Does money buy happiness, or does happiness come indirectly from the higher rank in society that money brings? We tested a rank-income hypothesis, according to which people gain utility from the ranked position of their income within a comparison group. The rank hypothesis contrasts with traditional reference-income hypotheses, which suggest that utility from income depends on comparison to a social reference-group norm. We found that the ranked position of an individual's income predicts general life satisfaction, whereas absolute income and reference income have no effect. Furthermore, individuals weight upward comparisons more heavily than downward comparisons. According to the rank hypothesis, income and utility are not directly linked: Increasing an individual's income will increase his or her utility only if ranked position also increases and will necessarily reduce the utility of others who will lose rank.

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Personality is the strongest and most consistent cross-sectional predictor of high subjective well-being. Less predictive economic factors, such as higher income or improved job status, are often the focus of applied subjective well-being research due to a perception that they can change whereas personality cannot. As such there has been limited investigation into personality change and how such changes might bring about higher well-being. In a longitudinal analysis of 8625 individuals we examine Big Five personality measures at two time points to determine whether an individual's personality changes and also the extent to which changes in personality can predict changes in life satisfaction. We find that personality changes at least as much as economic factors and relates much more strongly to changes in life satisfaction. Our results therefore suggest that personality can change and that such change is important and meaningful. Our findings may help inform policy debate over how best to help individuals and nations improve their well-being.

Unemployment has a strongly negative influence on well-being, but it is unclear whether it also alters basic personality traits. Whether personality changes arise through natural maturation processes or contextual/environmental factors is still a matter of debate. Unemployment, a relatively unexpected and commonly occurring life event, may shed light on the relevance of context for personality change. We examined, using a latent change model, the influence of unemployment on the five-factor model of personality in a sample of 6,769 German adults, who completed personality measures at 2 time points 4 years apart. All participants were employed at the first time point, and a subset became unemployed over the course of the study. By the second time point, participants had either remained in employment, been unemployed from 1 to 4 years, or had experienced some unemployment but become reemployed. Compared with those who had remained in employment, unemployed men and women experienced significant patterns of change in their mean levels of agreeableness, conscientiousness, and openness, whereas reemployed individuals experienced limited change. The results indicate that unemployment has wider psychological implications than previously thought. In addition, the results are consistent with the view that personality changes as a function of contextual and environmental factors.

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