Headey, Bruce (Melbourne Institute of Applied Economic and Social Research, University of Melbourne) Muffels, Ruud (Tilburg University) Wooden, Mark () (Melbourne Institute of Applied Economic and Social Research, University of Melbourne and IZA Bonn)
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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.
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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number
1218.
Find related papers by JEL classification: D19 - Microeconomics - - Household Behavior - - - Other D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution I31 - Health, Education, and Welfare - - Welfare and Poverty - - - General Welfare
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References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
van Praag, Bernard M S & Hagenaars, Aldi J M & van Weeren, Hans, 1982.
"Poverty in Europe,"
Review of Income and Wealth,
Blackwell Publishing, vol. 28(3), pages 345-59, September.
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