It seems that income of an individual and his psychological well being correlate with each other. Income helps individuals meet their certain universal needs and therefore that income, at lower levels, is a cause of subject well being. But the argument is based on the idea that the impact of income or other resources depends on changeable standards as those derived from expectancies, habituation levels, and serial comparisons. In one of the studies done in US, the significant correlation was found between Income and Well Being. But the cross-country correlation were larger. No evidence for the influence of relative standards on income was found : (1) Income change did not produce any effects beyond the effect of income level per se, (2) Income produced the some level of happiness in poorer and richer masses of U.S. Income appeared to produced lesser increase in psychological well being at higher, income levels in U.S. but this pattern was not evident across countries.

Author: Nitika Shekhar