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Putting a price tag on friends, relatives, and neighbours: Using surveys of life satisfaction to value social relationships

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  • Powdthavee, Nattavudh

Abstract

There is substantial evidence in the psychology and sociology literature that social relationships promote happiness for the individual. Yet the size of their impacts remains largely unknown. This paper explores the use of shadow pricing method to estimate the monetary values of the satisfaction with life gained by an increase in the frequency of interaction with friends, relatives, and neighbours. Using the British Household Panel Survey, I find that an increase in the level of social involvements is worth up to an extra £85,000 a year in terms of life satisfaction. Actual changes in income, on the other hand, buy very little happiness.

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  • Powdthavee, Nattavudh, 2008. "Putting a price tag on friends, relatives, and neighbours: Using surveys of life satisfaction to value social relationships," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 37(4), pages 1459-1480, August.
  • Handle: RePEc:eee:soceco:v:37:y:2008:i:4:p:1459-1480
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    1. repec:eee:soceco:v:73:y:2018:i:c:p:53-65 is not listed on IDEAS
    2. Boyce, Christopher J. & Wood, Alex M., 2011. "Personality and the marginal utility of income: Personality interacts with increases in household income to determine life satisfaction," Journal of Economic Behavior & Organization, Elsevier, vol. 78(1-2), pages 183-191, April.
    3. Mzoughi, Naoufel, 2014. "Do organic farmers feel happier than conventional ones? An exploratory analysis," Ecological Economics, Elsevier, vol. 103(C), pages 38-43.
    4. Brown, Zachary S. & Oueslati, Walid & Silva, Jérôme, 2016. "Links between urban structure and life satisfaction in a cross-section of OECD metro areas," Ecological Economics, Elsevier, vol. 129(C), pages 112-121.
    5. Boyce, Christopher J. & Wood, Alex M., 2011. "Personality and the marginal utility of income: Personality interacts with increases in household income to determine life satisfaction," Journal of Economic Behavior & Organization, Elsevier, vol. 78(1), pages 183-191.
    6. Walsh, Kieran & Gannon, Brenda, 2011. "Perceived neighbourhood context, disability onset and old age," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 40(5), pages 631-636.
    7. Latif, Ehsan, 2010. "Crisis, unemployment and psychological wellbeing in Canada," Journal of Policy Modeling, Elsevier, vol. 32(4), pages 520-530, July.
    8. Powdthavee, Nattavudh & Wooden, Mark, 2015. "Life satisfaction and sexual minorities: Evidence from Australia and the United Kingdom," Journal of Economic Behavior & Organization, Elsevier, vol. 116(C), pages 107-126.
    9. Powdthavee, Nattavudh & Lekfuangfu, Warn N. & Wooden, Mark, 2015. "What's the good of education on our overall quality of life? A simultaneous equation model of education and life satisfaction for Australia," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 54(C), pages 10-21.
    10. Rotondi, Valentina & Stanca, Luca & Tomasuolo, Miriam, 2017. "Connecting alone: Smartphone use, quality of social interactions and well-being," Journal of Economic Psychology, Elsevier, vol. 63(C), pages 17-26.
    11. Stanca, Luca, 2009. "With or without you? Measuring the quality of relational life throughout the world," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 38(5), pages 834-842, October.
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    13. Binder, Martin, 2016. "“…Do it with joy!” – Subjective well-being outcomes of working in non-profit organizations," Journal of Economic Psychology, Elsevier, vol. 54(C), pages 64-84.
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    15. Colombo, Emilio & Stanca, Luca, 2014. "Measuring the monetary value of social relations: A hedonic approach," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 50(C), pages 77-87.
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