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Financial satisfaction over the life course: The influence of assets and liabilities

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  • Plagnol, Anke C.

Abstract

Various studies have shown that financial satisfaction is, among other domains, an important determinant of overall individual well-being. Contrary to the common belief that financial satisfaction mainly depends on an individual's income, evidence for the US indicates that life course financial satisfaction steadily increases from the thirties onwards, whereas life course income shows an inverted U-pattern with a peak at midlife. To judge from other studies in the US and Norway, this pattern for financial satisfaction is not unique. The aim of the present analysis is to explore the determinants of this life course financial satisfaction pattern, taking into account not only income but also the possible impact of assets and liabilities. The analysis suggests that while income has the expected positive relation, increasing financial satisfaction at older age can be partly explained by decreases in liabilities and increases in financial assets, and that assets and liabilities considered separately provide a better explanation than net wealth. In addition, reduction in the dependency burden at old age leads to increased financial satisfaction while the deterioration of health has a negative impact. The data are from the second and third waves of the US National Survey of Families and Households.

Suggested Citation

  • Plagnol, Anke C., 2011. "Financial satisfaction over the life course: The influence of assets and liabilities," Journal of Economic Psychology, Elsevier, vol. 32(1), pages 45-64, February.
  • Handle: RePEc:eee:joepsy:v:32:y:2011:i:1:p:45-64
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    3. Andrzej Cwynar & Wiktor Cwynar & Monika Baryła-Matejczuk & Moises Betancort, 2019. "Sustainable Debt Behaviour and Well-Being of Young Adults: The Role of Parental Financial Socialisation Process," Sustainability, MDPI, Open Access Journal, vol. 11(24), pages 1-26, December.
    4. Matthew Brzozowski & Brenda Spotton Visano, 2020. "“Havin’ Money’s Not Everything, Not Havin’ It Is”: The Importance of Financial Satisfaction for Life Satisfaction in Financially Stressed Households," Journal of Happiness Studies, Springer, vol. 21(2), pages 573-591, February.
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    7. Duško Ranisavljeviæ, 2014. "The Flow Chart of Satisfaction Levels of Personal Customers Through the Credit Process in Serbian Retail Banking Market," Proceedings of FIKUSZ '14, in: Pál Michelberger (ed.),Proceedings of FIKUSZ '14, pages 223-236, Óbuda University, Keleti Faculty of Business and Management.
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    11. Martina Manfre' & Viola Angelini, 2018. "Does The Financial Situation affect Cheating Behavior? An Investigation through Financial Literacy," Working Papers 06/2018, University of Verona, Department of Economics.
    12. Derek T. Tharp & Martin Seay & Cherie Stueve & Somer Anderson, 2020. "Financial Satisfaction and Homeownership," Journal of Family and Economic Issues, Springer, vol. 41(2), pages 255-280, June.
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    14. Brown, Sarah & Durand, Robert B. & Harris, Mark N. & Weterings, Tim, 2014. "Modelling financial satisfaction across life stages: A latent class approach," Journal of Economic Psychology, Elsevier, vol. 45(C), pages 117-127.
    15. Tetsuya Tsurumi & Shunsuke Managi, 2017. "Monetary Valuations of Life Conditions in a Consistent Framework: The Life Satisfaction Approach," Journal of Happiness Studies, Springer, vol. 18(5), pages 1275-1303, October.
    16. Kumar Saurabh & Tanuj Nandan, 2019. "Role of financial knowledge, financial socialisation and financial risk attitude in financial satisfaction of Indian individuals," International Journal of Indian Culture and Business Management, Inderscience Enterprises Ltd, vol. 18(1), pages 104-122.
    17. Maria Pereira & Filipe Coelho, 2013. "Untangling the Relationship Between Income and Subjective Well-Being: The Role of Perceived Income Adequacy and Borrowing Constraints," Journal of Happiness Studies, Springer, vol. 14(3), pages 985-1005, June.
    18. Daniel Gray, 2014. "Financial Concerns and Overall Life Satisfaction: A Joint Modelling Approach," Working Papers 2014008, The University of Sheffield, Department of Economics.
    19. Edsel L. Beja, 2018. "The U-shaped relationship between happiness and age: evidence using world values survey data," Quality & Quantity: International Journal of Methodology, Springer, vol. 52(4), pages 1817-1829, July.
    20. Gülay Günay & Ayfer Boylu & Özgün Bener, 2014. "An Examination of Factors Affecting Economic Status and Finances Satisfaction of Families: A Comparison of Metropolitan and Rural Areas," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 119(1), pages 211-245, October.
    21. Sarah Brown & Daniel Gray, 2014. "Household Finances and Well-Being: An Empirical Analysis of Comparison Effects," Working Papers 2014015, The University of Sheffield, Department of Economics.
    22. Agus Zainul Arifin, 2018. "Influence Factors toward Financial Satisfaction with Financial Behavior as Intervening Variable on Jakarta Area Workforce," European Research Studies Journal, European Research Studies Journal, vol. 0(1), pages 90-103.
    23. Azwadi Ali & Mohd Rahman & Alif Bakar, 2015. "Financial Satisfaction and the Influence of Financial Literacy in Malaysia," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 120(1), pages 137-156, January.
    24. Ferdi Botha & Frikkie Booysen & Edwin Wouters, 2018. "Satisfaction with Family Life in South Africa: The Role of Socioeconomic Status," Journal of Happiness Studies, Springer, vol. 19(8), pages 2339-2372, December.
    25. Apergis, Nicholas & Hayat, Tasawar & Kadasah, Nasser A., 2019. "Subjective well-being in housing purchasing: Evidence with survey data from the U.K. housing residential market," The Quarterly Review of Economics and Finance, Elsevier, vol. 74(C), pages 328-335.

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