| Abstract: |
This paper explores the importance of the household's financial position for
an individual's level of well-being. Initially, the empirical analysis, based
on a large nationally representative panel survey, aims to ascertain the
impact of the household's monetary financial position on overall life
satisfaction and financial well-being, with the latter being measured by
financial satisfaction and subjective prosperity. Taking into account monetary
factors in addition to income, the results indicate that the household's level
of net wealth, assets and debt are important determinants of overall life
satisfaction and financial well-being. The paper also explores whether the
financial situation of households in a comparison group influences an
individual's overall life satisfaction and financial well-being. The results
suggest that the financial position of households in the comparison group is
an important determinant of an individual's level of overall life satisfaction
and financial well-being, with information effects generally dominating
comparison effects. In addition, the effects of the comparison group are
asymmetric depending on whether a household's financial position is above or
below the average of the reference group and vary over the life-cycle. |