Building Financial Satisfaction

This paper aims to contribute further research on the conceptualization of individual financial satisfaction as a particular domain of satisfaction with life as a whole. Based on the 2003 Survey on Living Conditions and Poverty for Andalucía (Spain) and using a self-reported measure of welfare, ordered probit models are used to analyze the extent to which individual financial satisfaction can be solely explained by income in absolute terms, or alternatively, by taking into account the importance of relative income in its two dimensions: (1) personal aspirations as individual’s adaptation to previous and future income levels (intra-individual comparisons), and (2) social comparisons as individual’s concern for her peer’s income (inter-personal dependency).     

Relative Standing and Subjective Well-Being in South Africa: The Role of Perceptions,Expectations and Income Mobility

Most studies that explore the impact of relative standing on subjective well-being use objective measures of the individual’s relative position, such as the mean income of the reference group or the individual’s ranking in the relevant income distribution. In this paper, using a new household survey from South Africa, we are able to derive subjective measures of relative standing, as information is collected on individuals’ perceptions of where they rank in the income distribution. We find considerable differences between objective and subjective measures of an individual’s relative ranking. Furthermore, our results suggest that an individual’s perceived relative status has a significantly larger effect on subjective well-being than objective measures of relative status based on reported income. We also examine the effects on subjective well-being of how individuals perceive their relative position in the income distribution to have changed since childhood, and what they expect their relative position to be in the future. We find that future upward mobility has a smaller effect than upward mobility compared to one’s past, suggesting that life satisfaction is influenced more by what has been achieved than by anticipated achievements.     

Relative Income and Happiness in Asia: Evidence from Nationwide Surveys in China, Japan, and Korea

This study attempts to examine relative income effects on perceived happiness in three major Asian countries—China, Japan, and Korea—in comparison with the United Sates, on the basis of largely comparable nationwide surveys in these countries. Consistent with the results from previous studies in Western countries, comparisons with an individual’s own income and average income of the reference group are significantly associated with the individual’s perceived happiness in Asia. The associations between relative income and happiness are stronger for individual income than family income in China, while the opposite is true in Japan and Korea. Even after controlling for the subjective assessment of family income or personal class identification within the society as a whole, income comparisons within the reference group matter for assessing happiness, especially when using family income for comparisons. Moreover, relative deprivation within the reference group, which is measured by the Yitzhaki index, is negatively related to happiness, providing more evidence for the validity of the relative income hypothesis.     

Income Satisfaction and Relative Deprivation: An Empirical Link

This paper explores the relationship between two well-established concepts of measuring individual well-being: the concept of happiness, i.e. self-reported level of satisfaction with income, and relative deprivation, i.e. the gaps between the individual’s income and the incomes of all individuals richer than him. Operationalizing both concepts using micro panel data from the German Socio-Economic Panel, we provide empirical evidence for subjective well-being depending more on relative deprivation than on absolute levels of income. This finding holds after controlling for other influential factors in a multivariate setting.      

Ways by which Comparable Income Affects Life Satisfaction in Hong Kong

Proponents of social equality attribute low life satisfaction to income inequality in society, an inequality which occurs when most people have relatively low income and only a few have high income. In contrast, range-frequency theory and other social comparison theories predict that when most people have low income, they are satisfied because of the absence of relative deprivation among themselves. This prediction essentially suggests that that the size of the group of individuals with comparable income (i.e., income parity) sustains their life satisfaction. This theoretical prediction, however, does not consider their desire to be distinctive. By incorporating the notion of optimal distinctiveness, the size of income parity may have a quadratic effect on the individual’s life satisfaction. This is a hypothesis that receives support from the present study in Hong Kong, China. The study finds a saddle point of income parity size associated with the lowest life satisfaction, other things being equal. Furthermore, middle-income individuals have income parity size equal to or above this saddle point. They would have higher life satisfaction with increased income parity size, which therefore leads to a more enlarged income inequality. Others, however, may have higher life satisfaction with reduced income parity size. Hence, reducing income inequality would have mixed effects on people with different levels of income.

