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Wealth, Assets and Life Satisfaction: A Metadata Instrumental-Variable Approach

Author

Listed:
  • Zuzana Brokesova

    (University of Economics in Bratislava)

  • Andrej Cupak

    (National Bank of Slovakia)

  • Anthony Lepinteur

    (University of Luxembourg)

  • Marian Rizov

    (University of Lincoln)

Abstract

We analyse the relationship between wealth/assets and life satisfaction. Using the Household Finance and Consumption Survey microdata from Slovakia in 2017, we first show that real assets (being the major component of household wealth) and life satisfaction are positively correlated. We address endogeneity concerns thanks to the metadata of the survey: we use the interviewers' ratings of the respondents' quality of dwellings to instrument the value of real assets. We show that the 2SLS estimate is positive and higher than the baseline OLS estimate, confirming that real assets are measured with error in survey data. Finally, we use the paradata to show that living next to a neighbour with better house quality significantly decreases one's happiness. Our results suggest that around half of the total effect of real assets on life satisfaction is relative.

Suggested Citation

  • Zuzana Brokesova & Andrej Cupak & Anthony Lepinteur & Marian Rizov, 2021. "Wealth, Assets and Life Satisfaction: A Metadata Instrumental-Variable Approach," Working and Discussion Papers WP 4/2021, Research Department, National Bank of Slovakia.
    • Handle: RePEc:svk:wpaper:1081
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    JEL classification:

    • I30 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General
    • D60 - Microeconomics - - Welfare Economics - - - General
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation

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