Report

Money Doesn't Buy Happiness... Or Does It? A Reconsideration Based on the Combined Effects ofWealth, Income and Consumption

Author(s) / Creator(s)

Headey, Bruce
Muffels, Ruud
Wooden, Mark

Abstract / Description

The accepted view among psychologists and economists alike is that economic well-being has a statistically significant but only weak effect on happiness/subjective well-being (SWB). This view is based almost entirely on weak relationships with household income. The paper uses household economic panel data from five countries — Australia, Britain, Germany, Hungary and the Netherlands — to provide a reconsideration of the impact of economic wellbeing on happiness. The main conclusion is that happiness is considerably more affected by economic circumstances than previously believed. In all five countries wealth affects life satisfaction more than income. In the countries for which consumption data are available (Britain and Hungary), non-durable consumption expenditures also prove at least as important to happiness as income. Further, results from panel regression fixed effects models indicate that changes in wealth, income and consumption all produce significant, though not large, changes in satisfaction levels.

Keyword(s)

Verbrauch Wohlstand Einkommen Zufriedenheit Verbrauch Wohlstand Einkommen Zufriedenheit consumption economic well-being income life satisfaction subjective well-being wealth

Persistent Identifier

Date of first publication

2004

Is part of series

Forschungsinstitut zur Zukunft der Arbeit/ Institute for the Study of Labor: IZA Discussion Paper Series;1218

Citation

  • Author(s) / Creator(s)
    Headey, Bruce
  • Author(s) / Creator(s)
    Muffels, Ruud
  • Author(s) / Creator(s)
    Wooden, Mark
  • PsychArchives acquisition timestamp
    2022-11-17T11:02:34Z
  • Made available on
    2008-06-30
  • Made available on
    2015-12-01T10:32:15Z
  • Made available on
    2022-11-17T11:02:34Z
  • Date of first publication
    2004
  • Abstract / Description
    The accepted view among psychologists and economists alike is that economic well-being has a statistically significant but only weak effect on happiness/subjective well-being (SWB). This view is based almost entirely on weak relationships with household income. The paper uses household economic panel data from five countries — Australia, Britain, Germany, Hungary and the Netherlands — to provide a reconsideration of the impact of economic wellbeing on happiness. The main conclusion is that happiness is considerably more affected by economic circumstances than previously believed. In all five countries wealth affects life satisfaction more than income. In the countries for which consumption data are available (Britain and Hungary), non-durable consumption expenditures also prove at least as important to happiness as income. Further, results from panel regression fixed effects models indicate that changes in wealth, income and consumption all produce significant, though not large, changes in satisfaction levels.
    en
  • Persistent Identifier
    https://nbn-resolving.de/urn/resolver.pl?urn:nbn:de:bsz:291-psydok-16751
  • Persistent Identifier
    https://hdl.handle.net/20.500.11780/1140
  • Persistent Identifier
    https://doi.org/10.23668/psycharchives.8948
  • Language of content
    eng
  • Is part of
    IZA Discussion Paper Series No. 1218
  • Is part of series
    Forschungsinstitut zur Zukunft der Arbeit/ Institute for the Study of Labor: IZA Discussion Paper Series;1218
  • Keyword(s)
    Verbrauch
    de
  • Keyword(s)
    Wohlstand
    de
  • Keyword(s)
    Einkommen
    de
  • Keyword(s)
    Zufriedenheit
    de
  • Keyword(s)
    Verbrauch
    de
  • Keyword(s)
    Wohlstand
    de
  • Keyword(s)
    Einkommen
    de
  • Keyword(s)
    Zufriedenheit
    de
  • Keyword(s)
    consumption
    en
  • Keyword(s)
    economic well-being
    en
  • Keyword(s)
    income
    en
  • Keyword(s)
    life satisfaction
    en
  • Keyword(s)
    subjective well-being
    en
  • Keyword(s)
    wealth
    en
  • Dewey Decimal Classification number(s)
    150
  • Title
    Money Doesn't Buy Happiness... Or Does It? A Reconsideration Based on the Combined Effects ofWealth, Income and Consumption
    en
  • DRO type
    report
  • Visible tag(s)
    PsyDok