Economic Shocks on Subjective Well-Being: Re-assessing the Determinants of Life-Satisfaction After the 2008 Financial Crisis

• Published in: Journal of happiness studies Vol. 20; no. 4; pp. 1041 - 1055
• Main Authors: Charles, Aurelie, Wu, Dongxu, Wu, Zhongmin
• Format: Journal Article
• Language: English
• Published: Dordrecht Springer Netherlands 01.04.2019; Springer Nature B.V
• Subjects: Decision making; Economic crisis; Economics; Group dynamics; Happiness; Households; Housing; Laboratories; Life satisfaction; Longitudinal studies; Membership; Peers; Personality and Social Psychology; Philosophy; Positive Psychology; Quality of Life Research; Random effects; Research Paper; Self employment; Social Sciences; Well being; Women; Subjective well-being; C3; D6; Panel data; D7; Group behaviour; Financial crisis
• ISSN: 1389-4978; 1573-7780
• DOI: 10.1007/s10902-018-9986-y

The paper investigates the extent to which life-satisfaction is biased by peer-comparison by looking at the relative value attached to the different domains of life-satisfaction, as suggested by Easterlin (Economics and happiness: framing the analysis, Oxford University Press, New York, 2005 ), by social group. We postulate that group membership influences the ranking of the satisfaction domains affecting subjective well-being which allows individuals to go back to their individual threshold over time. Using ordered probit models with random effects, the evidence for professional (self-employed vs. employee) and social (male vs. female) groups using the British Household Panel Survey and Understanding Society—UK Household Longitudinal Study from 1996 to 2014 shows that the ranking of the satisfaction domains is group-based suggesting a “keeping up with the Joneses” effect linked to the housing bubble.