Assessing Ethical Influences

Money, Emotions, and Ethics Across Individuals and Countries

Long Wang • J. Keith Murnighan

Received: 1 February 2013 / Accepted: 21 September 2013 / Published online: 5 October 2013

� Springer Science+Business Media Dordrecht 2013

Abstract This article presents two separate but closely

related studies. We used a first sample to investigate the

relationships among individuals’ reports of their income

and their subjective well-being, and their approval of

unethical behavior in 27 countries and a second sample to

investigate the relationship between corruption in 55

countries and their populace’s aggregated feelings of sub-

jective well-being (happiness). Analysis of data from

27,762 working professionals showed that, although

reported feelings of subjective well-being were negatively

related to their approval of unethical behaviors, income

was positively related to their approval of unethical

behaviors. In addition, the effects for feelings of subjective

well-being were particularly strong for high-income peo-

ple. Analyses also showed that, after controlling for eco-

nomic development and other country-level factors,

corruption was negatively related to a country’s feelings of

happiness. These findings suggest that feelings of sub-

jective well-being may lead to more ethical, less corrupt

behavior and that the tolerance of unethical, corrupt

behavior may lead to less collective happiness and sub-

jective well-being.

Keywords Ethics � Emotions � Income � Subjective well-being � Culture � Corruption

The dynamics of interpersonal interaction and economic

exchange create many ethical decisions for individuals,

organizations, societies, and countries. Each ethical choice

presents decision makers with a challenge, as maintaining

high ethical standards can be difficult for individuals as

well as for organizations, societies, countries, and their

representatives. Research has investigated a host of indi-

vidual and contextual factors that affect and are related to

ethical decisions, including (but not limited to) rewards and

sanctions (Flannery and May 2000; Hegarty and Sims

1978), codes of ethics (Weaver et al. 1999), the moral

intensity of the situation (Jones 1991), moral philosophies

(e.g., Cyriac and Dharmaraj 1994; Hunt and Vasquez-

Parraga 1993), ethical leadership (Brown et al. 2005),

culture (Vitell et al. 1993), gender (Brady and Wheeler

1996; Tyson 1992; Whipple and Swords 1992), age

(Ruegger and King 1992; White and Dooley 1993), and

personality characteristics (Arlow 1991).

In this article, we investigate how two fundamental

economic and psychological factors, income and subjective

well-being, relate to people’s ethical perceptions across

different countries and different cultures. These two factors

influence individuals’ everyday lives; they also reflect the

economic and psychological health of entire countries, as a

country’s social, economic, and political environments can

seriously influence people’s feelings of psychological well-

being. Both factors may also be critical in the context of

ethical decision making because right-versus-wrong deci-

sions (Warren and Smith-Crowe 2008) often pit an indi-

vidual’s self-interest against the interests of the other

members of a group or a society (e.g., Turiel 1983). Because

income and subjective well-being represent two broad but

fundamental elements of individuals’ self-interest, this

research investigates their effects on people’s ethical stan-

dards and moral judgments. Understanding the potentially

L. Wang

Department of Management, City University of Hong Kong,

Kowloon, Hong Kong

e-mail: [email protected]

J. K. Murnighan (&) Kellogg School of Management, Northwestern University,

Evanston, IL, USA

e-mail: [email protected]

123

J Bus Ethics (2014) 125:163–176

DOI 10.1007/s10551-013-1914-9

complicated interplay of these broadly important personal

variables provides an opportunity to understand some of the

critical macro and micro influences on ethical behavior.

Current theories of ethical decision making, including

both rationalist (e.g., Kohlberg 1969; Rest 1979) and

intuitionist models (e.g., Haidt 2001), provide little insight

into the potential for people’s income and subjective well-

being to interact with other rational or intuitive factors to

influence their moral decisions. Previous empirical

research has, however, investigated several related issues.

Tang and Chiu’s (2003) survey of 211 white-collar Chinese

employees in Hong Kong, for instance, found that the love

of money was related to a (self-reported) willingness to

engage in unethical behavior but income was not. They

also found that love of money was negatively related to pay

satisfaction, which was, in turn, negatively related to a

person’s willingness to engage in unethical behavior. They

concluded that ‘‘the love of money is the root of evil, but

money is not’’ (Tang and Chiu 2003, p. 13).

Thus, this article expands the investigation of the rela-

tionship between monetary income and feelings of sub-

jective well-being by examining their relationships with

people’s ethical judgments and perceptions in different

countries. In doing so, we address the basic theoretical

question of how economic and psychological well-being,

two critical aspects of everyday life, relate to people’s eth-

ical judgments and behavior. On the one hand, theories of

individual needs (e.g., Maslow 1954) and of intrinsic moti-

vation (e.g., Frey and Jegen 2001) seem to make different

predictions about the effects of income on people’s ethical

judgments, with the former suggesting a negative relation-

ship between increased income and unethical behavior and

the latter suggesting a positive relationship. On the other

hand, research on positive affect (e.g., Isen et al. 1988)

suggests that feelings of subjective well-being will be pos-

itively related to ethical behavior because ethical action can

help individuals maintain a sense of personal happiness.

These observations imply that an investigation of the rela-

tionships between income, subjective well-being, and peo-

ple’s ethical judgments and perceptions, and even a

country’s general level of corruption and its people’s overall

happiness, could be both revealing and important. Thus, we

analyzed a rich data set of 27,762 working professionals

from 27 countries as well as a separate data set of country-

level data from 55 countries in hopes of contributing to and

enriching current theories of business ethics, social psy-

chology, and organizational behavior.

