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The Effects of Wealth and Income on Subjective Well-Being and Ill-Being

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Listed author(s):
  • Headey, Bruce

    ()

    (Melbourne Institute of Applied Economic and Social Research)

  • Wooden, Mark

    ()

    (Melbourne Institute of Applied Economic and Social Research)

Abstract

The accepted view among psychologists and economists alike is that household income has statistically significant but only small effects on measures of subjective well-being. Income, however, is clearly an imperfect measure of the economic circumstances of households. Using data drawn from the 2001 and 2002 waves of the Household, Income and Labour Dynamics in Australia (HILDA) Survey, this paper demonstrates that wealth, which can be viewed as providing a degree of economic security, is at least as important to well-being and ill-being as income.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1032.

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Length: 26 pages
Date of creation: Feb 2004
Publication status: Published in: Economic Record, 2004, 80 (S1), S24-S33. doi:10.1111/j.1475-4932.2004.00181.x
Handle: RePEc:iza:izadps:dp1032
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Keywords: subjective well-being; life satisfaction; income; wealth;

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  • D19 - Microeconomics - - Household Behavior - - - Other

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  1. Andrew E. Clark, 2003. "Unemployment as a Social Norm: Psychological Evidence from Panel Data," Journal of Labor Economics, University of Chicago Press, vol. 21(2), pages 289-322, April.
  2. Blanchflower, David G. & Oswald, Andrew J., 2004. "Well-being over time in Britain and the USA," Journal of Public Economics, Elsevier, vol. 88(7-8), pages 1359-1386, July.
  3. Frey, Bruno S & Stutzer, Alois, 2000. "Happiness, Economy and Institutions," Economic Journal, Royal Economic Society, vol. 110(466), pages 918-938, October.
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  5. Oswald, Andrew J, 1997. "Happiness and Economic Performance," Economic Journal, Royal Economic Society, vol. 107(445), pages 1815-1831, November.
  6. Randolph Mullis, 1992. "Measures of economic well-being as predictors of psychological well-being," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 26(2), pages 119-135, March.
  7. Paul Frijters & John P. Haisken-DeNew & Michale A. Shields, 2001. "The Value of Reunification in Germany: An Analysis of Changes in Life Satisfaction," Department of Economics - Working Papers Series 828, The University of Melbourne.
  8. Hollander, Heinz, 2001. "On the validity of utility statements: standard theory versus Duesenberry's," Journal of Economic Behavior & Organization, Elsevier, vol. 45(3), pages 227-249, July.
  9. Bruno S. Frey & Alois Stutzer, 2002. "What Can Economists Learn from Happiness Research?," Journal of Economic Literature, American Economic Association, vol. 40(2), pages 402-435, June.
  10. Mark Wooden & Simon Freidin & Nicole Watson, 2002. "The Household, Income and Labour Dynamics in Australia (HILDA)Survey: Wave 1," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 35(3), pages 339-348.
  11. Mike Shields & Mark Wooden, 2003. "Investigating the Role of Neighbourhood Characteristics in Determining Life Satisfaction," Melbourne Institute Working Paper Series wp2003n24, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
  12. Bruce Headey & Jonathan Kelley & Alex Wearing, 1993. "Dimensions of mental health: Life satisfaction, positive affect, anxiety and depression," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 29(1), pages 63-82, May.
  13. Juster, F. Thomas & Smith, James P. & Stafford, Frank, 1999. "The measurement and structure of household wealth," Labour Economics, Elsevier, vol. 6(2), pages 253-275, June.
  14. Bruce Headey & Gary Marks & Mark Wooden, 2005. "The Structure and Distribution of Household Wealth in Australia," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 38(2), pages 159-175, 06.
  15. Buhmann, Brigitte, et al, 1988. "Equivalence Scales, Well-Being, Inequality, and Poverty: Sensitivity Estimates across Ten Countries Using the Luxembourg Income Study (LIS) Database," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 34(2), pages 115-142, June.
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