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Reversing the Question: Does Happiness Affect Consumption and Savings Behavior?

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  • Cahit Guven

Abstract

I examine the impact of happiness on consumption and savings behavior using data from the DNB Household Survey from the Netherlands and the German Socio-Economic Panel. Instrumenting individual happiness with regional sunshine, the results suggest that happier people save more, spend less, and have a lower marginal propensity to consume. Happier people take more time for making decisions and have more control over expenditures; they expect a longer life and (accordingly) seem more concerned about the future than the present; they also expect less inflation in the future.

Suggested Citation

  • Cahit Guven, 2009. "Reversing the Question: Does Happiness Affect Consumption and Savings Behavior?," SOEPpapers on Multidisciplinary Panel Data Research 219, DIW Berlin, The German Socio-Economic Panel (SOEP).
  • Handle: RePEc:diw:diwsop:diw_sp219
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    Cited by:

    1. Beja Jr., Edsel L., 2012. "What do happy people choose: rapid economic growth or stable economy?," MPRA Paper 38851, University Library of Munich, Germany.
    2. De Neve, Jan-Emmanuel & Oswald, Andrew J., 2012. "Estimating the influence of life satisfaction and positive affect on later income using sibling fixed-effects," LSE Research Online Documents on Economics 51523, London School of Economics and Political Science, LSE Library.
    3. repec:bof:bofitp:urn:nbn:fi:bof-201508181355 is not listed on IDEAS
    4. repec:eee:jeborg:v:137:y:2017:i:c:p:304-323 is not listed on IDEAS
    5. Yulei Rao & Lixing Mei & Rui Zhu, 2016. "Happiness and Stock-Market Participation: Empirical Evidence from China," Journal of Happiness Studies, Springer, vol. 17(1), pages 271-293, February.
    6. Ozge Gokdemir, 2015. "Consumption, savings and life satisfaction: the Turkish case," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 62(2), pages 183-196, June.
    7. repec:eee:joepsy:v:61:y:2017:i:c:p:29-38 is not listed on IDEAS
    8. Vasilios Kosteas, 2015. "Physical activity and time preference," International Journal of Health Economics and Management, Springer, vol. 15(4), pages 361-386, December.
    9. Yeniaras, Volkan & Akkemik, K. Ali & Yucel, Eray, 2016. "Re-considering the linkage between the antecedents and consequences of happiness," Journal of Economic Psychology, Elsevier, vol. 56(C), pages 176-191.
    10. L. Lambert D’raven & N. Pasha-Zaidi, 2016. "Using the PERMA Model in the United Arab Emirates," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 125(3), pages 905-933, February.
    11. Otrachshenko, Vladimir & Popova, Olga, 2014. "Life (dis)satisfaction and the intention to migrate: Evidence from Central and Eastern Europe," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 48(C), pages 40-49.
    12. Delis, Manthos D. & Mylonidis, Nikolaos, 2015. "Trust, happiness, and households’ financial decisions," Journal of Financial Stability, Elsevier, vol. 20(C), pages 82-92.
    13. Krause, Annabelle, 2013. "Don’t worry, be happy? Happiness and reemployment," Journal of Economic Behavior & Organization, Elsevier, vol. 96(C), pages 1-20.
    14. Lelkes, Orsolya, 2014. "Boldog-boldogtalan - a közpolitika szerepe
      [Happiness and unhappiness. The role of public policies]
      ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(12), pages 1381-1396.
    15. Bert Van Landeghem, 2012. "Panel Conditioning and Self-Reported Satisfaction: Evidence from International Panel Data and Repeated Cross-Sections," SOEPpapers on Multidisciplinary Panel Data Research 484, DIW Berlin, The German Socio-Economic Panel (SOEP).
    16. De Neve, Jan-Emmanuel & Diener, Ed & Tay, Louis & Xuereb, Cody, 2013. "The objective benefits of subjective well-being," LSE Research Online Documents on Economics 51669, London School of Economics and Political Science, LSE Library.
    17. Schroyen, Fred & Aarbu, Karl Ove, 2017. "Attitudes towards large income risk in welfare states: an international comparison," Discussion Paper Series in Economics 20/2017, Norwegian School of Economics, Department of Economics.
    18. Jan-Emmanuel De Neve & Ed Diener & Louis Tay & Cody Xuereb, 2013. "The Objective Benefits of Subjective Well-Being," CEP Discussion Papers dp1236, Centre for Economic Performance, LSE.
    19. Rickardsson, Jonna & Mellander, Charlotta, 2017. "Absolute vs Relative Income and Life Satisfaction," Working Paper Series in Economics and Institutions of Innovation 451, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
    20. Haining Wang & Zhiming Cheng & Russell Smyth, 2015. "Does Consuming More Make You Happier? Evidence from Chinese Panel Data," Monash Economics Working Papers 29-15, Monash University, Department of Economics.

    More about this item

    Keywords

    happiness; savings; consumption; weather;

    JEL classification:

    • D3 - Microeconomics - - Distribution
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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