Differences in the dependency on income for subjective well-being

Set point theory argues subjective well-being (SWB) varies between people, but has stability within people across time, fluctuating in response to external factors before returning to an individual’s unique mean. However, there are individual differences in how much SWB varies, suggesting some individuals may conform more closely to the set point model than others. Income appears to serve as a buffer to the impact of external factors on SWB variability, but this impact is hypothesized to differ by individual’s dependency on income for SWB. Longitudinal data from 5048 Australians were used to calculate contingent units from the participant’s annual reports of income, affective well-being, and life satisfaction. These individual estimates assessed the association between income and SWB based on an individual’s within-person data, producing unique scores for this association’s strength and direction. Individuals with stronger contingent units represent a greater dependency on external factors to determine SWB, so theoretically have a poorer fit to the model of set point theory. The contingent units demonstrated normal distribution, high reliability, and significantly moderated the relationship between within-person reports of SWB and income; suggesting this application of the contingent unit method is psychometrically sound. Contingent unit strength predicted moderate increases to SWB variability. Importantly, this effect was stronger than for other variables in the regression model: trait SWB, income, personality, and age. These results support the hypothesis that dependency on income for SWB predicts SWB variability, suggesting SWB variability acts as an effective indicator of fit to the model of set point theory.