usage of time.

The authors present their ideas and prove their hypothesis through extensive research where cross-sectional data from the United States has been used. Panel data from the United Kingdom has been studied and in another study, the importance of an individual's hourly wage has been manipulated experimentally. The studies thus showed similar results. Therefore the arguments are evaluated and supported through pieces of evidence from the studies conducted. In Study 1, the survey data consisting of an individual's happiness, income and hourly status from a sample of national representative of U.S has been studied and Study 2 was conducted on a larger sample from U.S. In Study 3, the panel data from the survey of British employees was considered to observe effects of the changes in income on welfare which was represented as a function of hourly pay and in Study 4, the salience of hourly wages was manipulated. Adequacy of the evidence to represent the arguments is enough and strong. The General Health Questionnaire (GHQ) is used as a measure of subjective and mental well-being. Also, the Satisfaction with Life Scale (SWLS) has been used as a measure. For the first study, survey data from residents of 48 states has been used. Further study was conducted by using dependent and independent variables where in the case of the dependent variable, subjective well-being of the respondents was evaluated using a particular scale.  Dependent variables like income were studied using 23 levels of income. Study 2 consisted of a larger data from National Survey of Families and Households and happiness of the respondents were measured as a single item using a scale of measure. Study 3 used panel data of British employees where the sample consisted of 52996 observations of 12431 respondents. Unlike incorporating demographic variables like the first three studies, study 4 dealt with fixed effects and changes in how people are paid. The studies are logical as relevant statistical calculations are used in every study with proper quantitative analysis of the responses recorded. Regression analysis is used to prove the assumptions. To avoid multicollinearity problems among the different variables, in both study 1 and 2, mean centered income has been squared and then included in the regression equations.  Both the studies are consistent with the hypothesis. In study 3 the demographic variables are all statistically controlled and the well-being measure was regarding GHQ. For all the studies, correlation, standard deviation and means have been calculated to incorporate in the regression analysis model. A positive relation was predicted between income and responses to GHQ. As predicted, there was a strong relation between income and well-being for the worker paid by hours. In the case of welfare as a measure of SWLS, the results were similar to GHQ. Therefore the evidence proved the hypothesis and according to the study, there is a positive relation between income and happiness when the payment is on hourly basis. 

Implications

The results are agreeable in many cases but there are other factors as well that determine one’s happiness. Hourly wages put a price on an individual’s time. Moreover, when one is paid by hours, the individual’s tend to think of time as a measure of money. This affects one’s leisure, which too is essential for welfare. In turn, the tendency of the person to enjoy the other pleasures of life gets highly reduced due to hourly payments. Higher wages generally foster well-being and the well-being increases manifold when the wages are hourly but evaluation of the happiness-income becomes critical as it is also important to analyze the levels of wages at which an employee agrees to trade off his leisure. Though the study of DeVoe and Pfeffer proved the hypothesis, but there lies a reason to also disagree with the results as the findings are only from the data observed in U.S and U.K. Therefore the results cannot be taken as a conclusion about the hypothesis as the study completely ignores the evaluation of other counterparts of the world. Hourly wages are prevalent in U.S and in some parts of Europe and hence the results are in favor of the predictions. Whereas in other parts of the world, many places do not have the practice of hourly wages and hence the results may vary and a similar conclusion cannot be drawn. The positive relation of hourly wages with happiness may not always be true when hourly wages affect the leisure of an individual and happiness thus gets affected. The results of the paper are also disagreeable when it is with respect to different countries and people other than the sample of people surveyed. The preference of work-leisure balance also varies among people across different countries. It is also not necessary that money and happiness will always possess a relation.

The implications of authors’ arguments are such that hourly wage is an essential organizational practice of payment and affects one’s happiness. From the results, it can be concluded that hourly wages and evaluation of happiness have a positive relation and the hourly paid workers gives more importance to their incomes while measuring their happiness. According to the other, economic authors, the percentage of people to support the statement is high but this is not the only factor that provides the happiness that the individual needs. The authors have mentioned that there are many who instead of earning a good amount of money fails to lead a happy life¹¹ .

Conclusion

The article can be improved by including and studying data from other countries as well other than U.S and U.K, which will give results that are more accurate. The study can also include non economic factors as those factors too play a role in determining happiness. Hourly wages affect one’s happiness but other factors too, like family, health and leisure-activities are important to measure happiness.

The research concludes that the organizational practices of hourly wages is an important factor in determining one’s happiness and also has a positive relation with welfare. There has been extensive studies conducted on survey data from U.S and U.K and those data are statistically evaluated to prove the hypothesis. Though the studies revealed consistent results but it did not study any data from any other country. Measuring happiness is critical and involves numerous factors that need to be evaluated. The study, although conducts extensive logical research using survey data consisting of various demographic variables and proves that hourly wage is essential in evaluating happiness, it overlooks many important variables. From the paper, it can be learnt that hourly wages is an important criteria for happiness and workers paid on hourly basis rely more on their incomes than workers who receive non-hourly payment, especially for United States and parts of Europe.

The happiness index of the other Asian countries also shows clear evidence that the individuals mental satisfaction is related to the money he earns. The other countries like Egypt, china, Tunisia have voted for the statement that the happiness of the , is surely based on the earning as the security of the income provides them with some kind of confidence by which they are able to deal with the difficult situations of life. On the other part of the coin lie, the non-economic factors which is also responsible for the happiness. The security of the hourly wage is obviously the base but spending time with close ones or travelling with them provides the same sort of happiness.

Man is a social being and the very sense of getting close to the society where he belongs is definitely a factor of happiness for him. For the well-being of a man, the mental satisfaction is surely needed but if his health fails to support him, the whole order falls apart. In order to be happy one needs to be healthy enough to work properly. A good health and a sound mind make a man spontaneous. Whereas, doing the things that sooths the mind can be considered as another factor responsible to bring happiness into one’s life. 

References

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