Acting for Happiness: Financial Behavior and Life Satisfaction of College Students

Recent research on well-being suggests that domain-specific behaviors contribute to domain-specific satisfactions, which in turn contribute to an individual’s overall satisfaction with life. Our study is an attempt to add to the literature by observing these phenomena from a financial perspective. Using data collected from a sample of undergraduate students at a major state university in the U.S. and employing structural equation modeling, we have found evidence suggesting that positive financial behaviors contribute to financial satisfaction and financial satisfaction in turn contributes to life satisfaction. In addition, positive financial behaviors contribute to life satisfaction through two more mediating variables: academic performance and academic satisfaction.     

Income Inequality and its Consequences for Life Satisfaction: What Role do Social Cognitions Play?

While it is generally agreed that income inequality affects an individual’s well-being, researchers disagree on whether people living in areas of high income disparity report more or less happiness than those in more equal environments, thereby indicating the need to study how and why income inequality matters to the individual’s well-being. Findings on group-specific reaction patterns to income inequality further fuel this need. Alesina et al. (2004) argue that a preference for inequality and the perception of the possibility of social mobility account for the indistinct relationship between income inequality and subjective well-being. Combining this hypothesis with previous research on social cognition and drawing on social justice theory, this paper aims to demonstrate the mediating nature of perceptions of income inequality. It argues that the perceived legitimacy of distributive outcomes and procedures contributes to how income inequalities affect individuals and their sense of well-being. The empirical analysis is based on data from the International Social Justice Project, developed from face-to-face interviews with a representative sample of the German population. Using structural equation modeling, the paper finds structural biases in the perception of income inequality. The paper concludes that subjective well-being is a product of the individual’s perception and legitimating processes. The results indicate that social cognition is a useful tool for studies of income inequality and subjective well-being.     

Psychometric Analysis of the Orientations to Happiness Questionnaire in Taiwanese Undergraduate Students

The aim of this study was to examine the psychometric properties of the Orientations to Happiness Questionnaire (OHQ; Peterson et al. in J Happiness Stud 6(1):25–41, 2005) in Taiwanese students. The participants were 578 undergraduate students (M_age = 18.64, SD = 1.02) and completed the OHQ, satisfaction with life scale (Diener et al. in J Personality Assess 49:71–75, 1985), and subjective happiness. Confirmation factor analysis indicated that a three-factor model with 17 items was the better fit model. Cross-validation also supported the modified Chinese version of the OHQ. Besides, the OHQ significantly predicted life satisfaction and subjective happiness with an exception of life of pleasure. Overall, it was concluded that the Chinese version of the OHQ would be useful for assessing individual’s orientations to happiness.     

The Compensating Income Variation of Social Capital

There is a small but growing literature on the determinants of social capital. Most of these studies use a measure of trust to define social capital empirically. In this paper we use three different measures of social capital: the size of the individual’s social network, the extent of their social safety net and membership of unions or associations. A second contribution to the literature is that we analyze what social capital contributes to our well-being. Based on this, we calculate the compensating income variation of social capital. We find differences in social capital when we differentiate according to individual characteristics such as education, age, place of residence, household composition and health. Household income generally has a statistically significant effect. We find a significant effect of social capital on␣life␣satisfaction. Consequently, the compensating income variation of social capital is substantial. Thanks to Tijl Woortman for his research assistance.     

Income and Happiness in Time of Post-Communist Modernization

This paper discusses the relations between economic development, family income, and happiness in post-communist Poland from the point of view of Inglehart’s theory of modernization. The happiness is understood as satisfaction with income and life, and as psychological well-being. The analysis of survey data yields the conclusion that economic development reduces the strength of the relations between income and satisfaction as well as between income and psychological well-being. These findings may be explained by changes in the value system from collectivist/materialist to individualist/post-materialist, even when these values are not directly measured. The analyzed data are from a series of representative surveys conducted in Poland during a period of political and economic transformation (i.e., between 1989 and 2008). Official statistical data on Polish economic development during the same period are used as a background for survey results. The relations between income and happiness change in Poland in a way consistent with Inglehart’s modernization theory.     

