Skip to main content
Log in

Building Financial Satisfaction

  • Published:
Social Indicators Research Aims and scope Submit manuscript

Abstract

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).

This is a preview of subscription content, log in via an institution to check access.

Access this article

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

References

  • G. S. Becker (1974) ArticleTitle‘A theory of social interactions’ Journal of Political Economy 82 IssueID6 1063–1091 Occurrence Handle10.1086/260265

    Article  Google Scholar 

  • N.M. Bradburn (1969) The Structure of Psychological Well-Being Aldine Publishing Company Chicago

    Google Scholar 

  • A. Campbell (1981) The Sense of Well-Being in America McGraw-Hill New York

    Google Scholar 

  • A. Campbell P. E. Converse W. L. Rodgers (1976) The Quality of American Life: Perceptions, Evaluations, and Satisfactions Russell Sage Foundation New York

    Google Scholar 

  • H. Cantril (1965) The Pattern of Human Concerns Rutgers University Press New Brunswick

    Google Scholar 

  • A. E. Clark (1997) ArticleTitle‘Job satisfaction and gender: Why are women so happy at work?’ Labour Economics 4 IssueID4 341–372 Occurrence Handle10.1016/S0927-5371(97)00010-9

    Article  Google Scholar 

  • A E. Clark A. J. Oswald (1994) ArticleTitle‘Unhappiness and unemployment, economic’ Journal 104 IssueID424 648–659

    Google Scholar 

  • A. E. Clark A. J. Oswald (1998) ArticleTitle utility and following behaviour in social and economic settings’ Journal of Public Economics 70 IssueID1 133–155 Occurrence Handle10.1016/S0047-2727(98)00064-4

    Article  Google Scholar 

  • S.E. Crawford E. Diener D. Wirtz R. Lucas S. Oishi (2002) ArticleTitle‘Wanting, having, and satisfaction: Examining the role of desire discrepancies in satisfaction with income’ Journal of Personality and Social Psychology 83 IssueID3 725–734 Occurrence Handle10.1037/0022-3514.83.3.725

    Article  Google Scholar 

  • E. Diener (1984) ArticleTitle‘Subjective well-Being’ Psychological Bulletin 95 IssueID3 542–575 Occurrence Handle10.1037/0033-2909.95.3.542

    Article  Google Scholar 

  • E. Diener R. Biswas-Diener (2002) ArticleTitle‘Will money increase subjective well-being? A Literature review and guide to needed research’ Social Indicators Research 57 119–169 Occurrence Handle10.1023/A:1014411319119

    Article  Google Scholar 

  • Diener, E. and R. E. Lucas: 1999, ‘Personality and subjective well-being’, In D. Kahneman, E. Diener and N. Schwarz (eds.), Well-Being: The Foundations of Hedonic Psychology (Chapter 11) (Russell Sage Foundation, New York).

  • J. S. Duesenberry (1949) Income, Savings and the Theory of Consumer Behavior Harvard University Press Cambridge MA

    Google Scholar 

  • R. A. Easterlin (1974) ‘Does economic growth improve the human Lot? Some empirical evidence’ P. A. David M. W. Reder (Eds) Nations and Households in Economic Growth: Essays in Honor of Moses Abramowitz Academic Press New York 89–125

    Google Scholar 

  • R. A. Easterlin (1995) ArticleTitle‘Will raising the incomes of all increase the happiness of all?’ Journal of Economic Behaviour and Organization 27 IssueID1 35–48 Occurrence Handle10.1016/0167-2681(95)00003-B

    Article  Google Scholar 

  • R. A. Easterlin (2001) ArticleTitle‘Income and happiness: Towards a unified theory’ Economic Journal 111 IssueID473 465–484 Occurrence Handle10.1111/1468-0297.00646

    Article  Google Scholar 

  • Eltinge, J. and W. Sribney: 1997, ‘Some basic concepts for the design based analysis of complex survey data’ STB 31, (1997): 208–212. College Station, TX: Stata Corporation.

  • Falk, A. and M. Knell: 2000, Choosing the Joneses: On the Endogeneity of Reference Groups, Institute for Empirical Research in Economics. University of Zurich, Working Paper No. 59.

  • Ferrer-i-Carbonell, A.: 2002a, ‘Income and Well-being: An Empirical Analysis of the Comparison Income Effect’, Tinbergen Institute Discussion Paper 2002-019/3.

