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The Effect of Income and Wealth on Subjective Well-Being in the Context of Different Welfare State Regimes

Author

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  • Miha Dominko

    (Institute for Economic Research)

  • Miroslav Verbič

    (Institute for Economic Research
    University of Ljubljana)

Abstract

In this article, we study the causal effects of two economic standing measures on the subjective well-being of the elderly, as well as the moderating effects of distinct welfare regimes on these relationships. For our analysis, we classify countries into the following welfare regimes: Conservative, Social-democratic, Mediterranean, and Post-socialist. We address the income endogeneity issue by utilizing the panel structure of our data and instrumenting for income. Our findings show that the significance and strength of the effects of both economic standing measures on life satisfaction are moderated by the institutional context or welfare regime type, which we support by providing several robustness checks. Finally, we make a deeper inquiry into the heterogeneity of the countries classified. After controlling for endogeneity, our results indicate that the relationship between economic standing and life satisfaction is mostly driven by individual countries, which suggests caution when studying the effect of economic standing on subjective well-being.

Suggested Citation

  • Miha Dominko & Miroslav Verbič, 2021. "The Effect of Income and Wealth on Subjective Well-Being in the Context of Different Welfare State Regimes," Journal of Happiness Studies, Springer, vol. 22(1), pages 181-206, January.
    • Handle: RePEc:spr:jhappi:v:22:y:2021:i:1:d:10.1007_s10902-020-00225-9
    DOI: 10.1007/s10902-020-00225-9
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    Cited by:

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    2. Hugo Briseño & Guillermo Estefani & Alejandra Núñez-Acosta & Manuel Soto-Pérez, 2022. "Urban Risks and Their Influence on Subjective Well-being Around the World," Journal of Happiness Studies, Springer, vol. 23(4), pages 1617-1636, April.
    3. Xiaozi Gao & Kerry Lee & Kannika Permpoonputtana & Adisak Plitponkarnpim, 2023. "Earning Too Little And Worrying Too Much: The Role Of Income And Financial Worries On Parents’ Well-Being In Hong Kong And Bangkok," Journal of Family and Economic Issues, Springer, vol. 44(3), pages 743-756, September.
    4. Mikael Nordenmark & Bodil J. Landstad & Åsa Tjulin & Stig Vinberg, 2023. "Life Satisfaction among Self-Employed People in Different Welfare Regimes during the COVID-19 Pandemic: Significance of Household Finances and Concerns about Work," IJERPH, MDPI, vol. 20(6), pages 1-13, March.
    5. Mona Ahmadiani & Susana Ferreira & Jacqueline Kessler, 2022. "What Makes People Happy? Evidence from International Data," Journal of Happiness Studies, Springer, vol. 23(5), pages 2083-2111, June.

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    More about this item

    Keywords

    Subjective well-being; Life satisfaction; Income; Wealth; Instrumental variable estimation; Welfare;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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