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Does the Market Make us Happy? The Stock Market and Well-being

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  • Aurora Murgea
  • Robert D. Reisz

Abstract

In the last decades, a growing body of literature was dedicated to the analysis of the determinants ofwell-being. Despite that, the relation between well-being and capital markets has never been investigated,presumably due to the scarcity of subjective well-being time series. The present paper tries to fill thisgap explaining why the capital market evolution has an impact on subjective well-being and investigatingthe relationship between well-being and the stock market in the USA. Empirical tests, using the GalluppHealthways Well-being Index, Standard & Poor's S&P 500 and the VIX volatility index show a strongand statistically significant impact of the stock market on well-being. The channels of influence are bothmonetary, through the income influence, and psychological due to the increase in uncertainty associatedwith the growing financial fragility and instability. These findings show that pursuing financial stabilityshould be a priority in the agenda of policymakers in order to achieve both economic development andindividual well-being.

Suggested Citation

  • Aurora Murgea & Robert D. Reisz, 2013. "Does the Market Make us Happy? The Stock Market and Well-being," Economia politica, Società editrice il Mulino, issue 1, pages 69-86.
    • Handle: RePEc:mul:jb33yl:doi:10.1428/73100:y:2013:i:1:p:69-86
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    References listed on IDEAS

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    1. Ng, Yew-Kwang, 1997. "A Case for Happiness, Cardinalism, and Interpersonal Comparability," Economic Journal, Royal Economic Society, vol. 107(445), pages 1848-1858, November.
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    1. The stock market and happiness
      by UDADISI in UDADISI on 2012-08-01 23:55:00

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    Cited by:

    1. Anita Ratcliffe & Karl Taylor, 2015. "Who cares about stock market booms and busts? Evidence from data on mental health," Oxford Economic Papers, Oxford University Press, vol. 67(3), pages 826-845.
    2. Tonzer, Lena, 2017. "Uncertainty, financial crises, and subjective well-being," IWH Discussion Papers 2/2017, Halle Institute for Economic Research (IWH).
    3. Anita Ratcliffe & Karl Taylor, 2013. "Who Cares about Stock Market Booms and Busts? Evidence from Data on Mental Wellbeing," Working Papers 2012021, The University of Sheffield, Department of Economics.
    4. Chen, Fuzhong & Hsu, Chien-Lung & Lin, Arthur J. & Li, Haifeng, 2020. "Holding risky financial assets and subjective wellbeing: Empirical evidence from China," The North American Journal of Economics and Finance, Elsevier, vol. 54(C).
    5. Frijters, Paul & Johnston, David W. & Shields, Michael A. & Sinha, Kompal, 2015. "A lifecycle perspective of stock market performance and wellbeing," Journal of Economic Behavior & Organization, Elsevier, vol. 112(C), pages 237-250.
    6. Tonzer Lena, 2019. "Elevated Uncertainty during the Financial Crisis: Do Effects on Subjective Well-Being Differ across European Countries?," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 19(2), pages 1-15, April.

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    More about this item

    Keywords

    J.E.L. D60; D53; G10; I31;
    All these keywords.

    JEL classification:

    • D60 - Microeconomics - - Welfare Economics - - - General
    • D53 - Microeconomics - - General Equilibrium and Disequilibrium - - - Financial Markets
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being

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