Poll of the Day > Consumption Changes Predict Changes in Subjective Well-Being

(+) Yeah! (+)

Abstract: Does happiness depend on what one earns or what one spends? Income is typically found to have small beneficial effects on well-being. However, economic theory suggests that well-being is conferred not by income but by consumption (i.e., spending on goods and services), and a persons level of consumption may differ greatly from their level of income due to saving behavior and taxation. Moreover, research within consumer psychology has established relationships between peoples spending in specific categories and their well-being. Here we show for the first time using panel data that changes in life satisfaction are associated with changes in consumption, not changes in income. We also find some evidence that increased conspicuous consumption is more strongly associated with improved well-being than is increased nonconspicuous consumption.

https://journals.sagepub.com/doi/10.1177/1948550619835215#articleCitationDownloadContainer

Paywall exists...but it's scientific literature so paywalls are only there for show.

TL;DR - Having more money doesn't make you happier, but spending more money does?

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adjl posted...

TL;DR - Having more money doesn't make you happier, but spending more money does?

Pretty much, if possible studies should use spending instead of income when reporting wellbeing in wealth studies. And spending on holidays, food, and housing are the highest ROI in terms of life satisfaction, spending on hobbies less correlated with life-satisfaction.

Interesting. Not altogether surprising, but definitely at odds with the usual approach people take to frugality (that is, cheap out on food/housing once you hit a minimum standard, then spend disposable income on hobbies). Holiday spending surprises me, since I would have thought that was too short-term a benefit to change all that much, but I guess the ability to look forward to a holiday as being a nice, fun time helps make it more satisfying once that time finally arrives.

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adjl posted...

definitely at odds with the usual approach people take to frugality (that is, cheap out on food/housing once you hit a minimum standard, then spend disposable income on hobbies).

blu posted...

We also find some evidence that increased conspicuous consumption is more strongly associated with improved well-being than is increased nonconspicuous consumption.

People happily set aside invisible spending like dinner to have objects that reflect their ability and wealth.
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I don't think the interpretation is that spending more <i>causes</i> increased happiness. The conclusion is that consumption is <i>more tightly correlated</i> with happiness than income is correlated with happiness. The rationale is pretty easy to see: you typically spend more to meet your immediate needs and wants, whereas income increases beyond that. Consumption naturally takes into account the diminishing returns of income (figure 1).

edit: leaving tags in because I'm stubborn and mad that they don't work any more

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