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Reversing the question: Does happiness affect consumption and savings behavior?

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  • Guven, Cahit

Abstract

This paper attempts to answer an interesting but empirically challenging question: Do changes in well-being (life satisfaction or happiness) lead to changes in consumption and savings behavior? The paper uses regional sunshine as an instrument for personal happiness using the Dutch Household Survey from the Netherlands. Sunshine improves happiness significantly. Instrumenting happiness with sunshine, happier people are found to save more, spend less, and have a lower marginal propensity to consume. Happier people take more time for making decisions and have more control over expenditures; they expect a longer life and (accordingly) seem more concerned about the future than the present; they also expect less inflation in the future.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Psychology.

Volume (Year): 33 (2012)
Issue (Month): 4 ()
Pages: 701-717

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Handle: RePEc:eee:joepsy:v:33:y:2012:i:4:p:701-717

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Web page: http://www.elsevier.com/locate/joep

Related research

Keywords: 3920; Happiness; Savings; Consumption; Weather; Economic behavior;

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References

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Citations

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Cited by:
  1. Vladimir Otrachshenko & Olga Popova, 2012. "Life (Dis)satisfaction and the Decision to Migrate: Evidence from Central and Eastern Europe," CERGE-EI Working Papers wp460, The Center for Economic Research and Graduate Education - Economic Institute, Prague.
  2. Krause, Annabelle, 2013. "Don’t worry, be happy? Happiness and reemployment," Journal of Economic Behavior & Organization, Elsevier, vol. 96(C), pages 1-20.
  3. Jan-Emmanuel De Neve & Ed Diener & Louis Tay & Cody Xuereb, 2013. "The objective benefits of subjective well-being," LSE Research Online Documents on Economics 51669, London School of Economics and Political Science, LSE Library.
  4. Krause, Annabelle, 2012. "Don't Worry, Be Happy? Happiness and Reemployment," IZA Discussion Papers 7107, Institute for the Study of Labor (IZA).
  5. Jan-Emmanuel De Neve & Ed Diener & Louis Tay & Cody Xuereb, 2013. "The Objective Benefits of Subjective Well-Being," CEP Discussion Papers dp1236, Centre for Economic Performance, LSE.
  6. Beja Jr., Edsel L., 2012. "What do happy people choose: rapid economic growth or stable economy?," MPRA Paper 38851, University Library of Munich, Germany.

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