The Distribution of Well-Being and Income within the Household

Several papers in the literature on intra-household allocation have suggested that various household ‘outcomes’, such as demands, saving, child health etc., depend on the distribution of income within the household. Implicit in these analyses is that a higher share of household income for one partner leads to a higher welfare for that person. In this paper we consider the issue of the intra-household distribution of welfare directly using a survey measure of self-perceived economic well-being. As a supplement to this we also present an analysis of responses to this question for singles; this allows us to ‘benchmark’ the responses for married individuals. Our data are drawn form the Danish component of the European Community Household Survey for the year 1994. We have three principal findings. First, we do not find any impact of the incomes of other non-related (‘peer-group’) persons on the financial satisfaction of singles. This is in contrast to other recent findings that suggest that agents consider relative incomes when considering their own satisfaction. Second, we find that husbands and wives often report very different levels of financial satisfaction. Finally, the most important correlate with relative satisfaction within the household is found to be relative income. This is a direct confirmation of the previously implicit findings.