Background

Kohlberg’s (1969) seminal theory of cognitive moral

development focuses on an individual’s moral reasoning

abilities as the prime determinant of their moral develop-

ment. More recent rationalist models (e.g., Trevino 1986;

Jones 1991) have considered a variety of personal and

contextual factors as additional causal forces but they have

not included an analysis of the impact of income and

subjective well-being on moral decision making. In con-

trast, intuitionist models (Haidt 2001) and recent neuro-

logical research (Greene et al. 2001) suggest that reason

and ethics cannot be understood without understanding the

role of moral intuitions and emotions because emotions are

‘‘the highest-order direct expressions of bioregulation in

complex organisms’’ (Damasio 1998, p. 84). A focus on

strong and immediate moral emotions, however, including

disgust, anger, and contempt (Haidt 2001; Hutcherson and

Gross 2011) also leaves little room for a consideration of

the effects of subjective well-being and income. Research

on motivation, needs, positive affect, and justice and fair-

ness, in contrast, provides a variety of insights on these

issues, not only for individuals but also for cultures and

countries.

Economic Versus Psychological Needs

Need theorists note that, although economic prosperity can

satisfy many basic needs, income cannot satisfy all of a

person’s needs, especially internal and higher-order needs.

Maslow’s (1954) classic hierarchy of needs, for example,

suggests that the satisfaction of a person’s external and

economic needs can lead to increased internal needs, e.g.,

esteem and self-actualization. These higher-order psycho-

logical needs are closely related to and consistent with

personal values and beliefs rather than materialistic gains.

Self-actualization, for instance, helps an individual dis-

cover the self by answering basic questions such as ‘‘Who

am I?’’ and ‘‘What am I?’’ (Maslow 1968). These funda-

mental questions connect to a person’s internal needs and

values rather than their materialistic needs. Similarly,

Herzberg (1966) suggested that monetary income can only

fulfill people’s lower-order needs. Also, because increases

in income lead to diminishing marginal utility (Brandstätter

and Brandstätter 1996), economic success alone may not be

able to satisfy people’s higher-order psychological needs

(Inglehart 1997), especially after they have reached basic

economic thresholds (Diener and Oishi 2000). Given

money’s many different meanings (Furnham and Argyle

1998), however, monetary income continues to serve as a

basic human motivator (Mitra et al. 1997).

Moral values and ethical standards also represent a

critical, essential part of self-image (Aquino and Reed

2002). A person’s moral self is a central factor, for

instance, in a major self-concept measure, the Tennessee

Self-Concept scale (Roid and Fitts 1988). Unethical

behaviors, in contrast, are often related to the pursuit of

164 L. Wang, J. K. Murnighan

123

self-interest, especially economic and materialistic self-

interest. The temptation to engage in unethical action, for

instance, can be particularly strong when people are

struggling to obtain economic necessities and must focus

on their own welfare rather than the needs of others.

Limited resources can also increase stress and strain in

individuals’ daily lives (Gallo et al. 2005) and more vio-

lence in their homes (Staggs et al. 2007). Thus, poor eco-

nomic conditions can lead to social and ethical problems,

and these issues can become more serious when a person’s

economic needs conflict with others’. After basic economic

needs are met, however, other internal, psychological needs

can become more important, with people focusing more on

intrinsic motivation and, concomitantly, creating an ethical

sense of self. Maslow (1971) suggested, for instance, that

people who have self-actualized will be altruists. Thus,

because economic needs diminish as income increases,

people should act more ethically as their income increases:

H1a Higher income will be associated with less approval

of unethical behaviors.

Money, Motivation, and Crowding Out

Although money 1

is central to economic transactions

(Weber 1922/1978; Simmel 1900/1978), it is often viewed

as orthogonal or even opposed to sacred human values. In

his critique of the dehumanizing effect of money, for

example, Marx (1964) argued that money could reduce

human values into marketable commodities. Similarly,

Blau (1967, p. 63) noted that ‘‘by supplying goods that

moral standards define as invaluable for a price in the

market, individuals prostitute themselves and destroy the

central value of what they have to offer.’’

Psychological and economic models which focus on the

potential conflict among different motivations (Frey and

Jegen 2001; Deci and Ryan 1985) suggest that extrinsic

(monetary) motivations can lead to reduced rather than

increased effort and performance. Deci and Ryan’s (1985,

1991) self-determination theory, for instance, posits that

individuals who fulfill their needs for competency, relat-

edness, and autonomy can establish a coherent sense of self

(psychological integration), which in turn provides

increased intrinsic motivation and personal growth, and

leads them to contribute more to their communities. Failure

to meet these intrinsic, psychological needs, in contrast,

often leads to increased extrinsic aspirations, e.g., eco-

nomic needs, that crowd-out intrinsic motivations.

This kind of crowding out may be particularly prevalent

in the social and moral domain. Titmuss (1970), for

instance, suggested that paying for blood would reduce

donations because money undermines respected social

values. Similarly, Fehr and Gächter (2002) found that

incentive contracts crowded-out voluntary cooperation, and

Frey and Oberholzer-Gee (1997) found that offering

monetary compensation reduced people’s sense of civic

virtues, i.e., it led to more people voting against accepting

a community-threatening nuclear waste repository rather

than for it. More recently, Vohs et al. (2006, 2008) have

demonstrated that the mere presence of money led to

increased social distance and self-interest among people

and less sensitivity to others’ needs.

