Income and happiness: a study of a panel of US residents

Can money buy happiness? Does the marginal effect of income on happiness of an average change over time? Does the change in income of an average individual increase their happiness over time? These are the main research questions that this paper attempts to answer using a longitudinal dataset for US residents, viz., panel study of income dynamic (PSID), for the years 2019, 2011, 2013, 2015 and 2017. The main methodology we use is Ordered-Logit regressions. We find reasonably strong evidence of an yes answer to all three questions. Our results pass a number of robustness checks.