Many studies have shown that people with higher incomes tend to also have higher self-esteem, but it has been challenging to figure out why. Which comes first? The income or the self-esteem?
On one hand, it is possible that making more money leads people to like themselves better. Like it or not, money is a symbol of personal value in our culture, and money affords more opportunities to do things that make people happy. So, perhaps wealthier people feel better because they make more money.
On the other hand, it is possible that having more self-esteem leads people to do things that make more money. For instance, people who like themselves better may be more confident and thus more likely to ask for a raise, take career risks, or perform better at their jobs so their income increases. Do people with higher self-esteem make more money because they feel better about themselves?
Sorting Out How Income and Self-Esteem Are Related
It's difficult to get to the bottom of this question. Researchers can't force some people to make more money or feel better about themselves and see what happens next. What's more viable is simply recording a person's income and self-esteem to see if they're related. But they can be related in two different ways. First, we could compare people to each other. Do the wealthiest people also tend to be the ones with higher self-esteem? This is how researchers often approach this question, and although it would provide useful information, we still wouldn't know what led to what.
The other way to see if these things are related is to compare people to themselves. By tracking people over time, we could observe how much people's incomes and self-esteem levels change and test whether one change usually comes before the other. In other words, if you make more money during the next year, can we expect you to increase in self-esteem during the following year?
Tracking Income and Self-Esteem Over Time
Together with our colleagues, we looked at a large, representative survey of people in the Netherlands over four years. Overall, 4000 people responded to surveys every year. Each time, they rated their personal self-esteem and how much money they made that year.
In general, when we compared people to each other, the people who made more money also had higher self-esteem, just as you'd expect based on all of the research that came before ours.
But the critical new finding came when we compared people to themselves. If someone made more money over time, that person typically ended up having higher self-esteem later on. The opposite pattern was less typical—increases in a person's self-esteem were followed by only modest increases in their income. These findings did not depend on people's gender, age, educational background, or their baseline income or self-esteem.
The Connection Between Self-Esteem and Status
One popular theory of self-esteem holds that it's a kind of barometer of how people are doing in life. People feel better about themselves when they have social feedback that they are doing well. For example, a person's sense of self-worth increases when someone tells them, "Good job!" Our findings support this theory. In Western cultures, income is a robust indicator that you are doing well, so it is not surprising that making more money would lead people to like themselves more.
Our study was conducted in the Netherlands, a country with unique social and economic norms. It is unclear whether we would get the same results in other parts of the world where income may say less about a person's social standing. However, this study provides the most convincing evidence so far that, generally speaking, making more money does tend to make people like themselves better.
For Further Reading
Bleidorn, W., Kretzschmar, A., Rauthmann, J. F., Orth, U., Denissen, J. J., & Hopwood, C. J. (2023). Self-Esteem and Income Over Time. Psychological Science, 34, 1163-1172. 10.1177/09567976231185129
Wiebke Bleidorn and Chris Hopwood are psychology professors at the University of Zurich interested in how people differ from one another and how people change over time.
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