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Reference dependent financial satisfaction over the course of the Celtic Tiger : a panel analysis utilising the Living in Ireland Survey 1994-2001

Author

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  • Liam Delaney
  • Carol Newman
  • Brian Nolan

Abstract

The link between income and subjective satisfaction with one’s financial situation is explored in this paper using a panel analysis of 4,000 individuals tracked through the course of the ‘Celtic Tiger’ boom period, 1994-2001. The impact of the level of individual and household income, the time-path of income and the impact of reference group income on financial satisfaction are all considered. To the extent that income influences financial satisfaction, there is strong evidence from this paper that household income has a greater effect on financial satisfaction than individual income. There is also evidence that changes in income have an independent effect on financial satisfaction with the time derivative of income entering positively in the financial satisfaction equation. Thus, our paper gives further evidence to support the hypothesis that individuals process changes as well as absolute levels of income. While reference group income has a negative effect at the start of the period it has no effect at the end.

Suggested Citation

  • Liam Delaney & Carol Newman & Brian Nolan, 2006. "Reference dependent financial satisfaction over the course of the Celtic Tiger : a panel analysis utilising the Living in Ireland Survey 1994-2001," Working Papers 10197/1110, Geary Institute, University College Dublin.
    • Handle: RePEc:ucd:wpaper:10197/1110
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    File URL: http://hdl.handle.net/10197/1110
    File Function: First version, 2006
    Download Restriction: no
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    More about this item

    Keywords

    Well-being; Financial satisfaction; Reference-dependency; Finance; Personal--Ireland; Income--Ireland; Reference groups;
    All these keywords.

    JEL classification:

    • D60 - Microeconomics - - Welfare Economics - - - General
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being

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