These observations suggest that an increase in monetary

income might crowd out socially oriented motivations.

Also, if wealth leads to increased aspirations, then

increasing income may not lead to increased ethicality;

instead, it may accelerate egocentrism (Piff et al. 2010) as

heightened aspirations often spur a continuing pursuit of

additional wealth to satisfy desires for power and fame, and

to overcome self-doubt (Srivastava et al. 2001). Increases

in monetary outcomes may also encourage a self- rather

than an other-oriented focus. When people acclimate

quickly to their current wealth, as they typically do (Layard

2005; Nettle 2005), they can become obsessed with

materialism and wealth (Richins and Dawson 1992; Ly-

ubomirsky 2011) as they slip into overspending and over-

consumption (Duesenberry 1949; Festinger 1954) and have

difficulty returning to more ascetic styles of consumption.

Unfortunately, the brain systems that control pleasure do

not control desire. Thus, even when one area of the brain

feels pleasure, another area can push people to want to

acquire more (Nettle 2005). Thus, this cycle can continu-

ously reinforce an economic mindset that reifies the virtues

of self-reliance (Rand 1957) and the value-creating

potential of self-interest (Smith 1776/2007) while simul-

taneously turning a blind eye to ethics and other-related

motivations. Thus, as one example, people in higher social

classes tend to be less generous, charitable, and prosocial

because they lack compassion (Piff et al. 2010). This leads

us to

H1b Higher income will be associated with more

approval of unethical behaviors.

Subjective Well-being, Happiness, and Ethics

Research has often demonstrated a positive relationship

between income and feelings of subjective well-being (e.g.,

Larson 1978; Diener and Biswas-Diener 2002), which

include life satisfaction, happiness, and positive affect (Die-

ner 2009), especially for low income people (Biswas-Diener

1 Sociologists (e.g., Zelizer 1994) have also discussed non-economic

aspects of money, e.g., its social and symbolic meanings. In the

current research, we focus on the economic and utilitarian aspects of

money because it is the most common form of income.

Money, Emotions, and Ethics 165

123

and Diener 2002; Diener et al. 2003). Increases in income,

however, have not been causally connected to increased

happiness or subjective well-being (Csikszentmihalyi 1999;

Diener et al. 1999; Lane 2000; Myers 2000) and their rela-

tionship is often exaggerated or illusory (Kahneman et al.

2006). People with great wealth, for example, tend to report

being only slightly happier than poorer people do (Diener

et al. 1985a). Also, winning a lottery does not necessarily lead

to more happiness, even compared to people suffering from

an illness (Brickman et al. 1978). One reason may be that,

although attaining wealth allows people to enjoy the big

things in life, it can also make them less sensitive to the

smaller pleasures of daily life (Quoidbach et al. 2010). As a

result, changes in happiness do not always match economic

trends (Campbell 1981) and personal values for money are

often negatively related to subjective well-being (Kasser and

Ryan 1993, 1996; Richins and Dawson 1992), possibly

because people who value money often pursue insatiable

desires such as power and fame (Srivastava et al. 2001) rather

than focusing on feelings like life satisfaction and internal

happiness (Diener 1994).

In the moral domain, feelings and values are often

intertwined. Because people internalize social and moral

values (Leary 2007), ethical violations tend to activate moral

emotions, such as shame, guilt, and disgust. These moral

emotions are among the most important elements of a per-

son’s moral apparatus (Tangney et al. 2007) because they

connect individuals to others’ interests and to society as a

whole (Haidt 2001) and provide strong disincentives for

unethical behavior (Kroll and Egan 2004). However,

because the emotional pain associated with these moral

emotions is often intense, they can also be associated with

reduced feelings of subjective well-being. Guilt, for

instance, can create strong, long-lasting, negative memories,

well after people act greedily (Wang and Murnighan 2011).

In contrast, when people feel satisfied with their lives,

they often have a strong motive to protect and maintain their

happiness (Isen et al. 1988); they also tend to be more

cooperative and sociable (Isen 1987) and are more likely to

enjoy and benefit from cognitive flexibility (Isen et al.

1987). This suggests that when people experience subjective

well-being, they will be more likely to refrain from unethical

behaviors, for two reasons: first, they have a strong incentive

to avoid negative emotions (Isen and Geva 1988), which

includes avoiding the distastefulness that accompanies

unethical behavior; and second, subjective well-being can

facilitate their ability to go beyond mere self-interest by

considering the multiple perspectives that encompass ethical

choices (Isen et al. 1987; Hermalin and Isen 2008). Thus,

when ethical principles and economic self-interest collide,

people with high subjective well-being may be more aware

of the adverse consequences of unethical action rather than

focusing only on their short-term economic incentives.

H2 Subjective well-being will be negatively associated

with the approval of unethical behavior.

