Past research has shown that people who make more money tend to have higher self-esteem. But it’s not clear which comes first – does having more money lead to higher self-esteem? Or does higher self-esteem drive people to earn more? This study aimed to understand how changes in income and self-esteem are connected within individuals over time.
Self-esteem refers to how positively people see themselves and their self-worth. Income is how much money someone makes. Prior studies found a small but consistent link between the two. People with higher incomes on average feel better about themselves compared to those making less money.
But those studies couldn’t separate whether income predicts self-esteem or vice versa. They also mostly compared people at one point (between person differences) rather than looking at changes within individuals (within-person changes). A newly published study1 analyzed data from over 4,000 adults in the Netherlands surveyed annually for four years. The researchers tracked how much they earned each year along with their self-esteem.
This allowed them to test not just whether higher earners have higher self-esteem on average. More importantly, they could see whether a boost in someone’s income predicts an increase in their self-esteem the next year. And whether rising self-esteem foretells someone earning more the following year. This sheds new light on how ups and downs in money and self-worth interact over time within people.
The sample consisted of 4,101 adults participating in the Longitudinal Internet Studies for the Social Sciences (LISS) ongoing panel study in the Netherlands.
Participants completed measures of self-esteem and reported their monthly income each year from 2019 to 2022.
Self-esteem was assessed using the 10-item Rosenberg Self-Esteem Scale. Individual gross monthly income was calculated for each year, adjusted for inflation.
The analysis focused on changes within individuals over time. They compared each person’s income and self-esteem to their own average levels. This shows when someone’s income or self-esteem was higher or lower than usual for them.
The researchers used statistical models to see:
- Did a boost in someone’s income predict their self-esteem increasing the next year compared to their average?
- Did an increase in someone’s self-esteem predict their income rising the following year relative to their average income?
This sheds light on the direction of the effects between changes in income and changes in self-esteem within individuals.
The models controlled for employment status. They also tested if the patterns differed by age, gender, or education level. This rigorous approach illuminates how shifts in income get linked to shifts in self-esteem over time within people.
The findings showed that, on average, people with higher incomes tended to have higher self-esteem. This aligns with prior research showing a link between income and self-worth.
More importantly, changes within individuals over time showed clear directional effects. When someone’s income increased compared to their average, their self-esteem also tended to go up the following year. This effect was large.
There was also a smaller but still significant effect in the reverse direction – increases in self-esteem predicted future increases in income.
These effects held true regardless of employment status or demographics like age, gender and education level. They were visible across all groups tested.
Overall, the results clearly demonstrate that rises in income lead to increases in self-esteem within individuals over time. To a lesser degree, boosts in self-esteem also precede future gains in income.
This pattern supports theories that self-esteem is impacted by financial status. But higher self-esteem may also facilitate earning more money. The findings provide new insight into the dynamics between income and self-worth within people.
This study sheds new light on how changes in income and self-esteem impact each other within individuals over time.
The results clearly show that when people’s income goes up compared to their average, their self-esteem tends to increase in the following year. This supports the idea that higher financial status boosts self-worth. Making more money seems to make people evaluate themselves more positively.
There was also evidence, although weaker, that self-esteem could predict future income. When self-esteem rose, income also modestly increased later on. This suggests self-esteem may help people achieve career success.
Overall, the study found a two-way street between changes in finances and changes in how people see themselves. Rises in income predicted self-esteem gains. Self-esteem increases also forecasted future income growth, but less so.
These findings contradict views of self-esteem as immune to external outcomes. People’s self-appraisals tend to be shaped by shifts in their income. At the same time, feeling good about oneself may help in earning more. This knowledge significantly advances our understanding of how life circumstances shape this important aspect of self-concept over time.=