Evaluating the Link Between Perceived Income Adequacy and Financial Satisfaction: A Resource Deficit Hypothesis Approach
Data from an economically and racially diverse sample (N = 258) was used to determine (a) if an association between objectively measured income and perceived income adequacy exists, (b) how well individuals assess the adequacy of their income, and (c) if a bias exists, can these estimates be used to describe a person’s overall level of financial satisfaction? Duesenberry’s (Income, saving, and the theory of consumer behavior. Harvard University Press, Cambridge, 1949 ) relative income hypothesis and Kyrk’s (The family in the American economy. University of Chicago Press, Chicago, 1953 ) resource deficit hypothesis were adopted for use as the conceptual framework for this study. A positive but modest association between objective and perceived income adequacy was noted. It was also found that individuals do not do a particularly good job of accurately assessing their income adequacy. Finally, perceived income adequacy estimation bias was found to be associated with financial satisfaction. Those who perceived their income to be deficient were less satisfied financially. Policy and practitioner implications from the study are discussed as a means for improving financial satisfaction at the individual and household level. Copyright Springer Science+Business Media Dordrecht 2013
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 114 (2013)
Issue (Month): 3 (December)
|Contact details of provider:|| Web page: http://www.springer.com|
|Order Information:||Web: http://www.springer.com/economics/journal/11135|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Guglielmo Maria Caporale & Yannis Georgellis & Nicholas Tsitsianis & Ya Ping Yin, 2007.
"Income and Happiness across Europe: Do Reference Values Matter?,"
CESifo Working Paper Series
2146, CESifo Group Munich.
- Caporale, Guglielmo Maria & Georgellis, Yannis & Tsitsianis, Nicholas & Yin, Ya Ping, 2009. "Income and happiness across Europe: Do reference values matter?," Journal of Economic Psychology, Elsevier, vol. 30(1), pages 42-51, February.
- Thomas Hansen & Britt Slagsvold & Torbjørn Moum, 2008. "Financial Satisfaction in Old Age: A Satisfaction Paradox or a Result of Accumulated Wealth?," Social Indicators Research- An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 89(2), pages 323-347, November.
- Vani Borooah, 2006. "What Makes People Happy? Some Evidence from Northern Ireland," Journal of Happiness Studies, Springer, vol. 7(4), pages 427-465, November.
- Runt Veenhoven, 2002.
"Why Social Policy Needs Subjective Indicators,"
Social Indicators Research- An International and Interdisciplinary Journal for Quality-of-Life Measurement,
Springer, vol. 58(1), pages 33-46, June.
- Veenhoven, Ruut, 2001. "Why social policy needs subjective indicators," Discussion Papers, Research Unit: Social Structure and Social Reporting FS III 01-404, Social Science Research Center Berlin (WZB).
- Clark, Andrew E. & Oswald, Andrew J., 1994.
"Satisfaction and comparison income,"
CEPREMAP Working Papers (Couverture Orange)
- Shane Sanders, 2010. "A Model of the Relative Income Hypothesis," The Journal of Economic Education, Taylor & Francis Journals, vol. 41(3), pages 292-305, June.
- Easterlin, Richard A, 2001. "Income and Happiness: Towards an Unified Theory," Economic Journal, Royal Economic Society, vol. 111(473), pages 465-84, July.
- Tania Burchardt, 2005. "Are One Man’s Rags Another Man’s Riches? Identifying Adaptive Expectations using Panel Data," Social Indicators Research- An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 74(1), pages 57-102, October.
- Ed Diener & Ed Sandvik & Larry Seidlitz & Marissa Diener, 1993. "The relationship between income and subjective well-being: Relative or absolute?," Social Indicators Research- An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 28(3), pages 195-223, March.
- Alex Michalos, 1985. "Multiple discrepancies theory (MDT)," Social Indicators Research- An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 16(4), pages 347-413, May.
- Angelique Chan & Mary Ofstedal & Albert Hermalin, 2002. "Changes in Subjective and Objective Measures of Economic Well-Being and Their Interrelationship among the Elderly in Singapore and Taiwan," Social Indicators Research- An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 57(3), pages 263-300, March.
When requesting a correction, please mention this item's handle: RePEc:spr:soinre:v:114:y:2013:i:3:p:1109-1124. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sonal Shukla)or (Rebekah McClure)
If references are entirely missing, you can add them using this form.