  • Ferrer-i-Carbonell, A.: 2002b, ‘Subjective Questions to Measure Welfare and Well-Being: A survey’, Tinbergen Institute Discussion Paper 2002-020/3

  • A. Ferrer-i-Carbonell B.M.S. Praag Particlevan (2002) ArticleTitle‘The subjective costs of health losses due to chronic diseases. An alternative model for monetary appraisal’ Health Economics 11 709–722 Occurrence Handle10.1002/hec.696

    Article  Google Scholar 

  • R. Frank (1985) Choosing the Right Pond: Human Behavior and the Quest for Status Oxford University Press New York

    Google Scholar 

  • B. S. Frey A. Stutzer (2002) ArticleTitle‘What can economists learn from happiness research?’ Journal of Economic Literature 40 IssueID2 402–435 Occurrence Handle10.1257/002205102320161320

    Article  Google Scholar 

  • Frey, B. S., M. Benz and A. Stutzer: 2003. Introducing Procedural Utility: Not Only What but also How Matters. IEW Working Paper No. 129, University of Zurich.

  • W. Greene (1990) Econometric Análisis MacMillan New York

    Google Scholar 

  • A. J. M. Hagenaars (1986) The Perception of Poverty North-Holland Amsterdam

    Google Scholar 

  • H. Helson (1964) Adaptation-Level Theory: An Experimental and Systematic Approach to Behavior Harper and Row New York

    Google Scholar 

  • G. M. Hodgson (1988) Economics and Institutions Polity Press Cambridge, UK

    Google Scholar 

  • H. Holländer (2001) ArticleTitle‘On the validity of utility statements: standard theory versus Duesenberry’s’ Journal of Economic Behavior and Organization 45 IssueID3 227–249 Occurrence Handle10.1016/S0167-2681(01)00144-5

    Article  Google Scholar 

  • D. Kahneman E. Wakker R. Saring (1997) ArticleTitle‘Back to Bentham? Explorations of experienced utility’ The Quarterly Journal of Economics 112 IssueID2 375–406 Occurrence Handle10.1162/003355397555235

    Article  Google Scholar 

  • D. Kahneman E. Diener N. Schwarz (Eds) (1999) ‘Foundations of Hedonic Psychology: Scientific Perspectives on Enjoyment and Suffering Russell Sage Foundation NY

    Google Scholar 

  • Knell M. (2000). Social Comparisons and Long-Run Development, PhD Dissertation. Institute for Empirical Research in Economics (IEW), University of Zürich

  • R. Lehtonen E. Pahkinen (1994) Practical Methods for Design and Analysis of Complex Surveys John Wiley New York

    Google Scholar 

  • R. Likert (1932) ArticleTitle‘A technique for the measurement of attitudes’ Archives of Psychology 140 55

    Google Scholar 

  • H. Liebenstein (1950) ArticleTitle‘Bandwagon, snob, and veblen effects in the theory of consumer’s demand’ The Quarterly Journal of Economics, 64 IssueID2 183–207 Occurrence Handle10.2307/1882692

    Article  Google Scholar 

  • Luttmer, E. F. P.: 2004, ‘Neighbors as negatives: Relative earnings and Well-being’, NBER – W10667.

  • Marshall, A.: 1890, The Principles of Economics, 8th edition (1920), (Macmillan, London).

  • A. Mas-Colell (1977) ArticleTitle‘The recoverability of consumers preferences from market demand behavior’ Econometrica 45 IssueID6 1409–1430

    Google Scholar 

  • M. McBride (2001) ‘Relative-income effects on subjective well-being in the cross-Section’ Journal of Economic Behavior and Organization 45 251–278

    Google Scholar 

  • A.C. Michalos (1985) ArticleTitle‘Multiple discrepancies theory (MDT)’ Social Indicators Research 16 347–413 Occurrence Handle10.1007/BF00333288

    Article  Google Scholar 

  • R.A. Pollak (1970) ArticleTitle‘Habit formation and dynamic demand functions’ Journal of Political Economy 78 IssueID4 745–763 Occurrence Handle10.1086/259667

    Article  Google Scholar 

  • Putnam, R.: 2001, ‘Social capital: Measurement and consequences’, in J. Helliwell (ed.), The Contribution of Human and Social Capital to Sustained Economic Growth and Well Being.