Although the relationship between income and sub-

jective well-being can be complex (Csikszentmihalyi

1999), there is generally a positive correlation between the

two for both individuals and collections of individuals

(countries). Thus, it is not surprising that a nation’s wealth

and its people’s self-reported happiness are often positively

correlated (Inglehart 1990; Diener et al. 1999). A variety of

factors, however, can dampen this relationship. In general,

the relationship between the two seems stronger for low

(Biswas-Diener and Diener 2002; Diener et al. 2003) than

for high-income people probably because income above a

certain level no longer affects basic human needs (Maslow

1968; Veenhoven 1991). Thus, the relationship between

national wealth and happiness is strongest for countries

with per capita GDPs that are less than $8,000 (Myers

2000). This suggests that income may also moderate the

relationship between subjective well-being and the

approval of unethical behavior: for people with low

incomes, who are more likely to view material goods as

instrumental to their happiness, the relationship between

subjective well-being and their approval of unethical

behavior is likely to be muted, with income dominating

their feelings of subjective well-being. In contrast, for

people with high income, the relationship between their

subjective well-being and their approval of unethical

behavior is likely to be stronger because their subjective

well-being no longer depends on increasing income. Thus:

H3 Income will moderate the relationship between sub-

jective well-being and the approval of unethical behavior,

with the two having a stronger relationship for people with

high income.

Reversing the Country Effect on Individuals

So far, our discussion suggests that subjective well-being

will influence individuals’ views of ethical values because

people try to avoid the negative feelings (Isen et al. 1988;

Isen and Geva 1988) that are associated with unethical

behavior—people can feel very badly when they have done

something unethical themselves and experiencing these bad

feelings (e.g., guilt) often leads to a decrease in unethical

behavior (Baumeister et al. 1994; Wang and Murnighan

2011). In contrast, they can also feel badly, and angry, when

they see people from their own country acting unethically.

Thus, people are often annoyed not only by their own

unethical behavior but also by other people’s unethical

behavior—particularly when either the individuals or their

actions are prominent (Schelling 1960). Goodpaster (1982)

also suggests that behavior in work organizations can and

should be targeted to foster a morally positive environment.

166 L. Wang, J. K. Murnighan

123

These ideas suggest that the ethical environment in organi-

zations, societies, and countries can and will affect indi-

viduals’ feelings of subjective well-being. The spillover of

these bad feelings can occur quickly and frequently (Schulz

et al. 2004), leading to broader emotional contagions (Hat-

field et al. 1994). Thus, in addition to individual subjective

well-being, we also investigate the relationship between

collective unethical action, in this case a country’s general

level of corruption, and people’s feelings of subjective well-

being within their country.

Corruption is neither new (Bardhan 1997) nor rare

(Shleifer and Vishny 1993); it provides a potent and per-

vasive signal of the ethical tenor of a country, and has been

measured at the country level by the World Bank’s cor-

ruption index. Corruption often allocates public assets to

unethical individuals, redistributing benefits from the

general population to people in positions of authority (El-

liott 1997). Bribery, for instance, can undermine market

efficiency and deprive people of fairness, justice, and the

opportunity to pursue a standard of living that their efforts

and accomplishments deserve (Donaldson 1996).

The role of emotions can be quite pervasive in politics

(Marcus 2003). Because corruption typically benefits the

unethical and advantaged minority at the expense of the

disadvantaged majority, we suggest that it can generate

extreme perceptions of injustice (Miller 2001), grievances

and anger (Clayton 1992; Mikula 1986; Pillutla and

Murnighan 1996; Solomon 1990), and retaliation (Bies

et al. 1997; Lind and Tyler 1988; Tyler 1994). Thus, cor-

ruption can not only hurt people economically, especially

in developing economies (Bayley 1966), it can also create

unjust, unfair perceptions that result in angry, spiteful,

cynical, and/or fatalistic actions within a society. Although

the economic consequences of corruption have been well-

documented, its emotional effects deserve further investi-

gation. Thus, our analyses focus on the emotional and

affective consequences of a country’s corruption on its

people’s feelings of subjective well-being. We suggest and

test whether a country’s level of corruption will be posi-

tively related to its people’s experience of negative emo-

tions, significantly reducing their feelings of happiness:

H4 A country’s corruption level will be negatively rela-

ted to its people’s collective happiness.

Methods

Because our research investigates income, subjective well-

being, and ethical issues for both individuals and countries,

we used two different samples. Sample 1’s multi-level data

is relevant to Hypotheses 1–3; Sample 2’s country-level

data is relevant to Hypothesis 4.

Sample 1: Income, Subjective Well-being, and Ethics

Sample 1 includes individual data from the 2005–2006

World Values Survey (WVS) and cultural data from Hof-

stede (2001)’s national cultural scores. We selected man-

agers/employers and professionals (e.g., lawyers,

accountants, etc.) instead of the national probability sam-

ples that World Values Group originally drew. Because

data for some of our measures for some countries were

incomplete, the final sample included 27,762 people from

27 of the WVS’s 43 countries: Australia, Brazil, Bulgaria,

Canada, Chile, China, Ethiopia, Finland, Germany, Ghana,

India, Indonesia, Italy, Japan, Malaysia, Mexico, Norway,

Poland, Romania, South Africa, South Korea, Spain,

Sweden, Switzerland, Thailand, Turkey, and Uruguay.

Respondents averaged 43.8 years of age; 50.8 % were

females; and 24 % had completed university-level educa-

tion. Thus, the age and gender composition of the entire

sample is quite representative of the world population;

educational levels provided more variety across countries.

Our final analyses also included several country-level

variables as controls.

Independent Variables

Income People self-reported their income by responding to

a 1–10 scale based on each country’s income deciles. Thus,

this is a measure of respondents’ relative income within

their country.

