Our article reviews empirical work that claims to provide evidence for the psychological benefits and effects of engaging with literature. Psychological research has considerable potential for addressing the limitations of traditional reader-response theories, especially if such research is conducted in an interdisciplinary context where literary scholars can actively shape the experimental setup. In the first part of the article we consider the work carried out in this connection by psychologist Keith Oatley and literary scholar Frank Hakemulder, calling attention to a number of important issues that, in our view, haven't been adequately addressed in their empirical studies. In the second part we turn to our more positive arguments, suggesting that the investigation of the psychological effects of reading cannot abstract from phenomenological data based on readers’ own self-reports. Building on philosophical and psychological views of the self as a narrative construction, we argue that the analysis of readers' life stories may offer important insights into how literary reading can have an impact on readers. The descriptive, qualitative, phenomenological route is less fraught with presuppositions and normative assumptions than Oatley's and Hakemulder's approaches, and deserves being taken into serious consideration.