Matthew J. Monnot, PhD

Marginal Utility and Economic Development: Intrinsic Versus Extrinsic Aspirations and Subjective Well-Being Among Chinese Employees (2017)

Author: Matthew J. Monnot
Journal: Social Indicators Research, 132(1), 155–185
DOI: 10.1007/s11205-015-1153-9

1 · TL;DR

This paper examines how intrinsic versus extrinsic aspirations relate to subjective well-being among Chinese employees as income rises.

Key points:

  • Income shows diminishing marginal utility for happiness: initial gains matter more than later ones.
  • Employees oriented toward intrinsic aspirations (growth, relationships, contribution) report higher well-being across income levels.
  • Strong materialistic orientation weakens the happiness returns of additional income.

2 · Methodology (Technical)

  • Design: Cross-sectional survey of employees in China.
  • Sample: Employees across a range of industries and income levels (national sample).
  • Measures:
    • Aspirations and goal content (intrinsic vs extrinsic), aligned with Goal Contents Theory.
    • Subjective well-being indicators (life satisfaction and related measures).
    • Income and demographic covariates.
  • Analyses:
    • Regression models examining linear and curvilinear (e.g., quadratic) relationships between income and well-being.
    • Interaction terms to test whether intrinsic vs extrinsic goals moderate the marginal utility of income.¹

3 · Methods in Plain English

Employees reported:

  • How important different goals are to them (personal growth, relationships, community vs money, status).
  • How satisfied they are with their life and circumstances.
  • Their income level.

The analysis checked:

  1. Whether income “buys” less extra happiness at higher levels than at lower levels (diminishing marginal utility).
  2. Whether that pattern looks different for people with intrinsic versus extrinsic goal orientations.

4 · Key Findings & Nuances

  • Replicates the classic finding that income has a non-linear relationship with well-being.
  • Demonstrates that employees who place greater emphasis on intrinsic aspirations:
    • Report higher well-being overall,
    • Show less dependence on continued income growth for satisfaction.
  • In contrast, strong extrinsic/materialist aspirations are associated with:
    • Lower well-being,
    • Stronger sensitivity to income differences and comparisons.

These results prefigure the later cross-national work with Beehr, highlighting how goal content shapes the experience of economic development at the individual level.

5 · Implementation Ideas

For Organizations in Rapidly Developing Contexts

  • Recognize that pay increases alone will not sustain engagement and well-being as economies mature.
  • Build people strategies that:
    • Highlight growth, mastery, and contribution,
    • Support meaningful relationships at work,
    • Avoid signaling that success is only about pay and status.

For People Analytics

  • Include intrinsic/extrinsic aspiration items in engagement or culture surveys.
  • Model interactions between income bands and goal orientation to identify segments at risk of dissatisfaction despite competitive pay.

For Leadership & Coaching

  • Use goal clarification exercises (e.g., self-concordant goal work) to help leaders and employees align career paths with intrinsic motives.
  • Frame promotion decisions and reward structures to reinforce good-life rather than purely goods-life messages.

6 · Endnotes (APA Style)

  1. Monnot, M. J. (2017). Marginal utility and economic development: Intrinsic versus extrinsic aspirations and subjective well-being among Chinese employees. Social Indicators Research, 132(1), 155–185. https://doi.org/10.1007/s11205-015-1153-9
  2. Deci, E. L., & Ryan, R. M. (2000). The “what” and “why” of goal pursuits. Psychological Inquiry, 11(4), 227–268.
  3. Kasser, T. (2002). The high price of materialism. Cambridge, MA: MIT Press.