Subjective Well-being As in previous research (see

Diener et al. 2003, for a review), subjective well-being was

measured by a single broad survey question 2

which asked,

‘‘All things considered, how satisfied do you feel about

your life as a whole.’’ Responses were on 10-point scales

from 1 = completely dissatisfied to 10 = completely

satisfied.

Dependent Variable: Approval of Unethical Behavior

Like previous research (Cullen et al. 2004), the WVS used

a four-item scale that measured the approval of unethical

behavior. The items asked whether four behaviors could be

justified: (1) ‘‘claiming government benefits to which you

are not entitled;’’ (2) ‘‘avoiding a fare on public transport;’’

(3) ‘‘cheating on taxes if have a chance;’’ and (4)

‘‘accepting a bribe in the course of your duties.’’ The items

used 10-point scales, from 1 = never to 10 = always jus-

tifiable. The scale was reliable (a = 0.80), indicating

2 To test the validity of this measure, we also used another single-

item measure of overall happiness in our analysis. Because the other

question was on a 1–4 scale, we could not easily combine it with our

subjective well-being item to reliably form a single factor, even after

performing several different scale transformations (e.g., Taras et al.

2012). Analysis of this other measure also led to similar overall

results as those reported above.

Money, Emotions, and Ethics 167

123

consistent perceptions across countries (Husted et al. 1996;

Cullen et al. 2004).

Control Variables Other personal and environmental

factors such as demographic characteristics and a country’s

economic development, ethical environment, and national

culture (Martin et al. 2007; Vitell et al. 1993) might also

affect judgments and perceptions of unethical behavior.

Our intention was to determine the additional effects of

subjective well-being and income, over and above these

potential effects. Thus, our analyses controlled for the

respondent’s age, gender, and education level, marital

status, and religious and charitable activity. We also con-

trolled for their country’s: GDP per capita 3

data from the

online database of the World Bank, log-transformed to

approximate a normal distribution; The World Bank Global

Competitiveness Report’s (Kaufmann 2004) ethics index

for each country; and Hofstede’s (2001) four cultural

dimensions—individualism, power distance, uncertainty

avoidance, and masculinity—to control for other culturally

based, value-oriented differences (Vitell et al. 1993); the

Freedom House’s measure of press freedom (Brunetti and

Weder 2003); and the Gini coefficient to control for income

and social inequality (Yitzhaki 1979). Again, it is clear that

any of these factors may be related to ethical behavior on

their own; our purpose in this research was to go beyond

these factors to discover new and important relationships

between economic and psychological influences on ethical

behavior.

As in previous research (Hofstede 1980), our final

analyses of the Sample 1 data excluded power distance

because of the extremely high multicollinearity it created:

it was highly correlated with individualism (r = -0.80,

p \ 0.01) and the public ethics index (r = -0.75, p \ 0.01). Although individualism was also highly corre- lated with public ethics (r = 0.64, p \ 0.01) and GDP per capita (r = 0.60, p \ 0.01), we kept it in our final analyses as it is a particularly important conceptual, cultural vari-

able. It is important to note that including or excluding all

of these variables in our analyses did not materially change

the results.

Sample 2: Country Corruption and Happiness

Sample 1 focused on individuals to test Hypotheses 1, 2,

and 3. In contrast, Sample 2 investigated the relationship

between a country’s level of corruption and its people’s

happiness (Hypothesis 4). We collected data from 105

countries using several sources, described below. Because

of the missing data for some of the variables, we conducted

the final regression analysis with a sample of 55 countries

that had complete data. Samples 1 and 2 focus on similar

issues, but at decidedly different levels of analysis. The

logic behind all four hypotheses, however, is consistent

across individuals and countries. Thus, we expected that

people would display their feelings individually and, via

aggregation, collectively, and that individuals and groups

of people who have positive feelings of subjective well-

being would react negatively to both individual- and

country-level unethical behavior. The variables and data

resources for Sample 2 included

Independent Variable The major independent variable

was a country’s level of corruption. We used the public

ethics index of the World Bank’s Global Competitiveness

Report (Kaufmann 2004), which reports six highly corre-

lated Corporate Corruption/Ethics Indices. We chose the

public ethics index because perceptions of public ethics are

closest to people’s everyday lives; higher values on this

index indicated more ethical standards. This measure was

highly correlated with other corruption measures (e.g., with

the corruption perception index from Transparency Inter-

national, r = 0.92, p \ 0.01, and with the World Bank’s control of corruption indicator, r = 0.91, p \ 0.01).

Dependent Variable Our primary dependent variable in

Sample 2, country-level happiness, was collected from the

World Database of Happiness (Veenhoven 2004), which

produces happiness scores for 212 countries and regions.

We collected the data for 2004 to make it consistent with

the data for our major independent variable. When a

country’s data was not available for 2004, we used the data

from the most proximate year. It is also possible that an

increase in corruption and other undesirable social factors

over a particular time span led to decreases in people’s

subsequent happiness. Thus, we also collected and ana-

lyzed lagged happiness data (in 2 and 3 years). Although

the pattern of the correlations did not change, multicol-

linearity problems among some of the variables increased.

Thus, we restricted the happiness data to the same year as

the other variables.

