Profiles of Happy Consumers in a Developing Country, The Case of Ecuador

The idea that not all types of consumption benefit well-being is not new. However, its recent formalization within the framework of the behavioral and social sciences has led to a rapid expansion of knowledge about the goods that are most effective in increasing happiness. Most evidence has been obtained from the developed world and with a focus on broad categories that ignore meaningful heterogeneities. This paper contributes to this domain by conducting a detailed analysis of the relationship that happiness has with a variety of market goods and with aggregate measures of purchasing power. We do this using the data of Ecuador, a country characterized by a relational-oriented culture, high collectivist values, structural inequalities, and weak political institutions. Throughout the paper, we tested various hypotheses related to this particular context. The results show that consumption is superior to income as a predictor of happiness. Higher levels of happiness can also be seen among people who spend more on relational and time-saving goods; less on health and alcohol; and own a good quality of dwelling. As for basic goods, some seem beneficial in the whole sample analysis, but they exhibit a stronger relationship with happiness among the poor. Additionally, we find that, in most cases, public goods as well as paying taxes correlate negatively with happiness. Moreover, we identify some heterogeneities that shed light on the behavior of the poor and that reflect unequal distribution of household tasks.