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An Examination of the Effects of Consumption Expenditures on Life Satisfaction in Australia
- Source :
- Journal of Happiness Studies. 21:2735-2771
- Publication Year :
- 2019
- Publisher :
- Springer Science and Business Media LLC, 2019.
-
Abstract
- This paper studies how consumption expenditures, especially spending on certain types of goods and services, affect people’s life satisfaction. The results demonstrate that conspicuous (i.e., visible and positional) spending increases life satisfaction. The analysis suggests that it is one’s conspicuous consumption expenditures relative to those of other households in one’s reference group that really matter. In contrast, savings and spending on basic goods and services, the less visible components of income, do not contribute to life satisfaction. This paper also evaluates the often-discussed relationship between income and life satisfaction, finding that the relationship is largely driven by conspicuous spending. Evidence of relationship heterogeneity across income groups is presented: conspicuous consumption expenditures have a positive influence on life satisfaction for individuals in all income groups; basic consumption expenditures, however, have a negative influence for people in the lowest income quartile. The findings of this paper underscore the importance of social comparisons to people’s well-being and imply that interdependence should be modeled in utility functions. The results are based on the Arellano–Bond generalized method of moments estimation, which controls for bias from unobserved individual heterogeneity and endogenous variables. The data come from the Household, Income and Labour Dynamics in Australia Survey (2006–2010).
- Subjects :
- Estimation
Consumption (economics)
Social comparison theory
05 social sciences
Life satisfaction
050109 social psychology
Conspicuous consumption
050105 experimental psychology
Goods and services
0501 psychology and cognitive sciences
Demographic economics
Subjective well-being
Psychology
Social Sciences (miscellaneous)
Reference group
Subjects
Details
- ISSN :
- 15737780 and 13894978
- Volume :
- 21
- Database :
- OpenAIRE
- Journal :
- Journal of Happiness Studies
- Accession number :
- edsair.doi...........9cacf340f705c0671bc178cad2f84ac6