Control Variables To control for other country-level

effects, we also included data from 2004 for:

Gross Domestic Product (GDP) Per capita, a measure of

a country’s economic development, drawn from the World

Bank economic development database. We did not include

GDP per capita in our final analyses because it was highly

correlated with the public corruption index (r = 0.82,

p \ 0.001), and life expectancy (r = 0.64, p \ 0.001). Controlling it in our analyses, however, led to similar

results.

Life Expectancy The health of a country’s people can

also affect their happiness. We used life expectancy at

birth, from the United Nations Population Division.

Although life expectancy was highly correlated with public

3 Although GDP per capita was highly correlated with public ethics

and individualism, including or excluding it from our analyses led to

similar results.

168 L. Wang, J. K. Murnighan

123

ethics (r = 0.60, p \ 0.01), including or excluding it did not affect our results.

Tax revenue Percentage Government intervention,

especially in support of social welfare, might also affect

people’s subjective well-being. We controlled for a gov-

ernment’s tax revenues, i.e., compulsory transfers to the

central government for public purposes, as a percentage of

GDP, using data from the Government Finance Statistics

Yearbook and the International Monetary Fund (IMF).

Because the correlation between tax revenue percentage

and public ethics was high (r = 0.62, p \ 0.01), we also analyzed the data by including and excluding this control

variable; the results remained the same.

The Environment Because environmental factors can

affect people’s health and subjective well-being, we also

used air pollution data as a control for environmental

variance. We collected the data of Nitrogen Oxides

Emissions (NOx) per capita from the United Nation sta-

tistical data set (UNSD/UNEP 2004 Questionnaire on

Environmental Statistics).

Literacy Rate and Population We also attempted to

control for literacy rate and population. The final analyses

included neither variable, however, because of extremely

high multicollinearity problems. Including them did not

materially change our results.

Analyses

We used Hierarchical Linear Modeling (HLM; Raudenbush

and Bryk 2002) to analyze Sample 1’s data because the

dependent variable was measured at the individual level but

the independent and control variables were measured at the

individual and country levels (ethics index, GDP, country

cultures). To test the model and control for the influence of

individual-level variables, we centered the level-1 variables

at the group mean (Hofmann and Gavin 1998). We also

estimated a multiple regression model to evaluate the vari-

ables’ multiple collinearity diagnostics. To test for the

interaction effects of income 9 subjective well-being, we

created an interaction term after centering the variables. To

avoid any spurious effects, we tested the robustness of our

results with and without the control variables.

Because all of Sample 2’s variables were measured at

the country level, we used OLS regression for the analyses.

Because the relationship between country-level happiness

and national wealth might not be linear, we also tested a

quadratic regression model: the results remained the same.

Results

Income and subjective well-being were both related to

people’s approval of unethical action, but in markedly

different ways. Income was positively related to their

approval of unethical behaviors, supporting Hypothesis 1b

rather than 1a. In contrast, subjective well-being was

negatively related to people’s approval of unethical

behaviors, supporting Hypothesis 2. There was also a sig-

nificant interaction between income and subjective well-

being, supporting Hypothesis 3 and suggesting that the

negative relationship between subjective well-being and

approval of unethical behavior was stronger for people

with higher incomes. Like previous research, individualism

was negatively related to the approval of unethical

behavior. Finally, after controlling for economic develop-

ment and other country-level factors, a country’s level of

corruption and its people’s subjective well-being were

negatively related in Sample 2, supporting Hypothesis 4.

Tables 1 and 2 display the correlation tables for Samples

1 and 2, respectively; Tables 3 and 4 report the HLM and

OLS regression results. Model 1 of the HLM analyses for

Sample 1 included only the control variables, for individuals

and for countries. Model 2 added income, subjective well-

being, and individualism. As noted, the relationship between

income and people’s approval of unethical behaviors was

positive and marginally significant (c = 0.02, p \ 0.10): higher income was associated with more rather than less

approval of unethical behaviors, partially supporting H1b

rather than H1a. Also as noted, the relationship between

subjective well-being and people’s approval of unethical

behaviors was negative and significant (c = -0.04, p \ 0.001): higher subjective well-being was related to less approval of unethical behaviors, supporting H2. Thus,

although the correlation between income and subjective

well-being was positive and significant (r = 0.21,

p \ 0.001), replicating previous findings, these two vari- ables were related in opposite ways to people’s ethical

judgments and perceptions.

Model 3 added the income 9 subjective well-being

interaction. The interaction between income 9 subjective

well-being was negative and significant (c = -0.01, p \ 0.01). Figure 1 depicts the interaction, showing that the relationship between subjective well-being and the

approval of unethical behavior was stronger for higher-

income people. In particular, high-income people who had

high subjective well-being approved of unethical behavior

the least and high-income people who had low subjective

well-being approved of unethical behavior the most. Sim-

ple slope analyses (Aiken and West 1993) using values for

income that were one standard deviation above and below

the mean further supported Hypothesis 3, as the negative

relationship between subjective well-being and the

approval of unethical behavior remained significant for

higher-income people (b = -0.07, p \ 0.001) but was only marginally significant for lower-income people

(b = -0.009, p = 0.101).

Money, Emotions, and Ethics 169

123

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170 L. Wang, J. K. Murnighan

123

Table 4 reports the OLS regression 4

results for Sample

2. Model 1, the baseline model, included only the control

variables. Adding the public ethics index in Model 2

improved the baseline model significantly (R 2

change = 0.09, p = 0.0015). As predicted, the relationship

between public ethics and individual happiness was posi-

tive and significant (b = 0.49, p \ 0.05). Thus, at the country level, corruption was negatively related to people’s

happiness, supporting H4. As noted, we did not include

GDP per capita in our final analyses, but it was not sig-

nificantly related to people’s happiness in either model.

