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 well-being, 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.