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Reversing the Question: Does Happiness Affect Consumption and Savings Behavior?

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  • Cahit Guven

Abstract

I examine the impact of happiness on consumption and savings behavior using data from the DNB Household Survey from the Netherlands and the German Socio-Economic Panel. Instrumenting individual happiness with regional sunshine, the results suggest that happier people 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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File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.338514.de/diw_sp0219.pdf
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Bibliographic Info

Paper provided by DIW Berlin, The German Socio-Economic Panel (SOEP) in its series SOEPpapers on Multidisciplinary Panel Data Research with number 219.

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Length: 52 p.
Date of creation: 2009
Date of revision:
Handle: RePEc:diw:diwsop:diw_sp219

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Keywords: happiness; savings; consumption; weather;

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References

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Citations

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Cited by:
  1. Krause, Annabelle, 2013. "Don’t worry, be happy? Happiness and reemployment," Journal of Economic Behavior & Organization, Elsevier, vol. 96(C), pages 1-20.
  2. Beja Jr., Edsel L., 2012. "What do happy people choose: rapid economic growth or stable economy?," MPRA Paper 38851, University Library of Munich, Germany.
  3. Otrachshenko, Vladimir & Popova, Olga, 2014. "Life (dis)satisfaction and the intention to migrate: Evidence from Central and Eastern Europe," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 48(C), pages 40-49.
  4. 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.
  5. 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.
  6. Krause, Annabelle, 2012. "Don't Worry, Be Happy? Happiness and Reemployment," IZA Discussion Papers 7107, Institute for the Study of Labor (IZA).

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