Table 4 Standardized beta coefficients from a regression analysis of the effects of public ethics on collective happiness

Variable Model 1 Model 2

Life expectancy 0.37* (0.01) 0.14 (0.02)

NOx emission per capita 0.14 (0.00) 0.00 (0.02)

Tax revenue percentage 0.09 (0.02) -0.07 (0.02)

Public ethics index 0.48* (0.01)

Overall model R 2

0.19 0.29

Adjusted R 2

0.15 0.23

DR2 0.09

Overall model F 4.08* 4.98**

N 55 55

** p \ 0.01; * p \ 0.05; � p \ 0.10

Table 2 Correlations and summary statistics; N = 105 countries

Mean SD 1 2 3 4 5

1 Happiness 6.80 0.79 –

2 Life expectancy 69.44 12.72 0.40** –

3 NOx emission per

capita

40.01 163.42 0.14 -.07

4 Tax revenue percentage 17.56 6.05 0.29* 0.40** 0.31*

5 Public ethics 41.00 24.51 0.52** 0.60** 0.36* 0.62** –

Table 3 Hierarchical linear models for the approval of unethical behaviors

Variable Model 1 Model 2 Model 3

Coefficient SE Coefficient SE Coefficient SE

Level 1

Age -0.01*** 0.00 -0.01*** 0.00 -0.01*** 0.00

Gender -0.10*** 0.03 -0.10*** 0.03 -0.10*** 0.03

Education level -0.04*** 0.01 -0.05*** 0.01 -0.05*** 0.01

Marital status -0.07** 0.03 -0.09*** 0.03 -0.09** 0.03

Religious organization membership -0.06** 0.02 -0.05** 0.02 -0.06** 0.02

Humanitarian/charitable organization membership 0.01 0.03 0.01 0.02 0.02 0.03

Income 0.02 �

0.01 0.02* 0.01

Subjective well-being -0.04*** 0.01 -0.04*** 0.01

Income 9 subjective well-being -0.01*** 0.00

Level 2

GDP per capita 0.04 0.08 0.04 0.08 0.04 0.05

Press freedom -0.00 0.01 -0.00 0.01 0.00 0.01

Income and social inequality 0.03*** 0.01 0.03*** 0.01 0.03*** 0.01

Country’s public ethics -0.00 0.01 -0.00 0.00 -0.01 0.00

Individualism -0.01 0.01 -0.01 0.01 -0.01 0.01

Uncertainty avoidance -0.00 0.01 -0.00 0.01 -0.00 0.00

Masculinity -0.01 0.00 -0.00 0.00 -0.01 0.00

*** p \ 0.001; ** p \ 0.01; * p \ 0.05; � p \ 0.10

4 The results remained the same when we tested a quadratic

regression model using GDP per capita.

Money, Emotions, and Ethics 171

123

Multicollinearity, however, may have distorted these

results. Several simple regression analyses without any

variable that had a correlation [0.40, however, were con- sistent with our overall results, attesting to the data’s

reliability.

Discussion

The world would not only be a better place if everyone

conformed to a common set of ethical standards, it would

also make life eminently easier. Thus, understanding the

correlates of ethics has the potential to provide insights that

could reveal the possibility of host of beneficial interven-

tions. With this in mind, the current research focused on

two central factors in people’s lives—their economic and

their psychological well-being. We used a data set from 27

different countries to investigate the relationship between

these two critical variables and people’s ethical judgments

and perceptions. Thus, our results provide a broad foun-

dation for insights into the correlates of ethical behavior.

Our results were particularly provocative, suggesting that

higher income, on its own, was not related to a desire for

greater ethics; instead, it was positively related to the

approval and tolerance of unethical behaviors. At the same

time, even though there is a positive relationship between

income and feelings of subjective well-being, increases in

people’s subjective well-being were positively related to

ethical behavior: people who felt good about their lives were

less approving of unethical behaviors. A significant

interaction between income and subjective well-being also

suggests that the effects of subjective well-being were par-

ticularly strong for high-income people, who were most

approving of unethical behaviors when they reported feeling

low subjective well-being and least approving of unethical

behaviors when they reported feeling high subjective well-

being. Thus, not only do these findings suggest that sub-

jective and economic well-being have decidedly different

effects on people’s ethical judgments and perceptions (as it

is more difficult to imagine that ethical judgments precede

economic well-being), they also show that their positive

relationship hides some qualitatively different forces. In

addition, our findings suggest that a country’s overall cor-

ruption ratings were associated with reduced collective

happiness. This suggests that the relationship between sub-

jective well-being and ethics is robust and widespread.

These findings have several theoretical and practical

implications. First, if increased ethics is a social goal, these

results clearly suggest that the focus should be on improving

subjective well-being rather than simply economic well-

being (e.g., Larson 1978; Diener and Biswas-Diener 2002).

These results also suggest that economic and subjective well-

being may have markedly different effects on other dimen-

sions of individuals’ lives. Although both can lead to a better

life, the intrinsic values and ideologies behind them may

conflict with one other in the domain of ethics and morality.