  • M Ravallion M. Lokshin (2001) ArticleTitle‘Identifying welfare effects from subjective questions’ Economica 68 IssueID271 335–357 Occurrence Handle10.1111/1468-0335.00250

    Article  Google Scholar 

  • P. A. Samuelson (1947) Foundations of Economic Analysis Harvard University Press Cambridge, MA

    Google Scholar 

  • A. K. Sen (1999) ArticleTitle‘The possibility of social choice’ American Economic Review 89 349–378 Occurrence Handle10.1257/aer.89.3.349

    Article  Google Scholar 

  • A. Stutzer (2004) ArticleTitle‘The role of income aspirations in individual happiness’ Journal of Economic Behavior and Organization 54 89–109 Occurrence Handle10.1016/j.jebo.2003.04.003

    Article  Google Scholar 

  • B.M.S. Praag ParticleVan A. Kapteyn (1973) ArticleTitle‘Further evidence on the individual welfare function of income: An empirical investigation in the Netherlands’ European Economic Review 4 IssueID1 33–62 Occurrence Handle10.1016/0014-2921(73)90029-9

    Article  Google Scholar 

  • Van Praag, B. M. S.: 1968, Individual Welfare Functions and Consumer Behavior: A Theory of Rational Irrationality (North-Holland, Amsterdam).

  • B. M. S. Van Praag (1971) ArticleTitle‘The welfare function of income in Belgium: An empirical investigation’ European Economic Review 2 337–369 Occurrence Handle10.1016/0014-2921(71)90045-6

    Article  Google Scholar 

  • B. M. S. Van Praag A. Kapteyn (1973) ArticleTitle‘Further evidence on the individual welfare function of income: An empirical investigation in The Netherlands’ European Economic Review 4 33–62 Occurrence Handle10.1016/0014-2921(73)90029-9

    Article  Google Scholar 

  • B. M. S. Van Praag (1991) ArticleTitle‘Ordinal and cardinal utility An integration of the two dimensions of the welfare concept’. Journal of Econometrics 50 69–89

    Google Scholar 

  • B. M. S. Van Praag P. Frijters (1999) ‘The measurement of welfare and well-being: The leyden approach’ D. Kahneman Ed Diener N. Schwarz (Eds) Well-Being: The Foundations of Hedonic Psychology. Russell Sage Foundation New York 413–433

    Google Scholar 

  • Van Praag, B. M. S. and A. Ferrer-i-Carbonell: 2001, Life satisfaction differences between workers and non-workers. The value of participation per se. Tinbergen Institute Discussion Papers N. 02-018/3.

  • B. M. S. Praag ParticleVan P. Frijters A. Ferrer-i-Carbonell (2003) ArticleTitle‘The anatomy of well-being’ Journal of Economic Behavior and Organization 51 9–49

    Google Scholar 

  • Van Praag, B. M. S.: 2004, The Connexion Between Old and New Approaches to Financial Satisfaction. IZA Discussion Paper Series No. 1162.

  • B. M. S. Van Praag A. Ferrer-i-Carbonell (2004) Happiness Quantified. A Satisfaction Calculus Approach Oxford University Press Oxford

    Google Scholar 

  • T. Veblen (1899) The Theory of Leisure Class Modern Library New York

    Google Scholar 

  • T. Veblen (1909) ArticleTitle‘The limitations of marginal utility’ Journal of Political Economy 17 620–636 Occurrence Handle10.1086/251614

    Article  Google Scholar 

  • R. Veenhoven (1993) Happiness in Nations: Subjective Appreciation of Life in 56 Nations 1946–1992 Erasmus University Press Rotterdam

    Google Scholar 

Download references

Author information

Authors and Affiliations

Authors

Corresponding author

Correspondence to Esperanza Vera-Toscano.

Rights and permissions

Reprints and permissions

About this article

Cite this article

Vera-Toscano, E., Ateca-Amestoy, V. & Serrano-Del-Rosal, R. Building Financial Satisfaction. Soc Indic Res 77, 211–243 (2006). https://doi.org/10.1007/s11205-005-2614-3

Download citation

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s11205-005-2614-3

Keywords

JEL Classifications

Navigation