Not All Leisure Is Created Equal: Income-Induced Constraints on the Enjoyment of Leisure

We demonstrate that higher income enhances the enjoyment individuals derive from leisure. This effect cannot be explained by diminishing marginal utility of leisure time or systematic differences in leisure activities across income groups. Instead, we show that this is largely attributable to cognitive stress – low income constrains the mental bandwidth necessary to enjoy leisure. These findings challenge the view that more leisure time offsets income inequalities. While higher-income individuals have less leisure time available, the leisure they do engage in provides them with greater utility. These findings also have important implications for how we model labour supply. Wage increases may not just increase the marginal cost of leisure, but also enhance the utility it provides. Finally, our research speaks to debates on the role that money plays in happiness. Our findings suggest that the utility-enhancing effect of income is largely due to the role income plays in buying 'restful' leisure.