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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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    Cited by:

    1. 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.
    2. Daniel Gray, 2014. "Financial Concerns and Overall Life Satisfaction: A Joint Modelling Approach," Working Papers 2014008, The University of Sheffield, Department of Economics.
    3. repec:spr:jhappi:v:19:y:2018:i:1:d:10.1007_s10902-016-9799-9 is not listed on IDEAS
    4. 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.
    5. 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.
    6. 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.
    7. Chong Shyue Chuan & Sia Bik Kai & Ng Kean Kok, 2011. "Resource Transfers And Financial Satisfaction: A Preliminary Correlation Analysis," Journal of Global Business and Economics, Global Research Agency, vol. 3(1), pages 146-156, July.
    8. 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.
    9. Brown, Sarah & Gray, Daniel, 2016. "Household finances and well-being in Australia: An empirical analysis of comparison effects," Journal of Economic Psychology, Elsevier, vol. 53(C), pages 17-36.
    10. repec:ers:journl:v:xx:y:2017:i:3b:p:90-103 is not listed on IDEAS
    11. 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.
    12. repec:spr:jhappi:v:18:y:2017:i:5:d:10.1007_s10902-016-9775-4 is not listed on IDEAS

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