Second, our findings identify new connections to ethical

judgments and perceptions, i.e., subjective well-being and

positive affect, across multiple countries and cultures.

Social intuitionist models (Haidt 2001) suggest that ethical

dilemmas produce immediate intuitions accompanied by

strong moral emotions (e.g., shame, guilt, and disgust) that

generate quick moral judgments (Tangney et al. 2007). In

contrast, our findings are consistent with the effects of

more positive, less intense emotions, like gratitude

(McCullough et al. 2001) and elevation (Haidt 2000) that

may be more directly connected to subjective well-being.

This suggests that subjective well-being has a potent,

positive influence on people’s ethical judgments and per-

ceptions, possibly because people typically try to avoid

unethical behaviors that stimulate emotional suffering and

reduce happiness. The broad scale of the data sets in our

analyses also suggests that this effect holds for profes-

sionals working in many different countries and cultures. If

this effect is causal, which our data cannot ascertain, it also

suggests that, to establish strong ethics in business, espe-

cially internationally, organizations may need to focus on

their employees’ subjective well-being rather than only

their income (Gaudine and Thorne 2001). From this per-

spective, a happy workplace may not only create a high

performance environment (Staw and Barsade 1993), it

might also encourage strong ethical and professional

standards. Thus, in practice, many of the ‘best companies

Fig. 1 The effects of high and low income on the relationship between subjective well-being and the approval of unethical behavior

172 L. Wang, J. K. Murnighan

123

to work for’ seem to have already adopted the right

approach to motivate their workforce.

Third, this study expands our understanding of corrup-

tion’s potential effects beyond its economic consequences,

e.g., misgovernance (Banerjee 1997), reduced investments

(Mauro 1995), income inequality (Gupta et al. 1998), and

distortion in resource allocations (e.g., Elliott 1997; Tanzi

1999). The current findings suggest that corruption can also

have noticeable, and potentially contagious emotional

consequences, reducing people’s feelings of happiness

even after controlling for important economic and other

social factors. This also suggests that economic develop-

ment may not be the strongest force behind happiness,

particularly because societal increases in income do not

always result in increased societal happiness (Easterlin

1994). In contrast, the negative emotions associated with

corruption, often resulting from unfairness and injustice,

may play a more important role. Thus, if these data could

provide causal conclusions—and we recognize that this is a

very large ‘if’—these two studies would tentatively suggest

that societies and individuals who work toward improving

general feelings of subjective well-being might also be able

to reduce corruption and the tolerance and possibly even

the incidence of unethical behavior.

Finally, these findings add to our understanding about

people’s basic goals in life. As Maslow (1954) noted, long

ago, people who have fulfilled their basic needs look for

something more. In this study, high-income earners who were

not subjectively happy seemed to be far from the self-actu-

alizing ideal; instead, they were the segment in our sample

that approved of unethical behavior more than any other. In

contrast, high-income earners who were subjectively happy

were our strongest disapprovers of unethical behavior: they

seemed to fit Maslow’s self-actualizing ideal. Thus, the

interactions in our data support a major push to help people

experience subjective well-being, but they also suggest that

this will be even more effective as incomes also increase.

Limitations and Future Directions

The current research’s limitations also provide important

new directions for future research. First, because we were

constrained by the WVS’s data set, our measures of income

and subjective well-being were based on self-reports, often

using single items, and our income measure assessed rel-

ative standing rather than real monetary income. If these

self-reported measures are biased (Weingart 1997), our

findings may not have captured all of the complexity of the

relationships among economic well-being, subjective well-

being, and ethics. In particular, future research would

benefit from more objective income measures to check the

reliability and validity of our results. Although single-item

measures of subjective well-being are not uncommon and,

in other research, are reasonably reliable (e.g., Kammann

and Flett 1983; Krueger and Schkade 2008), multiple-item

measures would provide more reliable data (Krueger and

Schkade 2008). Thus, future research might use measures

like the Satisfaction with Life Scale (SWLS, Diener et al.

1985b) or the Day Reconstruction Method (DRM; Kahn-

eman et al. 2004) to replicate and corroborate our results.

Second, the inherent limitations of archival data do not

allow us to test the specific psychological mechanisms that

we have suggested; nor do they allow for clear causal

conclusions. Thus, although our data demonstrated strong

effects for subjective and economic well-being, we cannot

clearly specify their underlying mechanisms. For example,

the negative correlation between corruption and happiness

may have been triggered by anger, a frequent and natural

result of unfair, unjust treatment. Future research that tests

these effects directly might provide more information

about their underlying dynamics.

Conclusions

This research documents a series of important and some-

what unexpected relationships between subjective and

economic well-being on people’s ethical judgments across

many different cultures and countries: although these two

aspects of well-being are often positively related to each

other (as they were here), subjective well-being seems to

be more strongly related to ethical behavior than economic

well-being is. Thus, psychological motivators like emo-

tions serve as particularly strong drivers of ethical judg-

ments; a strong negative relationship between corruption

and happiness adds to this conclusion.

Economic and subjective well-being are among the most

important aspects of a person’s daily life. This research,

however, suggests that the long-desired pursuit of wealth

may not be effective in fostering ethical environments and

societies; in fact, without feelings of subjective well-being,

its achievements might even be ethically detrimental. Thus,

these findings provide clear suggestions for maintaining a

healthy balance between the two, particularly with regard

to ethical standards, in the workplace and in everyday life.

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