When does money matter most? Examining the association between income and life satisfaction over the life course

Previous research shows that the correlation between income and life satisfaction is small to medium in size. We hypothesized that income may mean different things to people at different ages and, therefore, that the association between income and life satisfaction may vary at different points in the life course. We tested this hypothesis in 3 nationally representative panel studies. Multilevel modeling techniques were used to test whether age moderated both the within- and between-person associations. Consistent with past research, we found that individuals who earned more on average and individuals who earned more over time reported higher levels of life satisfaction. Importantly, these effects were strongest for midlife individuals (those in their 30s-50s) as compared with individuals who were younger or older.