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Title:Money Doesn?t Buy Happiness ... Or Does It? : A Reconsideration Based on the Combined Effects of Wealth, Income and Consumption PDF Logo
Authors:Headey, Bruce
Muffels, Ruud
Wooden, Mark
Issue Date:2004
Series/Report no.:IZA Discussion paper series 1218
Abstract: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.
Subjects:consumption
economic well-being
income
life satisfaction
subjective wellbeing
wealth
JEL:D19
D31
I31
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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