When Does Money Make Money More Important? Survey and Experimental Evidence

The authors investigate how the amount and source of income affects the importance placed on money. Using a longitudinal analysis of the British Household Panel Survey and evidence from two laboratory experiments, they found that larger amounts of money received for labor were associated with individuals placing greater importance on money; but this effect did not hold for money not related to work. The longitudinal survey analysis demonstrated these differential effects of the source of income on money’s importance while holding constant stable individual differences. The experiments provide causal evidence that the source of income has an effect on the importance of money as well as on the effort expended to earn more money. The authors’ results suggest that, even as individual differences in the importance placed on money may affect peoples’ income, depending on its source, income can also affect the importance people place on money.