Marginal Utility and Economic Development: Intrinsic Versus Extrinsic Aspirations and Subjective Well-Being Among Chinese Employees

The post-1979 economic reforms have led to impressive economic growth in China both in terms of gross domestic product and individual income. Individual wellbeing, however, has not increased on par with the economy (Brockmann et al. in J Happiness Stud 10(4): 387-405, 2009; Easterlin et al. in Proc Natl Acad Sci 109(25): 9775-9780, 2012). In the current series of studies, traditional and multilevel regression models are applied to examine the relationship between income and employee well-being. Results suggest a curvilinear relationship between income and satisfaction (both with one's job and one's income), supporting a diminishing marginal utility effect. Additionally, confirming a central postulate of Goal Contents Theory (GCT), individuals who espoused the importance of income (an extrinsic motive) were less satisfied with income itself. Further examining the application of GCT in a Chinese context, results suggest individuals who value extrinsic motives (i.e., money, possessions, fame) exhibit lower levels of job satisfaction, life satisfaction, and feelings of accomplishment. Finally, there is a significant multilevel effect such that between-city levels of health have a significant positive relationship with life satisfaction. These results offer organizational and policy implications related to the interaction between economic prosperity and human development.