Binge drinking and labor market success: a longitudinal study on young people

This paper presents a two-equation model of joint outcomes on an individual’s decision to binge drink and on his/her annual labor market earnings. The primary data source is the 1979 cohort of the National Longitudinal Survey of Youth (NLSY79), 1979–1994. We show that binge drinking behavior is quite alcohol-price responsive and is a rational addiction. A new result is that an individual’s decision to binge drink has a statistically significant negative effect on his/her earnings. Furthermore, we conducted simulations of the short-run and long-run impacts of increasing the alcohol price. They showed that the tendency for an individual to binge drink heavily is reduced significantly, and the reduction is greater in the long-run than short-run simulation. Also, an individual's annual earnings were increased. However, in the structural model, an individual’s earnings have no significant effect on his/her tendency to engage in binge drinking. Our results contradict earlier findings from cross-section evidence that showed increased alcohol consumption raised an individual’s earnings or wages.     

Personal Values as Mitigating Factors in the Link Between Income and Life Satisfaction: Evidence from the European Social Survey

Using data from the first two rounds of the European Social Survey, we examine the link between income, reference income and life satisfaction across Western Europe. We find that whilst there is a strong positive relationship between income and life satisfaction, reference or comparison income exerts a strong negative influence. Interestingly, our results confirm the importance of personal values and beliefs not only as predictors of subjective well-being, but also as mitigating factors in the relationship between income, reference income and life satisfaction. While our findings provide additional empirical support for the relative utility hypothesis, they are also consistent with Rojas’ (J Econ Psychol 28:1–14, 2007) Conceptual-Referent-Theory (CRT), which is based on the premise that the salience of income and comparison income depends on one’s intrinsic values and personal beliefs.

Mental Health of Parents and Life Satisfaction of Children: A Within-Family Analysis of Intergenerational Transmission of Well-Being

This paper addresses the extent to which there is an intergenerational transmission of mental health and subjective well-being within families. Specifically it asks whether parents’ own mental distress influences their child’s life satisfaction, and vice versa. Whilst the evidence on daily contagion of stress and strain between members of the same family is substantial, the evidence on the transmission between parental distress and children’s well-being over a longer period of time is sparse. We tested this idea by examining the within-family transmission of mental distress from parent to child’s life satisfaction, and vice versa, using rich longitudinal data on 1,175 British youths. Results show that parental distress at year t − 1 is an important determinant of child’s life satisfaction in the current year. This is true for boys and girls, although boys do not appear to be affected by maternal distress levels. The results also indicated that the child’s own life satisfaction is related with their father’s distress levels in the following year, regardless of the gender of the child. Finally, we examined whether the underlying transmission correlation is due to shared social environment, empathic reactions, or transmission via parent–child interaction.     

The Relative Importance of Health

This article seeks to extend Michalos’ [Social indicators research and health-related quality of life (QoL) research. Social Indicators Research, 65, 27–72, 2004] discussion on bridging social indicators research and health-related QoL (HRQoL) research through an examination of (1) the relative importance of satisfaction with one’s own health to another common measure of QoL—Life satisfaction, and (2) the relative importance of health in relation to other major life domains. Using data from two surveys, this article found that individuals may perceive health as most important in relation to other major life domains but satisfaction with one’s own health may not necessarily be the most important determining factor (in relation to satisfaction with other major life domains) of QoL as measured by life satisfaction. These findings support Michalos’ (Social indicators research and HRQoL research. Social Indicators Research, 65, 27–72, 2004) call for caution regarding the interpretation of research results on HRQoL since many HRQoL measures are measures of satisfaction with one’s own health and should not be considered as measures of QoL.     

Life Satisfaction Among Turkish and Moroccan Immigrants in the Netherlands: The Role of Absolute and Relative Income

In this paper we investigate the role of several socio-economic and non-economic factors such as absolute and relative income, education and religion to explain the differences of happiness levels of Turkish and Moroccan Immigrants in the Netherlands by using ordered logit model. We focus on members of the Moroccan and Turkish communities, as these are the two largest non-EU immigrant communities in the Netherlands. Our findings reveal that Moroccans, although they have lower income levels and higher unemployment rates than Turkish immigrants, their happiness level is higher than the Turkish immigrants. In order to understand this dilemma a questionnaire survey was performed to 111 Turkish and 96 Moroccan immigrants in Rotterdam, Amsterdam, Den Haag, Utrecht and Arnhem in 2010. The main purpose is to investigate how reference group’s self-reported life satisfaction is related to the level of absolute income; the level of relative income and other socio-economic factors. The main findings are that for Turkish sample relative income is significantly and negatively correlated with life satisfaction whereas, both absolute income (positively) and relative income (negatively) are significantly correlated with life satisfaction for Moroccan case.     

