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The importance of wealth for subjective well-being


  • Headey, Bruce

    () (Melbourne Institute of Applied Economic and Social Research)

  • Wooden, Mark

    () (Melbourne Institute of Applied Economic and Social Research)


It is widely assumed that since income is usually found to account for a relatively small proportion of the variance across individuals in self-reported well-being, money does not matter for personal happiness. This hypothesis is re-examined in this paper by including measures of household wealth alongside the more usual household income measure in regression equations of life satisfaction. Using data drawn from four large population surveys from four different countries,evidence is found indicating that wealth generally matters at least as much as income. It is thus concluded that economic circumstances explain more of the variation in individual well-being than previously thought. Nevertheless, the size of these wealth and income effects is still small.

Suggested Citation

  • Headey, Bruce & Wooden, Mark, 2005. "The importance of wealth for subjective well-being," Journal of Financial Transformation, Capco Institute, vol. 15, pages 59-67.
  • Handle: RePEc:ris:jofitr:0954

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    Cited by:

    1. Francisco Azpitarte, 2010. "Measuring poverty using both income and wealth: A cross-country comparison between the U.S. and Spain," Working Papers 153, ECINEQ, Society for the Study of Economic Inequality.
    2. Francisco Azpitarte, 2014. "Measuring Poverty using both Income and Wealth: A Cross-Country Comparison between the U.S. and Spain," LWS Working papers 18, LIS Cross-National Data Center in Luxembourg.
    3. Roger Wilkins & Mark Wooden, 2009. "Household Debt in Australia: The Looming Crisis that Isn't," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 42(3), pages 358-366.

    More about this item


    Well-being; Household wealth; HILDA Survey;

    JEL classification:

    • D19 - Microeconomics - - Household Behavior - - - Other
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution


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