Subjective Well-being in Rural India: The Curse of Conspicuous Consumption

Using data on 697 individuals from 375 rural low income households in India, we test expectations on the effects of relative income and conspicuous consumption on subjective well-being. The results of the multi-level regression analyses show that individuals who spent more on conspicuous consumption report lower levels of subjective well-being. Surprisingly an individual’s relative income position does not affect feelings of well-being. Motivated by positional concerns, people do not passively accept their relative rank but instead consume conspicuous goods to keep up with the Joneses. Conspicuous consumption always comes at the account of the consumption of basic needs. Our analyses point at a positional treadmill effect of the consumption of status goods.     

How Education Enhances Happiness: Comparison of Mediating Factors in Four East Asian Countries

Educational philosophers contend that education enhances autonomy and thus happiness, but empirical studies rarely explore the positive influence of education on happiness. Based on the previous finding that being better connected to the outside world makes people happy, this study examines the possibility that how well an individual connects to the world accounts for the positive association between education and happiness. Analyzing survey data from four East Asian countries, we find a common pattern among Japan, Taiwan and South Korea. Although both monetary and non-monetary factors play a role in explaining the relationship between education and higher reports of happiness, monetary factor is relatively unimportant whereas non-monetary factors, such as interpersonal network and degree of cosmopolitanism, account for a significant part of the association between education and happiness. China is exceptional due to its relative importance of personal income in accounting for happiness. In short, individuals who receive more education have more extensive social networks as well as greater involvement with the wider world; these life conditions are positively related with happiness. By enhancing one’s ability and propensity to connect with the wider social world, education may improve an individual’s subjective well-being.     

Purpose,Mood, and Pleasure in Predicting Satisfaction Judgments

We examined the extent to which satisfaction with life, with one’s self, and with one’s day are predicted by pleasure, purpose in life, interest, and mood. In a sample of 222 college students we found that both satisfaction with life and self-esteem were best predicted by positive feelings and an absence of negative feelings, as well as purpose in life. By contrast, satisfaction with individual days was predicted by negative feelings, and very strongly predicted by positive feelings, but not by purpose in life. In predicting life satisfaction purpose in life provided a buffering effect for lower levels of mood. People high in purpose in life reported high levels of life satisfaction even with moderate levels of mood. Thus, what makes a satisfying day is different from what makes a satisfying life or self. Life and self satisfaction were predicted significantly by purpose in life even after controlling for physical pleasure and affect balance, suggesting that they are more than just hedonic variables.     

Changes in the quality of life of Durban’s people

Durban, the busiest port and second largest industrial hub in South Africa, has a developmental vision that sees its residents living in ‚acceptably serviced housing’ and enjoying a ‚generally high quality of life that can be sustained’. This vision is in response to South Africa’s transitional aspirations to move from an inequitable apartheid state to a democratic society with greater socio-economic parity. Since 1998 the eThekwini Municipality, which is the local authority responsible for the city of Durban, has conducted annual surveys to monitor the changes in the quality of life of Durban’s people. Structured questionnaire interviews were administered in 14 300 dwellings between 1998 and 2005. The samples drawn each year were representative of the city’s demographics and covered a wide range of housing types. Results indicate that parity of life satisfaction between race groups is as far apart in 2005 as it was in 1998. The paper undertakes trend analysis, from a local government perspective, of key objective and subjective variables in the surveys. It identifies the domains that have the greatest impact on satisfaction with life, and reports the salient issues for black householders, who have the lowest level of life satisfaction.The Research Locale:  Durban, which is a port city on the east coast of South Africa, has a population of over 3 million people. The population is comprised of the following groups: Asian (20%), black (68%), coloured (3%) and white (9%). It is Africa’s busiest port and is South Africa’s second largest industrial hub. It provides key trade linkages to Johannesburg, which is South Africa’s largest industrial hub. The major economic sectors are manufacturing, tourism, finance and transport. The complex topography is intersected by 19 rivers that flow to 98 kms of coastline.